Slovak tax revenue will fall short of the 2013 target as economic growth slows more than predicted, making it harder for the eastern euro-area member to cut budget deficit, the Finance Ministry said.
The government will probably collect 361 million euros ($484 million) less than planned in taxes, representing 0.5 percent of gross domestic product, the ministry said in an e-mail from Bratislava. The shortfall is projected to widen to 0.9 percent in 2014 and to 1.3 percent a year after that.
The calculations are based on the last month’s revision of economic growth, which will probably reach 1.2 percent this year compared with previously forecast 2.1 percent. Hit by the slowing demand for exports from the west, the Slovak economy is failing to create jobs, reducing proceeds from income tax and boosting state spending on welfare.
“It’s a complication,” Finance Minister Peter Kazimir told journalists today. “Our ambition remains to meet the commitment to keep” the budget “limit.”
The administration of Prime Minister Robert Fico is striving to cut the budget gap to 2.9 percent of GDP as early as this year to differentiate itself from the troubled members of the euro area, which the eastern country joined in 2009.
The ministry will take additional measures to meet the 2013 budget plan, which Moody’s Investors Service on Jan. 9 called “challenging.”
Defections to public pensions from the private system will cut state welfare subsidies by 250 million euros, Kazimir said. The remaining 111 million euros of the revenue shortfall will be offset by a spending freeze and higher dividends from state-controlled companies, he said.