Rising debt has used up much of Slovakia’s fiscal space, meaning the next economic crisis could be more painful. That is the conclusion of a new report, Fiscal Space of Slovakia 2026, presented by the Council for Budget Responsibility.
Slovakia’s public debt reached almost 61.5 percent of GDP last year. The Council considers a debt level below 50 percent of GDP to be safe. If Slovakia continues managing its finances as it has so far, debt could reach around 75 percent of GDP by 2030. In the worst-case scenario, Slovakia could eventually lose the ability to finance its needs on acceptable terms and become dependent on external assistance.
According to Council member Martin Šuster, public spending currently accounts for almost half of the economy — 48 percent of GDP. This is where savings need to be found. These include various benefits, 13th pensions and tax allowances, such as those for children, as well as relatively high wages in some public institutions.
The Council stresses that running out of fiscal space does not mean Slovakia faces an immediate risk of bankruptcy. However, during another major crisis, the government could face higher borrowing costs and pressure to introduce painful spending cuts when the economy is already under strain.
Economist Martin Hudcovský of the Slovak Academy of Sciences compares the situation to taking out loans as an individual. Banks may approve the first loan, while the second becomes more difficult. By the third, fourth or fifth loan, getting additional financing becomes exceptional.
According to senior analyst from the Institute of Social and Economic Studies (INESS) Radovan Ďurana, higher borrowing costs for the state can also spill over into the private sector, making it more expensive — and potentially more difficult — for Slovak companies to borrow. For citizens, most of whom are either employees or pensioners dependent on the state, the key message is that public finances are not on solid ground.
The Council also warns that Slovakia faces additional risks that could hit at the same time — from weaker economic growth and an ageing population to climate-related costs, investment needs, the future of the car industry and a gradual decline in EU funding.
The message is therefore straightforward: Slovakia needs to stop its debt from rising and restore confidence in its public finances now. Over the following three to ten years, it should then rebuild financial reserves to be better prepared for future crises.
Source: STVR, TASR
