Page 51 - CE Outlook Regions 2024

2022.
The cabinet passed a €1.9bn consolidation package in December, which Fitch described as “mainly based on revenue-enhancing measures”. President Zuzana Caputova signed the state budget legislation for 2024 towards the end of December 2023, but said she could refer the legislation to the Constitutional Court quoting uncertainty over the budget responsibility rules.
In 2024 the state budget should drop by €7.84bn to 5.97% of GDP, or down by approximately 0.5 percentage points from the projected 6.52% of GDP in 2023.
The overall public income in 2025 should be €53.48bn, while expenses should be €61.32bn. The state budget deficit should be €7.62bn, with state income of €22.70bn and expenses of €30.32bn.
Slovakia is a eurozone country and the state budget was stretched following the COVID-19 and energy crises, generating discussion about necessary budget cuts under the EU’s Stability and Growth Pact, which mandates a deficit below 3%. The Ministry of Finance projects the Slovak public finances to be affected by excessive deficit procedures next year, including tighter oversight from the EU.
In December, international rating agency Fitch Ratings already lowered Slovakia’s credit rating from ‘A’ with a negative outlook to ‘A-’ with a stable outlook. Fitch highlighted “the downgrade reflects deterioration in public finances and an unclear consolidation path”. By 2025 Fitch also expects general government debt to exceed the pandemic high of 61.1% of GDP from 2021.
Despite the Fitch downgrade, Slovakia’s public debt is low by EU standards. Fitch projects the government debt/GDP ratio to rise from 57.8% at the end of 2022 to 65.5% by the end of 2025.
51 CE Outlook 2021 www.intellinews.com