(Adds 2010 fiscal framework in paragraphs 2, 13-17)
By Peter Laca
BRATISLAVA, April 1 (Reuters) - Slovakia's fiscal deficit
was below a government target in 2008, Finance Minister Jan
Pociatek said on Wednesday, but he said the balance would worsen
this year if the global economic crisis kept deepening.
The finance ministry on Wednesday also published its fiscal
framework for 2010, in which it proposed a bigger deficit than
originally planned because of the continued crisis.
Pociatek said the public finance gap was 2.2 percent of
gross domestic product last year, less than the government's
target of 2.3 percent, and matching the level seen in 2007.
But he said the widening deficit of the central state budget
-- the biggest part of public finances -- in the first quarter
[] signalled the overall gap would be wider this
year. He could not rule out a shortfall above 3 percent of GDP.
"It suggests the state finances would not be as successful
this year as (in 2008)," Pociatek told journalists after a
government meeting.
"We all know the reasons. The absolute absence of external
demand leads to falling exports and production, and this is
causing all these complications," he said.
Pociatek and other government members have said that the
fiscal gap may rise above the target of 2.1 percent of GDP this
year, but the cabinet has not yet completely abandoned the goal.
On Tuesday, Prime Minister Robert Fico said Slovakia's
economy may post its first ever annual contraction this year
[]. The current government forecast is for 2.4
percent economic growth, but it is likely to be revised
downwards.
Slovakia, a euro zone member since January, has not had to
bail out any of its banks but its economy is suffering from
slowing demand for its exports -- led by cars and TV sets -- in
the West.
Most EU states in central and eastern Europe expect a sharp
economic slowdown, which will put state budgets under pressure.
Pociatek said the government could fail to meet its plan to
keep the deficit within the limit of 3 percent of GDP set in the
European Union's Stability and Growth Pact if the crisis in
Slovakia's main export partners deepened much more.
"We will do everything we can not to exceed this level. But,
there could be theoretically a situation that would lead to
breaching this limit," he said.
BIGGER 2010 GAP
The finance ministry also said it had proposed a bigger
fiscal deficit for next year than previously planned as it
expected the crisis to continue to affect budget income.
The ministry's fiscal framework was based on an assumption
of 3.6 percent economic growth, which is unchanged from the its
projections released early in February.
The document said the ministry had cut projections of tax
revenues for next year "mainly because of a worsening
macroeconomic environment compared with original expectations."
The ministry also sees fiscal deficits in 2011 and 2012, at
2.2 and 1.7 percent of GDP, respectively.
"The deficit increase is delaying the original fiscal goal
of balanced public finances to a later period," it said, without
elaborating on when it wanted to have a balanced budget.
(Reporting by Peter Laca; Editing by David Stamp)
