RRZ Expects Deficit to Exceed 5 percent of GDP Again Next Year

Bratislava, 13 February (TASR) - Without additional measures, the general government deficit will rise from this year's 4.5 percent of gross domestic product (GDP) to 5.3 percent next year and to as much as 6 percent by 2029, according to an updated medium-term fiscal forecast published by the Budgetary Responsibility Council (RRZ) on Friday. The forecast reflects the existing state of legislation while using the latest macroeconomic forecast under a no-policy-change scenario. "Without further consolidation, deficits will remain at unsustainably high levels, causing the public debt to grow at an accelerated rate," warned RRZ, adding that the gross debt would rise to 75 percent of GDP by 2029, exceeding the upper debt brake limit by as much as 25 percentage points. Significant consolidation measures will be needed in order to achieve the government's targets under the approved 2026-28 general government budget, said RRZ. "For the current year alone, the negative deviation from the government's budgetary target is at 0.4 percent of GDP, or €535 million," added RRZ, while also quantifying the need for additional measures worth €2.7 billion (1.8 percent of GDP) in 2027 and, for 2028, at an additional €1.4 billion (0.9 percent of GDP). The deficit is expected to deteriorate further due to an increase in debt servicing costs, by 0.2 percent of GDP annually in the period between 2027 and 2029. Next year, defence spending will increase the deficit by 0.4 percent of GDP, and the costs associated with long-term care reform by a further 0.2 percent of GDP. Unless the government adopts additional consolidation measures, Slovakia's gross debt could rise to 67.8 percent of GDP next year, hitting 75 percent by the end of the forecast period. This would be a significant increase compared to the 61.5 percent of GDP estimated at the end of 2025 when the Maastricht criterion of 60 percent of GDP was exceeded, according to RRZ. jrg/df