Slovak lawmakers approve government's 2027 election-year budget, widening deficit

Slovak Parliament Approves 2027 Budget, Deficit Rises to 4.94% of GDP

Slovakia's 2027 Budget: Approval, Implications, and Reactions

Parliamentary Approval and Political Context

Oct 14 (Reuters) - Slovakia's parliament on Wednesday narrowly approved a 2027 budget which widens the deficit to 4.94% of gross domestic product and ends consolidation efforts in an election year.

The budget had been criticised by the opposition and the country's fiscal watchdog for risking spiralling debt in years

ahead and foresees the widest deficit since 2024, up from a 4.1% target in the 2026 budget.

The vote was a test for Slovak Prime Minister Robert Fico whose ruling coalition has faced internal fights weakening the government majority. The budget passed with 76 votes in the 150-member parliament.

End of Fiscal Consolidation

The 2027 budget will be the government's first without a fiscal consolidation package aimed at meeting EU fiscal rules that limit deficits to 3% of GDP.

Prime Minister Fico's Defense

Fico has defended the budget, saying deficits of 4-5% of GDP are now commonplace in the EU.

The government, he said, needs to keep spending on investments like hospitals, and on easing the burden of rising energy prices for households and businesses, and cuts now would worsen the economic situation.

"This is a budget for the survival of Slovakia and its people in difficult times," he said in a video message on social media over the weekend.

Criticism and Economic Outlook

Warnings of Rising Debt

CRITICS WARN OF RISING DEBT

The Finance Ministry, which sees the economy accelerating to 1.8% growth next year, said the budget focuses on maintaining social standards, coming amid trade wars and US tariffs, wars in Ukraine and the Middle East, and turbulence in global energy markets that is driving up fuel and electricity costs.

Spending will provide money to help ease energy price hikes, boost salaries and pensions, and fund drought and transport projects.

Fiscal Watchdog's Concerns

The country's Council for Budget Responsibility has criticised a wider deficit coming as the economy grows.

It said this week that spending planned on wages, pensions, and healthcare will hurt future budgets, and deficits could surpass 6% of GDP in the coming years without a return to consolidation.

Debt Projections

It forecast debt to rise to 65.9% of GDP next year, from 61.4% in 2025 — which is below EU averages of around 80%. Debt would reach 70% by 2028 without a return to deficit-cutting plans, the watchdog said.

(Reporting by Jason Hovet in Prague, Editing by Alexandra Hudson)