Published: Oct 13, 2025, 16: 29 GMT+00: 00
Slovakia’s government is continuing its efforts to reduce the budget deficit despite sluggish growth. But the risk of missing targets amid worsening fiscal fatigue is rising.
The Slovak government recently approved a third fiscal consolidation package to be implemented in 2026 worth around EUR 2.7bn (2% of GDP). While the plan is ambitious, the task of bringing long-lasting benefits to the country’s public finances is complicated by the export-oriented economy’s vulnerability to higher US tariffs and the slowdown among its main European trading partners.
Scope Ratings (Scope) expects a material slowdown in GDP growth this and next year. The rating agency has revised down real GDP growth estimates for 2025 to 0.8%, from 1.5%, and to 1.2% in 2026 from 1.7%. Slovakia’s estimated economic growth this year will be well below that of some peers in central and eastern Europe, such as Poland (+3.1%), Slovenia (+1.8%) and Czech Republic (+2.3%).
As the fiscal consolidation package comprises a substantial number of revenue-raising measures, it is likely to prove a drag on economic growth, weighing on domestic private consumption, business activity and reducing the scale of potential benefits for growth in public revenues. Some measures are temporary, so additional fiscal consolidation will be necessary in coming years to safeguard fiscal sustainability.
The new fiscal consolidation package – approved by the government at end-September and recently signed by the president – could help the government to bring the budget deficit down to the 4.1% of GDP target next year from an estimated 5% of GDP in 2025. This follows two previous packages implemented in 2024 (EUR 1.9bn, 1.5% of GDP) and in 2025 (EUR 2.7bn, 1.9% of GDP) attempting to reverse the negative effects of previous fiscal loosening. Most of the measures planned for 2026 (EUR 1.4bn) aim at boosting revenues mainly through making personal income taxes more progressive and increasing health and social contributions, among other measures (Figure 1).
Figure 1. Slovakia’s fiscal targets compared with outcomes
% of GDP (targets for 2024-26; estimated outcomes for 2024-25)
Further Consolidation Efforts Will Be Necessary to Safeguard Fiscal Sustainability
In contrast, the government has yet to give details of EUR 1.3bn in planned expenditure cutbacks. A portion of these savings could include refunds of previous large-scale energy subsidies, amounting to EUR 435m, neutralising their previous adverse effects on the budget deficit.
The remaining expenditure savings will likely include cuts to public administration operating and personnel costs, and sa
