RRZ: Gov't Repeatedly Fails to Submit Measures to Contain Debt, Breaches Law

Bratislava 31 August (TASR) - The government should have immediately presented measures to reduce Slovakia's debt after the country's 2025 debt stats were released in April, as this sanction is stipulated by the Constitutional Act on Budget Responsibility, and by failing to comply with it, the government of Robert Fico (Smer-SD) is violating the law, the Council for Budget Responsibility (RRZ) warned on Monday in its report assessing compliance with budget responsibility and transparency rules in 2025. "Budget responsibility rules are not a formality that can simply be fulfilled on paper. If sanctions are circumvented and the budget is planned only for the following year without presenting a consolidation strategy for subsequent years, uncertainty in the economy remains, growth declines and debt continues to rise," RRZ chair Jan Toth warned. According to Toth, responsibility for this development lies with the government, but also with Parliament, which expressed confidence in it despite the failure to comply with sanctions arising from the Constitutional Act. The Constitution also requires Parliament to safeguard the long-term sustainability of public finances. In its assessment, the council concluded that long-term public finance sustainability was not achieved in 2025. The long-term sustainability indicator under an unchanged-policy scenario reached 5.5 percent of GDP, meaning that public finances are in the high-risk zone. Despite three rounds of consolidation measures, the indicator has not improved significantly. According to the RRZ, its development was adversely affected by a less favourable macroeconomic environment. More significant improvement was also hindered by the inappropriate structure of consolidation packages, which weakened the economy's competitiveness, the adoption of new spending measures and the temporary nature of some consolidation measures. Gross debt stood at 61.4 percent of GDP at the end of 2025, remaining in the highest sanction band of the debt brake. Without further measures, it would rise above 75 percent of GDP by 2030 and move further away from the upper debt-brake limit, which has breached 50 percent of GDP permanently since 2020. According to currently available model estimates, the same threshold also corresponds to a safe level of debt for Slovakia. Whereas Slovakia was able to cushion previous crises thanks to lower debt and fiscal space, even an ordinary shock today would force spending cuts at a time when the economy and households need protection most. The council said the priority should be to halt debt growth as soon as possible, which requires a credible multi-year consolidation strategy based on permanent measures. The government, by contrast, has significantly relaxed its own budget targets without presenting measures worth at least €1.2 billion to achieve them in 2027 and a further €1 billion in 2028. The RRZ recommended amending the law to once again link public spending limits with long-term sustainability and restrict the scope for merely formal compliance with, or circumvention of, sanctions. "An essential prerequisite for protecting long-term sustainability, however, is above all a change in the approach of governments and Parliament to budget responsibility rules. The solution is not to weaken the effect of the rules currently in force," the RRZ added. mf