Public debt and deficit rising despite tax hikes

The Finance Ministry presented a draft 2026 state budget, which the government is set to approve on Friday. The budget includes a deficit of 4.1% of GDP, down from over 5% expected this year, mainly due to additional revenue from a consolidation package worth €1.4bn. Ministries are to save €535m, including a €160m wage freeze and €375m cuts to investments and spending on goods and services. Interestingly, the number of civil servants will rise by 5,400 to 233,236 in 2024–26. (openiazoch.sk)

The state will also save by sending local governments €290m less from income tax revenue. It claims municipalities will still save less than the state in 2026. Municipalities argue they will need to cut investments and regular services. (stvr.sk)

The fiscal responsibility council RRZ noted that even in 2027, following three consolidation packages and record public revenues relative to GDP, a deficit exceeding 5% is expected unless further consolidation occurs. Despite the consolidation, public debt will rise from 55.6% of GDP in 2023 to 65.7% in 2027. The government is ignoring the constitutional debt brake and, alongside tax hikes, is increasing public debt.

(RRZ)