26 Aug 2025 o 20:43
I
The new expenses have diminished the effect of consolidation.
Robert Fico’s government (Smer-SD), even after two waves of consolidation of public finances, in which people and companies have increased, will not be able to tame the deficit.
On its arrival, Slovakia managed a deficit of 4.8 percent of GDP, currently above five percent. It seems that the effect of the higher taxes on which the Slovaks were composed was blowing.
The third consolidation package for 2026 of two billion euros that the government wants to accept is a consequence that while one hand of governments raised taxes, the other gave hundreds of millions.
“The new fundamental expenditures approved by the government have largely an effect of consolidation,” says the Budget Analysis Head of the Budgetary Liability Council for the Index Pavol majher.
How is it possible that after two consolidation waves of public finance deficit does not decrease but grows?
It looks a bit like a paradox. Two consolidation packages were to bring four billion euros, but deficits still hold at about five percent of GDP. And they really have to grow.
There are two main reasons. The first is the so -called headwind, which is the factors that are outside the immediate impact of the government, such as the interest rate on debt financing, rising due to the increase in rates by the European Central Bank.
The second reason is the factors under the control of the government. These are new fundamental expenses that the government has approved and largely reduced the effect of consolidation.
What fundamental expenses are you talking about?
The first group of expenditure was approved with the first consolidation package. In December 2023 it was a full 13th pension, a new Ministry of Tourism and Sport was established, and there is also a significant co -financing of health care.
The government also increased the expenditure last year. Police and army stabilization contributions grew, which increase the deficit by 0.2 to 0.3 percent of GDP each year.
But this year, these are new investments in hospitals from the defense department. It is the construction of a new hospital in Vajnory and the reconstruction of the hospital in Prešov. Plus valorisation of wages in education, which was more pronounced than originally expected.
Why are you not counting on the negative effects for the deficit also the payment of remuneration of EUR 800 that public sector employees received this year?
Because tariff wages did not increase this year and the reward served as a substitute for valorisation. When we looked at the numbers, the reward cost was approximately the same, or even slightly lower than the cost of valorisation.
This year, the remuneration for the public sector was not a fiscal burden against the scenario of unchanged policies. Unlike new measures.
Even a small change in 13. The pensions would benefit
The estimated impact of consolidation measures for 2024 was EUR 1.7 billion in this year. Does the effect of consolidation measures decrease over time? In other words, we pay higher taxes, but the impact on the budget is reduced?
We see this effect especially in measures from the first consolidation package in which part of the measure was temporary. The most important part of the measures was an increase in the rates of health contributions for self -employed and self -payers from 14 to 15 percent, reducing the levy to the second pillar and bank levy.
The effect for the budget of these three measures over time really decreases. Higher health levies were fixed for only four years, ie by 2027. Bank levy, which was originally 30 percent of gross profit, was also determined to decline. Banks will also pay it this and next year, with the rate slightly reduced.
For the second pillar, if the levy is reduced, it is a short -term benefit to the state, but it will have to spend more pensions in the long term, as savers will have less saved money in the second pillar. So we cannot talk about the permanent recovery of public finances.
If the previous consolidation measures were not taken, the deficit would probably be even higher?
If the government did not at all, but at the same time did not receive further permanent expenditure, the deficit would be worse. This year, instead of 5.1 percent, it would be 6.5 percent of GDP.
Consolidation is important, helping to improve the state of public finances, but permanent expenditures have significantly disturbed their impact. It is an unused opportunity to heal public finances more fundamentally, which is a pity.
If the government did not accept 13. Pensions and other permanent expenditure, wouldn’t third consolidation be needed?
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