Favourable economic development and its impacts on the public budget pave the way for the quicker reduction of the debt-to-GDP ratio, with the debt expected to drop below the penalty range as early as this year already, according to the latest report drafted by the Council for Budgetary Responsibility (RRZ). Next year, the Government expects the debt to scrunch down to 46.5 percent of GDP, meaning that it would reach the lower limit of the penalty range for the first time since 2012. The penalty was introduced into constitutional law in order to limit the public debt. The Council, which is an independent body, believes, however, that the Government can meet the target even sooner.
Slovakia's debt stood at 50.9 percent of GDP late last year which is at the first penalty level under the constitutional legislation, designed to limit public debt. The debt has been in penalty range since 2012, with the Government introducing measures to reduce it every year. The Council also pointed out that the Finance Ministry has yet failed to institute binding expenditure caps that that the Council has been promoting. The expenditure limits could lead to quicker reduction of budgetary deficit in times of economic growth and, conversely, create leeway for fiscal expansion during an economic slowdown or recession.
