Government: The sustainability of Slovak public finances will not be jeopardized due to higher defense expenditures

Ljubljana – The medium-term sustainability of public finances in the coming years, according to the government, will not be jeopardized despite increased defense spending. The government on Tuesday adopted a position on the assessment of the Fiscal Council regarding the government’s draft annual report on progress for 2025. The Fiscal Council, in its assessment, warns of public finance pressures that could arise from increased defense spending and a potential deterioration of macroeconomic conditions, primarily due to the trade war.

The European Commission has called on countries to collectively request the use of the national derogation clause, which would allow for an increase in defense spending exceeding fiscal commitments over the next four years. According to the Ministry of Finance, the government will submit the request for the use of the national derogation clause to the European Commission and the EU Council, and in accordance with the fiscal rules law, the Fiscal Council will prepare an opinion on the occurrence of exceptional circumstances beforehand.

The government intends to request the use of the national derogation clause from the Commission and the Council, taking into account the assessment of the Fiscal Council, along with the submission of the annual report on progress, as explained by the Ministry of Finance. The deadline for submitting the report to the European Commission is April 30. The government is not expected to fully utilize the national derogation clause in the initial years, therefore “the medium-term sustainability of public finances will not be jeopardized,” emphasized the Ministry of Finance.

The state sector deficit, which is projected to reach 0.9 percent of GDP in 2024 according to the first estimate, is expected to rise to 1.9 percent of GDP this fiscal year, and then average around 1.8 percent of GDP over the next three years. The state budget recorded a deficit of 454 million euros in the first three months of this year, which is nearly one-fifth more than in the same period of 2024. (April 22)