Slovak PM launches re-election drive with tax cuts, wage hikes

By Tatiana Jancarikova BRATISLAVA (Reuters) - Slovakia's centre-left Prime Minister Robert Fico unveiled a plan on Saturday to raise the minimum wage and cut the sales tax on groceries, launching a drive for re-election next March for a third term at the euro zone country's helm. Fico's Smer party has ruled alone since winning an absolute majority in 2012, something it is not expected to repeat in part due to allegations of favouritism towards selected businessmen -- something Fico denies. But opinion polls show the combative 50-year old remains the favourite to lead any future coalition. Prime minister in 2006-2010 and again since 2012, Fico aims to take advantage of economic recovery to cement his popularity by hiking maternity benefits, building kindergartens and giving coupons to poor families for holidays at state-owned hotels. Fico said his measures, including a cut in the tax on food to 10 percent from 20 percent and a rise in the minimum wage to close to 400 euros ($441) per month from 380 euros, would cost 200 million euros, but would not raise the budget deficit. "If the country's economy is doing well, the government has to share with the people. Low deficit and debt are not tangible for them," Fico told reporters at his party's Saturday congress. The economy is expected to grow about 3 percent this year. Having allowed deficits to rise in the global financial crisis, the government has since cut the gap to under 3 percent of gross domestic product (GDP). Debt has remained below 60 percent of GDP, below the euro zone average. But some analysts say Fico missed a chance to use his strong standing to revamp education and healthcare, which could hurt the economy in the long term. "Fico did not use his comfortable position of ruling alone, not having to hassle with a coalition partner, to make unpopular but vital reforms," said political analyst Marian Lesko. While avoiding any big clashes with EU partners, Fico has joined Hungarian Prime Minister Viktor Orban in criticising sanctions imposed on Russia by the EU for its involvement in Ukraine's conflict. He has also been tough on foreign investors, pushing for more government control over strategic industries. The government tightened its grip of the gas sector and has forced Enel to rethink its planned sale of a 66 percent stake in the country's main electricity utility to another private firm. The government may take a majority stake instead. Fico suffered a rare defeat last year when he lost a presidential bid to non-partisan Andrej Kiska, but he still controls most levers of power. A poll by the Focus agency in May put support for Smer at 33 percent, from 44 percent in the last election. Possible coalition partners are the conservative Christian Democrats or a nationalist party, two among seven small opposition parties that may make it to parliament. ($1 = 0.9079 euros) (Editing by Mark Potter)