A Novel Way of Keeping Fiscal Deficits Under Control?

Having inherited an 8 percent budget deficit from the previous socialist government, the new conservative‐​liberal government of Slovakia has come up with a novel way of keeping budget deficits under control in the future. Starting in 2011, salaries of government ministers will rise and fall depending on the evolution of the fiscus. Thus, a budget deficit of 5 percent will translate to a 10 percent decrease in salaries, while an (unlikely) budget surplus of 5 percent will translate into a 10 percent rise in salaries, etc. It will be interesting to see if this new measure will truly result in a more responsible fiscal policy in the years to come.


Incidentally, had the United States adopted a similar measure, President Obama’s reported salary of $400,000 in 2009 would have fallen to $320,000 in 2010.