FACTBOX-Summary of Slovak 2007 state budget draft

    Oct 16 (Reuters) - The Slovak 2007 state budget draft was 
sent to committee this week ahead of the first of three 
parliamentary readings required for it to pass. 
    The government-approved draft sets the ceiling for the key 
public finance deficit at 2.9 percent of estimated GDP. 
    The first reading is expected on Dec. 5. 
    The following is a summary of the fiscal plan for 2007. 
 
CENTRAL STATE BUDGET: 
                               2006      2007     2008    2009 
(SKK bln) 
(local cash-flow methodology) 
 Revenues                      272.7     308.1    326.3   352.4 
 Expenditure                   330.2     347.0    349.7   366.1 
 Balance                       -57.5     -38.9    -23.4   -13.7 
 Balance (ESA 95)              -69.0     -32.2    -48.6    43.9 
                                                                
PUBLIC SECTOR BUDGET           2006     2007     2008     2009 
(SKK bln) 
(ESA 95) 
 Revenues                      564.0    601.7    630.9    672.8 
 Expenditure                   608.4    654.3    677.6    712.4 
 Balance                       -44.4    -52.6    -46.7    -39.6 
 Balance (pct of GDP)           -2.9     -2.9     -2.4     -1.9 
  
 - Revenue and expenditure data for the central state budget 
are calculated according to local cash-flow methodology. 
 - The key figure for Slovakia's target to adopt the euro in 
2009 is the overall public finance deficit calculated according 
to the European Union's ESA 95 methodology. 
 - The cash-flow methodology takes in revenues and expenditures 
when money arrives or leaves state accounts, while the accrual 
ESA 95 method includes revenues and expenditures as they occur. 
 - The central budget is the major part of public finances. The 
overall public finance deficit ceiling for 2006, including the 
cost of pension system reform, was set at 4.2 percent of GDP. 
 - The calculated cost of the pension reform is 1.1 percent of 
GDP in 2007. 
 - Slovakia joined the Exchange Rate Mechanism 2 (ERM-2), a 
waiting room ahead of euro adoption, in November 2005, with 
the crown's central parity rate set at 38.4550 to the euro. 
     
 TIMETABLE 
 - Deputies are now starting to discuss the budget draft in 
various parliamentary committees. 
 - Parliament will debate the draft for this first time at a 
regular session starting on Dec. 5 
 - Parliament has no deadline for approving the 2007 state 
budget. The state would start next year with a provisional 
budget if deputies fail to pass the regular budget law by the 
end of 2006. But with a solid majority in parliament, the 
government is expected to approve the draft easily. 
     
TAX CHANGES 
INCOME AND CORPORATE TAX 
 - Income and corporate tax rates remain at 19 percent. 
 - Tax relief measures for those earning more than 46,700 crowns 
in 2007 are reduced. 
 - A loophole allowing companies to grant 2 percent of their 
taxes to non-government organisations is reduced to 0.5 percent. 
 - The fiscal benefit should total 1.7 billion crowns in 2008, 
rising to 1.9 billion in 2009. An estimate of the impact 
in 2007 should be released in the coming days. 
  
VALUE-ADDED TAX 
 - The value-added tax (VAT) rate for drugs and some other 
medical goods is cut to 10 percent from 19 percent. 
 - The finance ministry estimates the proposed change will 
reduce state budget income by some 2.7 billion crowns next year, 
or 0.18 percent of GDP. That reduction edges up to 2.8 billion 
crowns in 2008 and 3.0 billion crowns in 2009. 
  
 (Reporting by Martin Santa in Bratislava) 
 ((Editing by Gerrard Raven; martin.santa@reuters.com; Reuters 
Messaging: martin.santa.reuters.com@reuters.net; +421-2 5341 
8402)) 
  Keywords: ECONOMY SLOVAKIA BUDGET