Slovakia’s state budget deficit widened significantly in the first two months of 2026, as government spending continued to outpace revenues, according to the latest fiscal data.
As of the end of February, the state budget recorded a deficit of EUR 1.44 billion, almost four times higher than the EUR 346-million shortfall recorded in January.
The gap is also considerably larger than in the same period a year earlier. In the first two months of 2025, the deficit reached EUR 782 million, meaning the current deficit is nearly double last year’s level.
The development follows weaker-than-expected tax collection in 2025. According to available figures, tax revenues last year fell EUR 1.8 billion short of the Finance Ministry’s projections in the state budget.
The ministry’s budget plan for 2026 expects the annual deficit to reach EUR 5.13 billion. After just two months, the current shortfall already represents around 28% of the planned deficit for the entire year. At the same point in 2025, the deficit accounted for about 12% of the annual target.
Government expenditure has grown faster than revenues at the start of the year.
In January and February, state spending totalled EUR 5.2 billion, representing almost 16% of the full-year spending plan.
During the same period, revenues reached EUR 3.7 billion, equivalent to 13.4% of the annual target.
Current expenditure – which includes wages for public sector employees, social benefits and pensions – increased by more than 11% YoY in the first two months of 2026. In absolute terms, this represented an increase of around EUR 500 million compared with the same period last year.
Tax revenues remain the largest source of income for the state, accounting for about 83% of total revenues, while current expenditure represents almost 90% of total spending.
In the first two months of the year, tax revenues reached EUR 3.3 billion, while current expenditure totalled EUR 4.9 billion, leaving a gap of EUR 1.6 billion between the two.
The government’s budget for 2026 assumes that total tax revenues will reach EUR 22.9 billion, about EUR 500 million more than in 2025.
However, early data suggest weaker tax collection in several categories.
In the first two months of 2026, the state collected EUR 1.9 billion in value-added tax (VAT), representing a 6.5% YoY decline.
The comparison reflects the fact that the standard VAT rate remained at 23% in both 2025 and 2026.
Lower VAT receipts may be linked to weaker consumer spending or tax evasion, which the National Bank of Slovakia warned about last year.
Recent retail data point to reduced household consumption.
Retail turnover in Slovakia fell by 3.7% YoY in January, according to the Statistics Office. Retail sales have now declined for three consecutive months.
“Households tend to cut spending first on goods that are not essential,” said Lubomir Korsnak, an analyst at UniCredit Bank.
“While food sales more or less stagnated in January, non-food sales declined,” he added.
The largest drop was recorded in online and mail-order sales, where revenues fell by almost 11%.
Sales in drugstores, pharmacies, clothing and footwear shops declined by around 4%, while sales of household goods such as electronics, furniture and DIY products fell by nearly 9%.
Corporate income tax collection has also declined slightly.
The state budget assumes that revenues from corporate income tax will reach EUR 5.2 billion in 2026, about EUR 200 million more than last year.
However, during the first two months of the year, corporate tax revenues reached EUR 565 million, about EUR 35 million less than in the same period of 2025.
At the same time, revenues linked to labour taxation have increased.
From January, health insurance contributions paid by employees rose by 1%, from 4% to 5%. The minimum wage also increased to EUR 915, raising associated tax and contribution payments. Contributions paid by self-employed workers also increased.
As a result, the state collected EUR 821 million in taxes and contributions from employees and self-employed workers in the first two months of the year, compared with just over EUR 700 million in the same period last year.
Excise taxes, insurance tax and motor vehicle tax also increased by EUR 19 million.
According to the latest forecast from the Council for Budget Responsibility (RRZ), Slovakia’s general government deficit could reach 4.5% of GDP in 2026, equivalent to roughly EUR 6.4 billion.
Compared with the council’s January estimate, the projected deficit has worsened by EUR 186 million.
The council said the forecast assumed no additional measures from the government. Under this scenario, the deviation from the approved budget would reach 0.4% of GDP, or EUR 565 million. (The Slovak Spectator)