Slovakia’s state vault has seen better days.
As of now, the deficit for the 2027 budget is set at 4.9 percent, which is higher than the EU limits (which is 3 percent). It’s also the biggest deficit in the last three years. Gross public debt will rise to 66.3 percent of the GDP.
Officially blamed on an “unfavourable macroeconomic environment” that “squeezed Slovakia’s industry-heavy economy”, the new budget is more like a mirror to the shortcomings of the current government.
The government of Robert Fico has excellent plans to save the day: it is determined to reduce the gap to 4.5 percent and then to 4 percent in the following two years. In light of the track record of the previous years, it’s more a dream than a solid plan, though.
The problem is – reality.
Given the upcoming election year, the government wants to spend more on social affairs, healthcare, education, and transportation projects. It also plans to create more than 4000 new jobs in public administration. The new budget doesn’t include any raises in taxes – a novelty compared to the past three, or as the prime minister himself put it, “the budget of good news”.
At the same time, since 2023, Bratislava rolled out three consolidation packages that raised taxes, yet didn’t produce the intended results. The population paid the burden, but this far, the government couldn’t rein in public finances.
According to the European Commission’s findings, economic growth remains weak (further burdened by global uncertainty and trade tensions) and competitiveness is weakening. This is also reflected in decreased inflows of foreign direct investment.
Probably in fear of a widespread backlash, the government rushed forth with the budget – it got accepted without any meaningful debate on fiscal priorities or on measures that could stimulate economic growth. Many employers and trade unions rejected the draft simply because they had no time to review it: social partners received the document on October 4 – and the cabinet approved it on October 5. The same criticism was worded by the Supreme Audit Office and the Council for Budget Responsibility, Slovakia’s independent financial watchdog.
The latter also expressed its doubts about the constitutionality of the budget: with failing to meet the requirement of stabilizing public debt, the government’s plan weakens the long-term sustainability of public finances. Because at this point, Slovakia is (should be) in the toughest state of its constitutional debt-brake regime, which would normally require a balanced budget, not one with rising public debt.
Even with the questionable procedure – the budget barely passed in parliament (76 votes out of 150). Opposition lawmakers didn’t even register for the vote in protest.
There is a reason behind the urgency, of course. The government’s support in parliament fading away – it was a now or never chance to get it done.
And if it is good news, then, after three years of consolidation – the government could show a minimal progress (no new taxes).
Alas, not much else as the deficit is close to where it started. Voters might question whether it was worth it.
