Slovak FinMin: we are on Greek path in terms of rising debt
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(Reuters) – Slovakia is on a Greek path in terms of rising debt and interest rates and turning the trend will be tough, the country’s new finance minister Ladislav Kamenicky said on Sunday.
Fitch rating agency cut euro zone member Slovakia’s debt rating on Friday by one notch to ‘A-‘ with a stable outlook, citing deteriorating public finances and an “unclear” consolidation path.
“Slovakia is on a Greek path, and on financial markets it has for some time been borrowing at Greek interest rates, and turning the growing trajectory of public debt will be extremely difficult,” Kamenicky said on Facebook, referring to the Greek debt crisis last decade.
He was reacting to an opposition post criticising a lack of reaction from the new government to Fitch’s downgrade.
Greece’s debt crisis, which shook the euro zone, forced the country to sign up for international bailouts worth about 260 billion euros ($279.79 billion) to stay afloat.
“I am just making my preparations for the 2024 budget,” Kamenicky said. “Don’t worry, gentlemen from the opposition, I will be happy to explain you in detail where you have led Slovakia.”
Kamenicky, who was previously finance minister in 2019-20, returned to the post in October as part of a new administration led by leftist political veteran Robert Fico, whose SMER party won an election in Slovakia in September.
Fitch said it expected Slovak’s public budget deficit for 2023 to be around 6% of gross domestic product, up threefold from 2022.
It said it expected a similar deficit next year and a deficit of 6.5% of GDP in 2025, and for debt to exceed the COVID-time high of 61.1% of gross domestic product in 2025.
The new government last week presented a nearly 2 billion euro package of mainly tax increases, including a bank levy, to help shore up the budget in 2024, but it also stuck by a pledge to give more money to pensioners and to reduce the fiscal gap by just 0.5 percentage points per year to keep up social standards.
The government is expected to discuss the 2024 budget next week. News website www.dennikn.sk reported on Sunday that Kamenicky was proposing a 5.97% of GDP gap next year, versus 6.5% the ministry expects this year.
Standard and Poor’s kept Slovakia’s rating at ‘A+’ with a stable outlook while Moody’s kept its A2 rating with a negative outlook last month.
Slovakia auctioned 2032-year bonds SK4000021986= with an average yield of 3.84% on Nov. 20.
