Slovak Government Preparing the Largest Fiscal Consolidation Package in History
29.07.2025
The Slovak Ministry of Finance is working on the third package of budget consolidation measures. According to Finance Minister Ladislav Kamenický in an interview with Markíza TV, it may become the most extensive in recent years — with a potential fiscal impact estimated at around €3 billion.
Kamenický said that the ruling coalition is discussing a set of 68 measures aimed at reducing the budget deficit. He noted that a more ambitious version had initially been considered — 75 measures totaling about €3.5 billion. However, some proposals did not gain the support of coalition partners.
The detailed list of initiatives has not yet been disclosed. However, Kamenický mentioned possible steps such as increasing the gambling tax and reducing certain state expenditures. At the same time, raising the real estate tax is currently not being considered.
The final decision on the package will be made by the coalition council. Presentation of the document at the government level is expected by the end of August 2025.
Previous packages: focus on taxes and fees The first stage of budget consolidation was implemented in 2023 and was expected to bring about €1.5 billion. At that time, the focus was on reducing contribution rates to the second pension pillar, increasing health insurance contributions, and raising the costs of various state fees and services.
The second package, adopted in 2024, included stricter measures: increasing the basic VAT rate to 23%, introducing taxes on banking transactions and cash withdrawals, adjusting tax benefits for families, and raising prices for motorway vignettes. The overall fiscal effect was estimated at €2.8 billion.
Deficit and economic background For the second consecutive year, Slovakia is facing a high budget deficit — in 2024 it exceeded €6.3 billion, accounting for more than 6% of GDP. The government’s goal is to reduce it to 3% by 2027.
However, analysts from the National Bank of Slovakia and the Ministry of Finance warn that accelerated consolidation may slow economic growth. According to the latest forecasts, by the end of this year the deficit could reach €7.1 billion, or 5.2% of GDP.
Moreover, analysts from the Ministry of Finance note that government measures have negatively affected tax collection. According to their data, in 2025 revenues will be €452 million lower than projected in the three-year budget adopted last autumn. In 2026, the shortfall may reach €709 million, and in 2027 — €1.1 billion. In total, over three years the state budget could lose €2.26 billion.
Alternative proposals Amid growing budgetary pressure and sluggish economic growth, the influential independent analytical group Dáta bez pátosu presented a set of proposals which, according to its experts, could support economic recovery and strengthen fiscal discipline.
Among the suggested measures are several structural changes and restrictions affecting both social benefits and state expenditures:
- reducing the number of public holidays, especially those falling on weekends;
- a 50% cut in annual “thirteenth” pensions;
- introducing a cap on service pensions;
- eliminating energy subsidies (heating, gas, electricity) for most households — except socially vulnerable groups;
- freezing salaries for senior politicians and optimizing public administration staff numbers.
The authors emphasize that these steps would not only reduce budget expenditures but also strengthen the long-term sustainability of the state’s financial system.