“The decline in tax and contribution revenues reduces the manoeuvring space of fiscal policy at a time when it is necessary to continue with consolidation of public finances. It is becoming evident that the ceiling in this area has been reached, and further negative measures may fuel the grey economy, taking us several years back to the era of cash payments,” warned Ľubomír Andrassy, President of the national authority for external control, in connection with the development of this year’s budget.

The SAO regularly publishes its report on the development of budgetary performance for the first half of each calendar year. In its current report, the Office highlights risks linked to selected public expenditure items, with the greatest long-term threat represented by the pension system. SAO analysts examined in more detail the impact of the introduction of early retirement pensions, focusing on the category of early retirees who left the labour market after 40 years of service.

The SAO has long warned about the heavy burden placed on public finances by the Social Insurance Agency, which is responsible, among other things, for paying old-age and early retirement pensions.

“Early retirement pensions, a generous pension indexation mechanism, as well as the 13th pension, are pushing public finances into the trap of a high-risk zone for Slovakia’s sustainability. To cover statutory entitlements, the state will have to subsidise the Social Insurance Agency this year by more than EUR 2.75 billion. Pension expenditure has doubled over the past decade, from EUR 6.4 billion to nearly EUR 13 billion,” explained the President of the SAO, adding that “pension reform is the greatest challenge not only for the current but also for future governments.” He also pointed to the alarmingly low birth rate, which has a fundamental impact on Slovakia’s demographic outlook. According to the baseline demographic projection, the population could shrink dramatically to 4.7 million by 2080, down from the current 5.4 million.

The negative development of the state budget is also reflected in the rising public debt. According to this year’s fiscal performance of general government entities, Slovakia’s gross debt will exceed 60% of GDP and could reach EUR 84 billion, or 61.6% of GDP. Although the state budget for 2025, approved by the National Council of the Slovak Republic, anticipated an increase in debt, it was expected to reach only 59.6% of GDP, with public debt rising by EUR 700 million. This means that every citizen of Slovakia – whether elderly or newborn – will carry the burden of debt of EUR 15,500 per capita, compared with EUR 14,300 this year.

SAO analysts further warned Parliament and the Government about the continuing indebtedness of state-owned hospitals, whose debt increased by more than EUR 168 million in the first six months of 2025. At the same time, despite austerity measures at the level of central government bodies, the number of employees rose by 699 this year, and the personnel expenditure ceiling was increased by more than EUR 240 million. The largest increases in staff were recorded at the Ministry of Labour (199), the Ministry of Health (152), the Ministry of the Interior (73) and the Government Office (67).