* Govt okays 2011 budget draft, deficit seen at 4.9 pct/GDP
* Slovaks aim to meet EU's deficit cap of 3 pct/GDP by 2013
* Budget based on forecast of a 3.3 pct GDP growth
* FACTBOX []
(Adds FinMin comments, background, bond)
BRATISLAVA, Oct 6 (Reuters) - Slovakia's new centre-right
government approved its draft budget for 2011 on Wednesday,
aiming for the largest drop in its deficit of any of the
European Union's eastern member states.
The draft, to be debated by parliament in the coming weeks,
is designed to cut the overall gap to 4.9 percent of gross
domestic product (GDP) from about 7.8 percent this year through
a combination of spending cuts, tax hikes and a small
contribution from economic growth.
The euro zone member's consolidation plan is much more
ambitious than the deficit cuts planned by other of its
ex-communist neighbours, albeit coming from a worse balance.
"Next year will be tough, when most of the consolidation
will be done...a low deficit is a necessary precondition for a
healthy economy," said Finance Minister Ivan Miklos.
"Next year, Slovakia will have to borrow 8 billion euros. We
had to prepare a budget that will convince investors.. so we can
borrow cheaply," he said.
The budget expects economic growth to slow to 3.3 percent
from 4 percent expected this year.
The cabinet introduced a 1.75 billion euro austerity package
in September aimed at cutting spending and boosting budget
revenue and unions plan a protest against the savings next week.
Slovakia's debt jumped to 43.8 percent of gross domestic
product this year from 27.7 percent at the end of 2008 and the
government expects it to peak at 47.3 percent in 2012, a figure
roughly around half the European average.
APPROVAL
Prime Minister Iveta Radicova's cabinet holds a narrow
majority in parliament but looks set to comfortably win support
for its budget proposal.
The euro zone's poorest member pledged to cut its fiscal gap
to below the EU's official cap of 3 percent of GDP by 2013 and
seeks to reach a balanced budget in the mid-term.
The approved budget draft carries significant risks related
to the global economy recovery, the impact of Slovakia's
austerity measures and fiscal discipline from local authorities.
The neighbouring Czech Republic approved its 2011 budget
last month with a 4.6 percent fiscal deficit ceiling, while
Poland has planned its gap at 5.9 percent in 2011 according to
EU methodology, although it has since pointed to substantial
slippage in its planned consolidation this year.
Alongside approving the budget, Slovakia opened the books
for a 2 billion euro eurobond on Wednesday, and demand reached
more than 4 billion by mid-day, the country's debt agency said.
Miklos said the expected pricing at 150 basis points above
mid-swaps would be a success and a vote of confidence in the
Slovak fiscal plans.
(Reporting by Jason Hovet and Jan Lopatka via Prague newsroom;
editing by Patrick Graham)
