Page 71 - CE Outlook Regions 2022

The medium-term plan foresees additional structural consolidation in
2023, which will be partially offset by the use of grants from the RRF,
which could amount up to €6.3bn (6.3% of annual GDP) in total over
the period 2021-2026. The 2023 and 2024 targets of consolidation
policy presented by the government (-2.7% and -2.6% of GDP,
respectively) envisage a structural consolidation at 1 percentage
point of GDP each year.

According to Erste Group, in 2020 the fiscal deficit of Slovakia
reached 5.5%, with the debt-to-GDP ratio slightly below 60%, while
for 2021 the Slovak finance ministry expects an increased
government deficit at 7.9% of GDP, triggered by additional
COVID-19 related expenditures.

In 2021, the EC projects the Slovak government debt-to-GDP ratio
to amount to 61.8%, before gradually going down to 59.1% by 2023,
mainly due to moderating primary budget deficits, strong nominal
GDP growth and persistently low interest rates. The draft budget
assumes that the expected debt level of 2021 will be maintained in
2022, followed by a decline below 59% of GDP in the following two
years.

The Slovak government approved the draft state budget for 2022
with a deficit at 4.94% of GDP. According to the government
estimate, the state budget deficit is expected to stand at 8% of GDP
in 2021. For 2022-2024, the Slovak government forecasts a draft
general government budget to reach a deficit equalling 7.9% of GDP,
influenced by uncertainty due to the ongoing pandemic and its
impacts on macroeconomic development.

The NBS analysts forecast the 2022 general deficit to reach 4.1% of
GDP, down by 0.8 percentage points compared to the government
proposal. The central bank does not expect full use of unspecified
expenditures and expects a more moderate growth in capital
expenditures.

According to Slovak debt and liquidity management agency Ardal,
Slovakia's gross funding needs should reach €6bn in 2022. Ardal
plans to open one or two new government bond lines in 2022,
including a bond line with an issue size of €3bn or €5bn and with
medium-term maturity, and a bond with issue size of €5bn and with
long-term maturity, via syndication and/or auction. The total
expected amount to be sold is €2bn-€3bn.

As Ardal´s schedule shows, the agency plans to conduct bond
auctions once per month (January to June, September to November,
with no auctions envisaged in July, August and December), with two
to four bonds to be sold simultaneously.

71 CE Outlook 2022 www.intellinews.com