Slovakia’s government has spent recent weeks promoting the idea that its public finances are on a sharp path to improvement. Yet new figures from the European Commission paint a picture that is far less flattering than the one presented in Bratislava.
The Commission expects Slovakia to post a 4.6% deficit next year – significantly above the goal set by the Finance Ministry. Instead of leading the eurozone in fiscal repair, Slovakia would remain among the worst performers in the EU, according to the forecast.
Brussels’ assessment diverges from the government’s because it applies its own economic assumptions, evaluates the likely effects of policy measures independently, and revises revenue expectations using its own modelling. These adjustments tend to shrink the optimism found in national budgets.
Major rating agencies also take a less upbeat view: both Fitch and S&P Global anticipate a deficit of around 4.5% of GDP, suggesting broad international alignment behind the Commission’s outlook.
Finance Minister Ladislav Kamenicky recently argued online that Slovakia was reducing its deficit more dramatically than any of its eurozone peers. His claim was based on the ministry’s own projections, which show a steep drop from this year’s levels.
However, using the Commission’s numbers, the planned improvement becomes one of the more modest consolidations in the currency bloc. Several countries – including France – are expected to undertake sharper fiscal adjustments.
Economists also note that Slovakia is attempting consolidation from a much higher level of imbalance than most of its neighbours.
“Others don’t need to cut as much because they weren’t running such large deficits to begin with,” says Michal Lehuta of VUB.
Public debt, meanwhile, continues to increase. The Commission expects debt to approach 67% of GDP until 2027, rising from roughly 62% this year – and exceeding the government’s own medium-term targets.
The domestic Council for Budget Responsibility warns of an even steeper trajectory without further action. In its latest scenario, debt could reach about 75% of GDP until 2030 if consolidation efforts stall.
To reverse the trend, the government would need to push the deficit towards 2.4% of GDP until 2028, a move that would severely limit its ability to fund services and investments through borrowing. Higher interest costs will compound the pressure: by the end of the decade, Slovakia would need to run an almost balanced primary budget just to keep debt from rising further.
Even under scenarios where debt eventually plateaus, it would remain well above today’s level. Fiscal experts argue that Slovakia should not settle for stability alone. As a small, trade-dependent economy, it is more vulnerable to global downturns than larger EU states, and therefore benefits from maintaining a lower debt load.
A leaner debt profile, they say, would also create space to absorb looming demographic costs, particularly those linked to an ageing population. (The Slovak Spectator)