Slovakia deficit cut realistic despite downgrade: minister

(BRATISLAVA) - Slovakia's Finance Minister Ivan Miklos said Tuesday that cutting the public deficit to less than 3.0 percent of GDP in 2013 was realistic, despite warnings from ratings agency Moody's.

"I think that cutting deficit to under 3.0 percent of GDP next year is realistic," Miklos told journalists in Bratislava.

"The new government will have to cut the deficit from 4.6 percent this year to 2.9 percent next year," he said.

European Union rules require the bloc's members to keep their public deficits -- the shortfall between state spending and revenue -- below 3.0 percent of gross domestic product.

Few nations in the 27-member EU have actually respect the rule, notably during the economic crisis, but Brussels and the markets are pushing nations to show they are trying to fall into line.

Moody's on Monday cut Slovakia's rating by one notch to A2 and changed its outlook to negative, citing the country's exposure to weakening external demand, the key engine for its exports-based economy.

It also said a recent collapse of the centre-right government led by Prime Minister Iveta Radicova will challenge the country's fiscal consolidation targets.

Slovakia holds a snap election next month.

Slovakia's outgoing government originally planned to cut the public finance deficit from 4.6 percent in 2011 to 3.9 percent this year but the collapse of the government in October slowed down the austerity drive.

The finance ministry said earlier it expected the public deficit to reach 4.6 percent as economic growth slows to 1.1 percent in 2012.

An ex-communist economy of 5.4 million which joined the EU in 2004 and the eurozone in 2009, Slovakia posted 4.0-percent growth for 2010.

That performance came in the wake of a 4.8-percent contraction in 2009 during the global crisis.

Moody's also chopped the debt ratings of Italy, Spain, Portugal, Slovenia and Malta and put France, Britain and Austria on warning.