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Ministry of Finance presented a plan on how to improve public finances without throttling the economy

Last update: 20.09.2023 11:00

If Slovakia wants to stop the debt ratio from rising, we need to take consolidation measures of at least 5% of GDP in the next parliamentary term. We are talking about more than EUR 6 billion. In this case, however, it is only the necessary consolidation to stabilise debt while maintaining economic growth.

If we take no action, the debt will rise to almost 67% by 2026 and become unsustainable for the country. These are the conclusions of the Ministry of Finance of the Slovak Republic, which today presented the targets for the recovery of public finances.

Slovakia is not in a good position at all. For example, according to data from the European Commission (EC), we are currently reporting a budget deficit twice as large as the EU average. While Slovakia's general government deficit this year is estimated at 6.1% of GDP, the EU average is 3.1% of GDP. Without consolidation measures, we estimate that the deficit would not fall significantly over the next three years.

If Slovakia does not take the necessary measures, our debt will rise to almost 67% by 2026. With a 0.5% consolidation, the result would be no better. The debt would be above 63%. Only a consolidation of 5% of GDP could stabilise the debt ratio below 60% (55.9%). If we want to reduce debt, the clean-up in public finances should be even more substantial. However, this could already damage our economy, which would have a negative impact on living standards.

Consolidation of public finances is also necessary from the perspective of long-term sustainability, which is crucial for our economy. It is this parameter that determines the state's ability to take fundamental measures in the future and also influences Slovakia's investment stability. To get to low risk, Slovakia would need to take measures amounting to almost EUR 10 billion. Again, our economy might not be able to cope with that anymore. 

Press Department
Ministry of Finance of the Slovak Republic