The Slovenia Times

General Government Deficit at 5.5% of GDP in H1

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The cost of financial crisis excluded, the general government deficit in the first half of 2014 would have been practically level year-on-year, Andrej Flajs of the office's national accounts division told the press.

In the first half of 2013, the state spent EUR 443m or 2.5% of GDP on bank recapitalisation. This figure excluded, the general government deficit in the period would have stood at EUR 5.7% of the country's GDP, only EUR 5m more than in the first half of this year.

The Statistics Office has also updated the figures on the general government deficit in the 2010-2013 period, upgrading the 2013 deficit by 0.2 percentage points to 14.6% of GDP and downgrading the 2012 deficit by 0.2 points to 3.7% of GDP.

The figure for 2013 includes the December bank bailout in the total amount of EUR 3.633bn, as well as payments of pay rises for public servants and compensation to the erased. These costs excluded, the deficit stood at EUR 1.402bn or 3.9% of GDP, Flajs said.

He expects that the general government deficit will stand at EUR 1.649bn or 4.5% of GDP at the end of the year, with recapitalisation of banks contributing 0.9 percentage points.

The consolidated general government debt stood at EUR 77.9% of GDP at the end of June, and is expected to increase to 82.2% to EUR 30.339bn by the end of the year.

Fajs said the biggest problem for public finances at this point was the surge in investment spending, a trend driven by EU funding. "This investment dynamics must be stopped," he said.

He deems the current investment levels dangerous in particular if the solid export growth stalls, as it would immediately put huge pressure on the public finances.

EU funding is positive but investment spending above 5% of GDP would be "very dangerous", he said.

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