Slovakia has largely exhausted the financial buffer that helped it respond to previous crises and could face much more painful choices when the next downturn comes, the country’s independent budget watchdog has warned.
Public debt reached 61.4% of GDP in 2025, well above the level of less than 50% that the Council for Budget Responsibility (RRZ) considers safe for an economy such as Slovakia’s.
Without further measures to repair the public finances, debt could approach 75% of GDP until the end of the decade, the RRZ says in its latest analysis of Slovakia’s fiscal room.
“That fiscal space has been exhausted does not mean the country will go bankrupt tomorrow,” the council said. “It does mean, however, that we will have to deal with any potential risk in a much more painful way.”
News site Aktuality.sk, reporting on the analysis, highlighted how the consequences of high state debt could ultimately reach ordinary households.
A heavily indebted government has less room to respond to a recession by increasing benefits, helping businesses or otherwise supporting the economy. It may instead have to raise taxes or cut spending during the crisis itself.
Higher government borrowing costs can also feed through into more expensive mortgages and other loans, while the RRZ says highly indebted economies tend to suffer deeper downturns and slower recoveries.
In an extreme scenario, Slovakia could struggle to finance itself at acceptable rates and require external assistance.
That could mean “a significant impact on the population’s standard of living” and a de facto loss of Slovakia’s fiscal sovereignty, the watchdog warned.
The RRZ says Slovakia’s problem was not caused by crises alone. Governments also failed to rebuild sufficient fiscal reserves during better economic periods after those shocks had passed.
The watchdog says the immediate priority should be to stop debt rising further. That would require bringing the deficit towards 2.5% of GDP over the medium term, followed by further efforts to rebuild a fiscal buffer when economic conditions allow.
It also wants Slovakia to adopt a more systematic approach to fiscal risks, including monitoring potential problems involving state-owned companies and other liabilities and preparing mechanisms that could be activated quickly when another crisis strikes.
The Finance Ministry, together with the International Monetary Fund, is already preparing a framework for monitoring and managing fiscal risks, according to the RRZ. (The Slovak Spectator)