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Slovakia has approved its draft budget for 2026, aiming to reduce the fiscal deficit to 4.1% of GDP while maintaining spending on pensions, wages, and energy price caps. The government plans to implement tax hikes, adjust tax brackets, and cut state office expenses, among other measures. Despite efforts, the deficit is projected at 5.9 billion euros with debt rising to 62.8% of GDP. Economic growth is forecasted at 1.3% for 2026. Analysts warn that debt may continue rising, and the budget does not fully meet national debt regulations.
Slovakia's government has approved its draft budget for 2026, targeting a reduction of the country's fiscal deficit to 4.1% of GDP through a combination of tax increases and other consolidation measures. The deficit for the current year is projected at 5.0% of GDP, above the government's target. A parliamentary vote on the budget is expected later this month. Advertisement
Prime Minister Robert Fico's leftist-nationalist administration has pledged to lower the deficit while continuing spending on additional pension payments, higher wages, and energy price caps. The government had entered the European Union's excessive-deficit procedure last year and, in September, lawmakers approved a fiscal consolidation package worth 2.7 billion euros to support the 2026 deficit reduction.
Key measures in the plan include higher taxes on foods with elevated sugar or salt content, an adjustment of tax brackets, increased compulsory health insurance contributions for workers, reduction of public holidays, and cuts in state office expenditures and purchases. The government has attributed the high deficit and rising debt to previous administrations, while opposition leaders have argued that the measures could slow economic growth without preventing debt accumulation.
The draft budget estimates the 2026 deficit at 5.9 billion euros, with debt rising to 62.8% of GDP from the current 61.5%. Defence spending is set to remain at 2% of GDP, which Slovakia says it will not exceed, despite NATO's call for higher contributions. The Council for Budget Responsibility (RRZ) has noted that the consolidation measures adopted under three previous packages have not yet stabilized debt, which could rise to 65.7% of GDP by 2027 unless additional measures are introduced. The RRZ also highlighted that the current budget proposal does not fully comply with the country's debt brake regulations.
Slovakia aims to bring its deficit below the EU's 3% of GDP limit by 2028, later than initially planned, due to challenging external trade conditions. The 2026 draft anticipates economic growth of 1.3%, improving from an expected 0.8% this year, though growth is projected to remain below 2% until 2029. The European Commission's Spring Forecast had projected Slovakia's 2025 deficit at 4.9% of GDP, ranking it among the EU countries with the highest budget gaps.
Source Reuters
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