NKU: Wars, Energy Prices and Low GDP Growth Pushing Government Debt Up to €90 bn

Bratislava, 18 September (TASR) - Even after the third round of consolidation measures, the recovery of public finances hasn't been translated into better economic growth, a reduction in gross debt, or sustainable changes to the social welfare and health-care systems, according to the report on budgetary performance for the first half of 2026, published by the Supreme Audit Office (NKU) on Friday. A decline in private investment at the national level, the war in Ukraine, persistent tensions in the Middle East, and global market uncertainties are negatively impacting economic performance at both the European and Slovak levels. The gross general government debt could approach 63.7 percent of GDP (some €92 billion) by the end of 2026. "If we look at the forecast underpinning this year's budget proposal, the debt is climbing toward €90 billion despite three fiscal consolidation packages. Put simply, this means that every citizen of Slovakia, from new-born to senior, will bear a debt burden of €16,700. Ultimately, every euro of state debt falls on the shoulders of the citizens, as they are the ones who must foot the bill for its repayment," explained NKU chairman Lubomir Andrassy. More than €1.4 billion flowed from state coffers to service the debt in the first six months of the year alone, which is an increase of €390 million year-on-year (y-o-y), he said. The consolidation measures taken over the past three years have contributed to an increase in general government revenues, up by 6.8 percent y-o-y in the first six months of 2026. The growth was driven by higher volumes of VAT collected, reflecting stronger household consumption and a moderate increase in salaries. NKU sees budgetary risks in factors such as the failure to assess the effectiveness of adopted consolidation measures (for example, the transaction tax and higher taxation of labour), declining consumer demand, and rising energy or fuel prices, as well as the failure to address adverse demographic trends and persistent, critical levels of the health-care sector's debt. According to NKU, pension system expenditures place the greatest strain on the public administration budget. Social-insurance provider Socialna poistovna paid out more than €6.1 billion in pension benefits in the first half of this year, up 3.7 percent from the same period of 2025. Nearly 82 percent of all funds went toward old-age and early retirement pensions, while the second-largest expenditure item was the money allocated for disability pensions. ko/df