* Czech, Slovak budget gaps rise to record levels
* Economic crisis stings, govts plan lower 2010 gaps
* Hungary shortfall seen below target on better income
By Robert Mueller and Martin Santa
PRAGUE/BRATISLAVA, Jan 4 (Reuters) - The Czech budget
deficit jumped well past expectations last year, but better than
expected revenue in Hungary and Slovakia helped avoid their
governments' most pessimistic forecasts.
Economists say governments across the European Union's
eastern arm must rein in deficits or risk derailing efforts to
catch up with richer EU states and join the euro, also worrying
that upcoming elections across the region may complicate that.
Although not as dire as double digit budget gaps in the EU's
worst hit states, the Czechs saw their central state budget
deficit hit 192.2 billion crowns, almost five times the original
plan and above previous estimates. []
Finance Minister Eduard Janota said the deficit would likely
mean an overall public sector deficit of 6.6-7.0 percent of
gross domestic product under the European Union's ESA rules,
well over the 3 percent ceiling for euro entry.
The expected 4 percent contraction in the economy was key to
missing the cabinet's 175 billion crown target for a central
state budget that makes up the main part of the total fiscal
balance. []
"This is historically the highest deficit... and it was
caused almost exclusively by a failure to meet revenue (plans),"
Janota said.
The 2010 budget foresees a deficit of 163 billion crowns,
with the overall public sector gap at 5.3 percent of GDP.
Prime Minister Jan Fischer said this year's gap could still
grow if left-leaning parties push more spending -- rolling back
maternity pay cuts, cancelling doctor fees or adding an extra
pension payment -- in a January parliamentary session ahead of a
general election in May.
Czech President Vaclav Klaus vowed on Monday not to sign any
new bills into law that would push the proposed 2010 budget
deficit above the plan. Klaus has veto rights but can be
overruled by a parliamentary majority. []
CUTS
Poland is the only country in ex-communist Central Europe to
avoid recession last year, and it expects its 2009 budget target
to come in lower than its 27 billion zloty ($9.41 billion) plan.
But that is expected to double this year for a general
fiscal deficit that could hit 7 percent of GDP, while the
government has avoided tax hikes and spending cuts ahead of
presidential and parliamentary elections this year and next.
In Slovakia, the newest euro zone member, the central state
budget gap rose to 2.791 billion euro ($3.99 billion) in 2009,
four times the 2008 deficit and a record in nominal terms.
[]
But an upgraded economic outlook in the final quarter of the
year helped it to a better result than the 3.154 billion euro
deficit estimated in October by the centre-left cabinet of Prime
Minister Robert Fico, a goal triple the original target.
Slovakia switched to the euro a year ago and aims to bring
its overall fiscal gap -- estimated at 6.3 percent of GDP --
under the EU's 3 percent ceiling by 2012, one year earlier than
requested by the European Commission.
The Commission has forecast Slovakia to emerge from the
crisis as one of the EU's fastest growing members in 2010 with a
1.9 percent expansion, but analysts were cautious on staking
lower deficits squarely to economic growth. []
"Based on the prime minister's latest comments it appears
that the government is counting mainly on economic growth and
does not plan many pro-active steps," said Slovenska Sporitelna
analyst Michal Musak.
Hungary, after years of lax fiscal controls, was the first
country in the European Union to seek International Monetary
Fund aid in 2008 to help plug financing holes -- help that came
with tight conditions attached.
The country's finance minister, Peter Oszko, said the 2009
cash-flow budget deficit will be below the government's target
as tax revenues in December came in above expectations while
spending remained under control. []
That means Hungary is on track to meet one of the key
conditions of its $25.1 billion IMF-led bailout. The ministry
will publish details of December budget performance on Tuesday.
(Writing by Jason Hovet; editing by Patrick Graham)
