Based on the information available, the SAO SR could not conclusively determine whether the Government of the Slovak Republic had complied this year not only with the constitutional principles of public administration, but also with the laws and international rules governing the preparation and subsequent parliamentary consideration of the country’s most important annual economic legislation. One reason is that, despite specific requests, the Ministry of Finance did not provide the SAO SR with the expert documentation underpinning the Government’s decision in September to activate the debt brake escape clause, equivalent to 3.21% of GDP.

The uncertainties surrounding the exemption are not merely legal; they also concern statistical and accounting reporting. General government revenue is projected to reach €63.34 billion next year, while expenditure is expected to total €70.78 billion, resulting in a deficit of €7.44 billion, or 4.94% of GDP. By the end of 2027, Slovakia’s total public debt could approach €100 billion, equivalent to approximately €18,500 per citizen.

“The budget is a key instrument for ensuring the sustainable development of society, supporting the business environment and maintaining social cohesion. It is therefore important not only to assess how limited resources are formally allocated across public policy areas, but also to evaluate how stakeholders participate in preparing this key annual legislation. This means involving not only individual budget chapters, but also social partners, while taking account of critical perspectives from academia and independent oversight institutions,” said Ľubomír Andrassy, President of the SAO.

He reiterated the SAO’s criticism of how the Government and subsequently the National Council of the Slovak Republic handled this year’s draft budget. Although the preparation of the annual budget formally follows budgetary rules, rushing its approval undermines transparency and stakeholder participation and shows a lack of respect for other parties concerned.

Economic outlook and the cost of debt

SAO auditors consider the fiscal risks identified by the Ministry of Finance in the draft budget to be reasonably balanced. Slovakia’s projected economic growth of 1.8% will depend on domestic consumption and foreign demand, as well as a recovery in the German economy and stronger performance in the automotive industry. However, growth could still be held back by armed conflicts, high energy prices, unpredictable trade barriers and weaker demand from China.

“The general government budget must be assessed not only in terms of annual revenue and expenditure and the resulting planned balance, but also in terms of whether the three-year consolidation measures succeed in reducing the country’s overall debt. It is important to monitor whether consolidation addresses the structural causes of imbalances in public finances and creates genuine scope for sustainably financing the state without further increases in taxes and social contributions,” Andrassy said.

In the coming years, the budget will face growing pressure from debt-servicing costs. These amounted to €1 billion in 2023, are expected to reach almost €2.5 billion next year and could rise to €3 billion by 2029.

Healthcare, pensions and public administration under pressure

In its substantive assessment of the draft budget, the SAO SR draws MPs’ attention to several high-risk areas, particularly those requiring substantial public funding or where the absence of systemic reform could undermine the long-term sustainability of state financing and public policies. These include the pension system, funded primarily through the Social Insurance Agency’s budget (€15.5 billion); public healthcare (€11 billion); and the efficient operation of state and public administration.

Next year, the gap between contributions from economically active people and state payments covering state-insured persons in the public health insurance system is expected to widen further. The budget allocates €2.1 billion to cover state-insured persons, representing just 22% of total health insurance funding.

The draft budget estimates that €608 million will be needed to complete planned investments, including the construction and equipment of new hospitals and the resolution of critical infrastructure problems. Of this amount, €562 million is earmarked for the Central Military Hospital in Ružomberok. Less than €48 million would remain for other state healthcare facilities — a critically low amount given ongoing construction projects and the sector’s investment backlog.

“Neither the Government nor the Ministry of Health has a realistic plan for addressing the healthcare sector’s debt, which is already approaching €2.4 billion, or for introducing the systemic measures needed to stop the endless cycle of borrowing and put patients first,” Andrassy said.

Performance indicators continue to show that Slovakia lags behind the European Union average in public administration efficiency. The country scores at the 62.7th percentile on the public administration efficiency index, compared with an EU average above the 80th percentile. The quality and efficiency of public institutions directly affect the services citizens receive and are also linked to the risk of public funds being used inefficiently.

In 2027, the structure of state expenditure is expected to shift significantly. Routine operating costs are rising at the expense of investment, ultimately weighing on economic growth. Compared with 2024, expenditure on employees of the state and local governments will increase by 15.4% to €17.1 billion. Spending on the routine consumption of public institutions is also rising sharply: expenditure on goods and services will increase by 27.3% over the same period, reaching €9.5 billion in next year’s budget.

“These figures send a clear signal to the Government and Parliament that it is high time to begin an expert debate on fundamental state reform and on how to finance the services delivered to citizens by professional public servants. The SAO SR has been calling for this discussion for years, and the issue is also reflected in Vision for Slovakia 2040, confirming its strategic importance,” Andrassy said.

Demographic change threatens the sustainability of pensions

Expenditure on social policy and employment support is budgeted at €20 billion for 2027, an annual increase of almost €443 million. Most social spending is channelled through the Social Insurance Agency, with pension insurance accounting for 88% of the Agency’s total expenditure. Its budgeted expenditure for next year stands at €15.5 billion.

A transfer of €2 billion to the Social Insurance Agency will place a significant burden on the state budget. Against the backdrop of negative demographic trends, this also poses a risk to the long-term sustainability of public finances.

“Rather than simply looking for the money needed to pay pensions, those responsible should focus on structural changes in the labour market and develop initiatives that enable more older people to remain economically active. From the SAO’s perspective, the ‘silver generation’, together with the silver economy, represents one of the major challenges in transforming society by 2040,” Andrassy concluded in the SAO’s assessment of the state budget.