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General Government's Deficit Reaches 5.5% of GDP in 2009

Ljubljana, 31 March (STA) - Slovenia's general government deficit nearly trebled in 2009 to EUR 1.9bn or 5.5% of GDP. $This was perhaps the most difficult year, not only for the economy but also for public finances,$ Andrej Flajs of the Statistics Office said Wednesday.

But the figure is relatively favourable, as projections in September put the end-year figure at EUR 2.1bn or 6.1% of GDP. Slovenia is now projected to hit the EUR 2.1bn-mark in 2010, according to Flajs.

The fiscal picture started to deteriorate in the first half of 2008, but deficit started soaring in early 2009 as tax revenue in particular slowed down while spending remained level.

Moreover, in the last quarter of 2009 revenues from social security contributions dropped year-on-year for the first time as unemployment rose and companies refrained from paying Christmas bonuses, said Flajs.

But at the same time the situation started to improve in the second half of last year as government spending slowed down. "In the first half government spending was still too high and had not been adjusted to the crisis," said Flajs.

The rising deficit was coupled with soaring debt, which increased from 22.6% of GDP in 2008 to 35.9% (EUR 12.5bn) as the government borrowed an additional EUR 4.1bn. "The state took on too much debt," said Flajs.

This year debt is projected to increase to 39.8% of GDP.

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