Monday, October 1, 2007

Slovak 2009 Euro Adoption in Doubts

The planned public finance deficit of 2.94% of GDP this year, which just barely meets the 3.0% Maastricht criterion for euro adoption, might increase by 0.2-0.3 pp as Eurostat suggested including the national highway company and public media into the public finance balance sheet. The Ministry of Finance said these amounts are still manageable in the light of keeping the deficit under 3.0% in 2007, since the state revenues and expenditures after nine months suggest an actual deficit of about 2.7% of GDP by the end of the year. However, health care, railways and public-private partnership (PPP) projects in highway construction remain a potential danger if included into the official public finance numbers. A final say by the Eurostat on the deficit accounting is expected soon. A survey among analysts on the probability of euro adoption reflected the arisen worries and fell by 7 pp to its lowest level since December last year (from 77% in August to 70% in September).

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