INSTANT VIEW 2-Slovak 2006 state budget gap well below plan

    The Slovak central state budget showed a 
deficit of 31.68 billion crowns ($1.21 billion) for the full 
year 2006, well below the approved deficit ceiling of 57.47 
billion crowns, the finance ministry said on Tuesday. 
     
CENTRAL STATE BUDGET   JAN-DEC 06    JAN-DEC 05    FY 2006 PLAN 
 (SKK bln) 
 balance                -31.678       -33.886         -57.468 
 (For full budget table, please click on [nL02286238]) 
     
- The budget showed a deficit of 6.983 billion crowns for 
January-November. 
- The state budget traditionally shows smaller deficits than the 
full-year plan throughout the year, but the gap rises in the 
final weeks as state spending grows late in year. 
 
 ANALYST COMMENTS: 
 LUCIA STEKLACOVA, SENIOR ANALYST, ING BANK BRATISLAVA, 
    "It seems that some spending allocations were not used up in 
2006, and were transferred to this year. 
    "The overall fiscal deficit will be probably lower, because 
GDP growth was higher than expected." 
     
 BACKGROUND: 
- The central budget showed a deficit of 33.886 billion crowns 
for the whole of 2005, much less than the approved ceiling of 
61.524 billion. 
- Slovakia introduced a flat 19 percent tax rate in 2004 as a 
part of an overhaul of its complex tax system, and the tax 
reform has helped bring higher budget revenues. 
- The central state budget data are calculated according to 
local cash-flow methodology as the ministry publishes the key 
public finance statistics according to the European Union's ESA 
95 standards bannually. 
- The cash-flow methodology takes in revenues and expenditures 
when money arrive or leave the state accounts, while the accrual 
ESA 95 method includes revenues and expenditures immediately as 
they occur. 
- The central budget is the major part of public finances. The 
overall public finance deficit ceiling was set at 4.2 percent of 
GDP for 2006, including the cost of pension system reform, but 
the finance ministry's latest estimate predicted a gap of 3.6 
percent of GDP for the full of 2006. 
- Slovakia plans to slash the fiscal deficit to 2.9 percent of 
GDP in 2007 to meet the criteria for euro adoption. 
- Slovakia joined the Exchange Rate Mechanism 2 (ERM-2), the 
precursor to euro, in November 2005, with the crown's central 
parity rate set at 38.4550 to the euro. 
     
- For LIVE Slovak economic data releases, click on...... 
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- Stories on Slovak currency moves........................[SKK/] 
- Slovak speed money guide .............................. 
- Slovak benchmark state bond prices ................. 
- Slovak forward money market rates .................... 
 
  

[Reuters/Finance.cz]