RRZ: Slovakia's 2026 Budget Deficit to Reach 4.4% of GDP without New Measures

Bratislava, 31 July (TASR) - Slovakia's public finance deficit is projected to reach 4.4 percent of GDP, or €6.2 billion, this year if the government adopts no additional measures, with the negative deviation from the official target therefore remaining at 0.3 percent of GDP — representing a medium risk to meeting the approved budget, states the Fiscal Responsibility Council's (RRZ) latest budget estimate report from July. RRZ updates its estimate every month. In July, it only marginally increased its projected deficit. The expected shortfall rose by €27 million when compared to the June forecast, mainly due to faster spending on current state budget expenditures. "The most significant negative deviation in the RRZ estimate when compared to the budget is a shortfall in tax and social contribution revenues amounting to 0.3 percent of GDP (€473 million), driven primarily by lower-than-expected corporate tax and VAT receipts," said the council. It added that the weaker corporate tax forecast reflected an unexpected revenue shortfall for 2025 as identified in the latest tax returns submitted. According to RRZ, the lower VAT revenue estimate is mainly the result of slower household consumption growth than assumed in the budget. RRZ also expects higher spending by local authorities and in the health-care sector to weigh on the budget. By contrast, these pressures are being partly offset by better financial performance among other public sector entities, including public transport companies. RRZ's projected deficit for 2026 is almost identical to the government's latest estimate, which was published in April in its Annual Progress Report on the implementation of the Fiscal-Structural Plan. The difference amounts to €33 million. mf/df