2008/562/EC: Council Decision of 3 June 2008 abrogating Decision 2005/182/EC on the existence of an excessive deficit in Slovakia
Date: 2008-06-03
Institutions: Council of the European Union
Subjects: Slovakia, budget deficit, public finance, stability programme

10.7.2008

EN

Official Journal of the European Union

L 181/43

COUNCIL DECISION

of 3 June 2008

abrogating Decision 2005/182/EC on the existence of an excessive deficit in Slovakia

(2008/562/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty
Community, and in particular Article 104(12) thereof,

establishing the European

Having regard to the recommendation from the Commission,

Whereas:

accordance with Article 4 of Council Regulation (EC) No
3605/93 of 22 November 1993 on the application of
the Protocol on the excessive deficit procedure annexed
to the Treaty establishing the European Community (3).

(5)

Based on data provided by the Commission (Eurostat) in
accordance with Article 8g(1) of Regulation (EC) No
3605/93 following the notification by Slovakia before
1 April 2008 and on the Commission services' spring
2008 forecast, the following conclusions are warranted:

(1)

(2)

(3)

(4)

By Council Decision 2005/182/EC (1), following a recom-
mendation from the Commission in accordance with
it was decided that an
Article 104(6) of
excessive deficit existed in Slovakia. The Council noted
that the general government deficit was 3,6 % of GDP in
2003, above the 3 % of GDP Treaty reference value.

the Treaty,

On 5 July 2004, in accordance with Article 104(7) of the
Treaty and Article 3(4) of Council Regulation (EC) No
1467/97 of 7 July 1997 on speeding up and clarifying
the implementation of the excessive deficit procedure (2),
the Council made, based on a recommendation from the
Commission, a recommendation addressed to Slovakia
with a view to bringing the excessive deficit situation
to an end by 2007 at the latest. The recommendation
was made public.

In accordance with Article 104(12) of
the Treaty, a
Council Decision on the existence of an excessive
deficit is to be abrogated when the excessive deficit in
the Member State concerned has,
in the view of the
Council, been corrected.

the data

In accordance with the Protocol on the excessive deficit
the Commission
procedure annexed to the Treaty,
provides
the
the
procedure. As part of the application of the Protocol,
Member States are to notify data on government
deficits and debt and other associated variables twice a
in
year, namely before 1 April and before 1 October,

implementation of

for

— due to data revisions after the 2004 Council Decision
on the existence of an excessive deficit, the general
government deficit remained below 3 % of GDP in
the years 2003-2005. After increasing to 3,6 % of
GDP in 2006 it was reduced to 2,2 % of GDP in
2007, which is below the 3 % of GDP deficit
reference value. This compares with a target of
2,9 % of GDP set in the December 2006 update of
the convergence programme,

as

and

such

faster

growth

upswing

dividends

expenditure

— the fiscal consolidation has benefited from buoyant
GDP, employment and revenue growth, allowing the
expenditure-to-GDP ratio to fall
than the
revenue-to-GDP ratio. The falling expenditure-to-
GDP ratio was also induced by expenditure restraint
substantial
and
reforms
the
restrictions on social benefits. Nevertheless,
cyclical
from
structural reforms were not fully exploited for fiscal
consolidation. As a result, the structural deficit (i.e.
the cyclically adjusted balance net of one-off and
other temporary measures) is estimated to have dete-
riorated from some 1½ % of GDP in 2003 to around
3 % of GDP in 2006 before improving to around
the
2½ % of GDP by 2007. However, part of
structural deterioration can be attributed to the intro-
duction of the second funded pension pillar in 2005
with transfers
estimated to have
increased from 0,8 % of GDP in 2005 to 1,2 % and
In
1,3 % of GDP in 2006 and 2007 respectively.
addition,
increases in taxes on cigarettes preceded
by sizeable pre-stocking with cigarettes at various
stages of the distribution chain led to sizeable shifts
in tax revenue resulting in extra tax revenue in 2003,
2005 and 2007 followed by equivalent
revenue
shortfalls in the subsequent years,

to this pillar

(1) OJ L 62, 9.3.2005, p. 16.
(2) OJ L 209, 2.8.1997, p. 6. Regulation as amended by Regulation (EC)

No 1056/2005 (OJ L 174, 7.7.2005, p. 5).

(3) OJ L 332, 31.12.1993, p. 7. Regulation as last amended by Regu-

lation (EC) No 2103/2005 (OJ L 337, 22.12.2005, p. 1).

L 181/44

EN

Official Journal of the European Union

10.7.2008

— for 2008,

and

strong

the Commission services' spring 2008
forecast projects the headline deficit to be reduced
to 2,0 % of GDP, driven mainly by
further,
continued
some
growth prospects
revenue-increasing measures such as a broadening
of the corporate and personal income tax base and
an increase in the maximum ceiling on social contri-
butions. This is in line with the official deficit target
of 2,0 % of GDP set in February 2008. For 2009, the
spring forecast projects, on a no-policy change basis,
an increase in the deficit
to 2,3 % of GDP. This
indicates that
the deficit has been brought below
the 3 % of GDP reference value in a credible and
sustainable manner,

(6)

in
In the view of
Slovakia has been corrected and Decision 2005/182/EC
should therefore be abrogated,

the excessive deficit

the Council,

HAS ADOPTED THIS DECISION:

Article 1

From an overall assessment it follows that the excessive deficit
situation in Slovakia has been corrected.

— nevertheless,

the structural balance is projected to
deteriorate by some one quarter of a percentage
point of GDP in 2008 and, on a no-policy change
basis, by around one quarter of a percentage point in
2009. This has to be seen against the need to make
progress towards the medium-term objective (MTO)
for the budgetary position, which for Slovakia is a
structural deficit of just below 1 % of GDP,

— government debt remains well below the 60 % of
It declined from 42,4 % of
GDP reference value.
GDP in 2003 to 29,4 % in 2007. According to the
spring 2008 forecast, the debt ratio is projected to
remain broadly stable over the forecast horizon (on a
no-policy change basis).

Article 2

Decision 2005/182/EC is hereby abrogated.

Article 3

This Decision is addressed to the Slovak Republic.

Done at Luxembourg, 3 June 2008.

For the Council
The President

A. BAJUK