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Slovakia Adopts Debt-Ceiling Bill as EU Leaders Meet on Rules

8. December, 2011

In the result of debt crisis which started last year and spread to several euro-area members, Slovak lawmakers approved a constitutional bill imposing a cap on state debt.

The bill assumes tougher sanctions and has the purpose of strengthening public finances amid a lingering debt crisis in the region.

All except one of the 147 lawmakers present in Bratislava, backed the bill, which would trigger an automatic freeze in spending and other sanctions if the state debt approaches the limit of 60 percent of GDP. The ceiling is set to decline gradually to 50 percent of GDP. Should debt limit exceed 57 percent of GDP, the government must prepare a balanced budget, while crossing the limit would result in a confidence motion against the government. It will be possible to avoid penalties in case of a significant recession, a banking-industry bailout and a natural disaster.