* 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 on Wednesday the 2011 state budget draft,
aiming for the largest budget consolidation among the European
Union's ex-communist east.
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 periphery country's consolidation plan is much
more ambitious than deficit cuts planned by other central
European countries, 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.
He said the consolidation amounted to 2.5 percentage points,
excluding a half-a-point contribution of economic growth
predicted to slow down 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.
Slovak unions plan a protest against the savings next week,
part of a wider discontent by European unions with budget cuts
across the continent.
Slovakia's debt has jumped during the economic slowdown to
43.8 percent of gross domestic product this year from 27.7
percent at the end of 2008. The government expects it to peak at
47.3 percent in 2012, a figure roughly around half the European
average.
Prime Minister Iveta Radicova's cabinet holds a narrow
majority in the 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 European Union'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, impacts of Slovakia's austerity
measures and fiscal discipline of local authorities.
The neighbouring Czech Republic approved its 2011 budget
last month with a 4.6 percent fiscal deficit ceiling, while
Poland's gap should stand at 5.0 percent in 2011 according to
Polish accounting methodology.
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)
