Report on Compliance with the Fiscal Responsibility and Fiscal Transparency Rules for 2019

  • 28. 8. 2020

The general government gross-debt-to-GDP ratio continued to decline throughout 2019. In April 2020, Eurostat released gross debt data for 2019 at just below 48.0 % of GDP , i.e., the debt has dropped below the sanction brackets specified by the constitutional act.

The value of the gross-debt-to-GDP ratio will be definitively confirmed in the autumn notification scheduled to be published in October 2020, but given that it is nearing the first sanction bracket threshold, there is a high risk of exceeding the bracket threshold.
According to CBR the measures implemented in 2019 failed to bring about a sufficiently swift reduction in the gross-debt-to-GDP ratio.

The insufficient pace and size of debt reduction after 2012 needs be perceived in the context of the likely occurrence of the next potential crises and shocks which the Slovak economy will have to face.

The debt is expected to sharply overshoot the level of 60 % of GDP in 2020 due to the economic downturn in Slovakia caused by the coronavirus pandemic; it means the debt will exceed the highest sanction bracket of the debt break. If no additional measures are adopted, the CBR expects the debt to attack 70 % of GDP by 2023. The estimated sharp rise in debt compared to the 2019 level proves that a faster pace of debt reduction in favourable economic times is required. The exceptional situation in which the public finances have found themselves requires a higher level of transparency in the approach to expenditures. Given the situation in public finances, expenditures not related to pandemic should be considered more prudently.