Page 27 - Central & Southeast Outlook 2020

The state budget revenues were reduced due to the omission of a levy on the profits of state-run forestry company Lesy SR at €5mn and an increase in expenditures of the labour ministry by €80.5mn due to the growth in minimum pensions.
The European Commission accepted Slovakia’s state budget draft for 2020, however, it did not fully comply with EU requirements. This was due to the economic slowdown, the deteriorating external environment and several pieces of pre-election legislation.
The Commission identified certain risks of deviation for eight eurozone countries, including Slovakia, when assessing the structural balance as well as the expenditure rule. Slovakia’s general government deficit is expected to rise to 1.2% of GDP in 2020 due to the introduction of government fiscal measures reducing the tax burden and the introduction of minimum pensions.
The general government debt-to-GDP ratio is forecast to keep decreasing, as a result of the pace of nominal economic growth. It is projected to amount to 47.3% in 2020, going down to 46.9% in 2021. The fiscal stance is expected to be neutral in 2020 and 2021.
In 2019 Slovak Finance Minister Ladislav Kamenicky introduced the special bank levy which should increase from 0.2% to 0.4% of the value of banks' liabilities in 2020, and drop back to 0.2% in 2021. The banks are expected to pay an additional €144mn in 2020.
4.0​ ​Debt
4.1 ​Debt - Czech Republic
According to the Ministry of Finance, the government bonds saw an increase in yields in the last few months of 2019.​In 3Q19 the ministry issued and sold medium-term and long-term government bonds with a total nominal value of CZK35.5bn (€1.4bn), down compared to 1H19. In 9M19, sold medium-term and long-term government bonds denominated in Czech crown amounted to a total nominal value of CZK217.3bn with an average residual time to maturity of 11.2 years and average yield to maturity of 1.89% p.a, accounting for almost 87% of CZK-denominated redemptions of state debt to be covered in 2019.
In 2019, the international ratings agency Moody upgraded its rating for the Czech Republic from A1 with a positive outlook to Aa3 with a stable outlook for long-term liabilities, for the first time in 17 years, which was
27​ CESE Outlook 2020​ ​ ​www.intellinews.com