RRZ: Slovakia's Fiscal Sustainability Worsens, Remains High Risk

Bratislava, 30 April (TASR) – The long-term sustainability of Slovakia's public finances slightly deteriorated last year and remains in the high-risk band, said the Council for Budgetary Responsibility (RRZ) in its latest Long-Term Sustainability Report for 2025, presented by its chair Jan Toth on Thursday. The indicator rose from a revised level of 5.3 percent of GDP in 2024 to 5.5 percent of GDP, or €7.9 billion, last year. This figure reflects the scale of consolidation measures needed to stabilise public debt over the long term. According to Toth, sustainability is being undermined by Slovakia's record gross debt, currently at 61.4 percent of GDP. Although the deficit declined last year, it remains high and will tend to return towards 5 percent of GDP unless the government continues consolidation efforts. "Alongside consolidation packages, the government adopted new expenditure measures. We also face an external environment that isn't favourable for Slovakia's growth, whether it's due to US trade policy or the ongoing war in Iran," said Toth. He added that worsening demographics will also weigh on sustainability, with around 40 percent of the long-term challenge stemming from the pension system and expected additional spending on long-term care. RRZ also significantly revised the 2024 sustainability indicator upward, from 4.1 percent to 5.3 percent of GDP, shifting it from a medium- to high-risk band. The main reason was weaker economic growth. "Weaker economic prospects mean lower tax and contribution revenues in the future, naturally complicating the state of public finances," explained Toth. Compared with this revised figure, sustainability worsened slightly again last year. According to RRZ, the overall impact of government measures was neutral and didn't improve the situation. "The positive effects of the consolidation package prepared for this year were offset by other government measures. This means that sustainability hasn't improved significantly even after three rounds of consolidation," underlined Toth. He emphasised that consolidation must continue, but its structure is crucial. It shouldn't weaken competitiveness or make economic investment less attractive, areas in which RRZ sees several risks. Governments and parliament typically avoid adopting consolidation measures in election years, while so-called consolidation fatigue may also emerge. Toth also warned that European fiscal rules are set incorrectly for Slovakia, and formal compliance won't halt debt growth. mf/df