Review Hari Stefanatos
The government deficit in Slovenia was in the region of 5.5% of GDP at the end of the third quarter of 2013, which represented one point increase compared to the previous year. However, the recent bank bailout is expected to cause it to surge by about another 10%, according to figures released on Monday by the Statistics Office.
The €3.2 billion recent bailout brings up the total bank recapitalization to €3.6 billion, which according to the Head of Accounts, Andrej Flajs: “we’re talking about a deficit of about 10.3% of GDP attributable to bank recapitalisation”.
According to Flajs, Slovenia’s gross dept is expected to increase accordingly, surging by at least 10% from the 62.6% of GDP that was at the end of the third quarter.
Despite the increase, Flajs believes that it was important for the bulk of the bank recapitalization to take place in 2013 in order to take some of the burden from the 2014 budget.
The other factor that contributes to the problem, according to Flajs, is the widening of the deficit of the public pension insurance, which reached 7.1% in the first three quarters of 2013. The deficit was 4% in 2008 and increased to 6% in 2012.
This steep increase in 2013 is attributed to the “robust austerity” and the resulting decline in pension contributions.