RRZ: Non-compliance with Debt Brake Sanctions Keeps Debt Growing

Bratislava, 1 September (TASR) - The main objective of fiscal responsibility, namely achieving sustainable public finances, was not met in 2024, the Council for Budget Responsibility (RRZ) stated in its Report on Compliance with the Fiscal Responsibility and Fiscal Transparency Rules for 2024. The RRZ pointed to the fact that, despite high levels of public debt, the sanctions imposed by law are often complied with only formally, leaving their purpose unfulfilled. This could also be considered a violation of the law, according to the RRZ. Under the no-policy-change scenario, the long-term sustainability indicator reached 4.1 percent of the gross domestic product (GDP), thus placing public finances in the medium-risk zone. Seeing visible progress compared to 2023 following the adoption of several measures by the government and parliament, the sustainability indicator improved 2.1 percentage points year-on-year. However, taking into account the medium-term development of public finances expected by the RRZ, as well as the measures adopted in 2025, long-term sustainability would worsen by 0.5 percent of GDP compared with the situation estimated at the end of 2024. Given the persistently poor condition of public finances, the RRZ calls on the government to present more ambitious and permanent measures to improve long-term sustainability as soon as possible. "As declared by the government, its goal is to reduce the deficit to 3.5 percent of GDP by the next general election. This would require measures worth €2.9 billion, or 2 percent of GDP," warned the analysts, adding that if the existing consolidation packages are fully implemented and no new expenditure-increasing measures are introduced, fiscal targets could almost be met by 2027. However, they said, this would still not be enough to halt debt growth which would require curbing the deficits down to 2.5 percent of GDP and less. According to the RRZ, the government and parliament failed to ensure adequate protection of long-term sustainability, in particular due to the absence of effective expenditure ceilings and by adopting a purely formal approach to complying with the debt brake sanctions. jrg/mcs