Robert Fico’s government approved Slovakia’s draft budget for 2025 on Tuesday, October 15. Slovakia’s budget deficit target will be 4.7% of GDP.
The deficit target in the 2025 budget proposal is about 1.3 percentage points below the 5.97% of GDP deficit projected for this year. The pace of deficit reduction in the now adopted project is more ambitious than that of the previous year, when the pace of deficit reduction was 0.47 percentage points.
In the coronavirus year 2020, Slovakia faced a budget deficit. After a record annual rate of 9.68%, the deficit showed a significant downward trend. The deficit in 2021 was almost 8%, in 2022 approximately 5%, in 2023 6.5% and this year, according to the Ministry of Finance, it is expected to be lower than expected in the project: 5, 8%. Next year’s draft budget also calls for a reduction of the deficit in the coming years: the deficit will be 3.7% in 2026 and 3% in 2027. That is, Slovakia will be able to return to the norm established in the EU seven years after the start of the crisis. This is what the Fico government is currently planning.
The bill adopted Tuesday also calls for larger amounts of revenue and spending than this year. The Slovak government estimates total revenue for next year of €59.9 billion and total expenditure of €66.5 billion, leaving a deficit of €6.6 billion. The document foresees revenues in the state budget for 2025 in the amount of 27.6 billion euros, and on the expenditure side, 34 billion euros, according to which the budget deficit will be 6.4 billion euros.
The draft budget foresees an increase in spending in most segments; For example, the budget of the Ministry of Health will increase by 7.7% and will reach 9.6 billion euros. The €170 million will also increase the Ministry of Defence’s revenue to €2.78 billion, equivalent to a NATO commitment of 2% of GDP.
To achieve the goal of reducing the budget deficit for next year, the Slovak legislature approved an additional consolidation package earlier this month. The package of measures, valued at around €2.7 billion, includes, among other things, a transaction tax, an increase in corporate income tax and the introduction of several types of VAT rates.
The country’s public debt-to-GDP ratio will fall to 58.9% by the end of this year, partly due to reduced public spending and slowing inflation, according to Slovakia’s Ministry of Finance. Thanks to consolidation measures, the growth rate of public debt has stabilized at 60% of GDP.
The vote on the draft budget approved by the government will take place in December in the Slovak Legislative Assembly.
