Slovakia’s 2024 budget proposal should be called ‘pre-bankruptcy’, says opposition

The budget for 2024 presented by the Slovak government, with a deficit of 5.97% of GDP – the highest in the EU – and plans to increase spending and taxes, can only be described as pre-bankruptcy, Michal Šimečka, leader of the opposition party Progressive Slovakia, said on Monday.

While not as high as the 6.5% deficit forecast by the European Commission, the budget for 2024 presents a deficit worth 5.9% of GDP, with the government mainly planning to raise taxes on banks, increase health insurance premiums for employers, and lower contributions to the pension investment system to help with the long-term sustainability of Slovakia’s finances.

“It is a budget proposal that cannot be called anything other than pre-bankruptcy,” said Šimečka, pointing to Fitch lowering Slovakia’s rating to A- just last week.

With this budget proposal, the government has “firmly set out on the Greek path,” he added.

Despite the Commission’s recommendation to reduce energy assistance, the government has announced a blanket subsidy on energy for households to the tune of €1.25 billion, presented as a “nice gift from the government” by parliament speaker Peter Pellegrini. The government also raised Christmas pensions, which will cost €494 million.

Finance Minister Ladislav Kamenický does not plan to request final approval from the Commission, as he claims it has already approved the “basic figures” already. The government plans on passing the proposal on Tuesday morning.

Slovakia’s long-term budget will see its overall debt pass the EU’s goal of 60% of GDP in 2026, and the proposal already counts on the EU fiscal rules to take effect from 2025, which are “likely to require further nominal deficit reductions of 1% of GDP per year”.

However, the EU is attempting to reform its rules, which are too strict to be realistic, as they do not account for budgetary changes that took place following the pandemic and war in Ukraine.

Member states want to finalise the deal by the end of the year but still disagree on how strict the new rules should be.

(Barbara Zmušková | Euractiv.sk)