RRZ: Updated Budget Targets Won't Lead to Restoration of Public Finances

Bratislava, 21 May (TASR) - The government's updated budget targets won't lead to a significant improvement in public finances or to stabilising the public debt, stated the Budgetary Responsibility Council (RRZ) on Thursday as part of its assessment of the 2026 Annual Progress Report for Slovakia, which was recently approved by the government. According to the presented budget targets, the public finance deficit is expected to reach 4.2 percent of gross domestic product (GDP) next year and fall to 4.1 percent of GDP in 2028. According to RRZ, the government is thus abandoning its ambition to reduce the public finance deficit to 3 percent of GDP, a target that it had originally planned to reach as early as 2027. "The updated targets will no longer lead to a significant improvement in public finances or to the stabilisation of public debt. With these targets in place, the public debt is projected to rise to 66.2 percent of GDP in 2028, compared to last year's figure of 61.4 percent of GDP. Although a slower pace of consolidation may generally be justified in the face of an economic downturn, given the state of public finances, the extent to which targets have been eased appears disproportionate and isn't supported by a current independent macroeconomic forecast," stated the analysts. Meanwhile, the council noted that, given the current state of public finances, even the new budget targets will require significant consolidation efforts. According to its estimate, the deficit will reach as high as 4.9 percent of GDP next year if no further measures are taken. This is due to a more significant increase in defence spending and interest costs on debt, and the government's new measures will also require higher spending. "Measures amounting to approximately €1 billion will thus be necessary to meet the target," stated RRZ. In this regard, it criticised the government for failing, for the first time, to publish in its report an estimate of expected general government revenue and expenditure trends without measures - a so-called fiscal outlook - which significantly reduces its transparency. The government isn't disclosing the scale of the measures it deems necessary to achieve its goals, therefore. am/df