What are expenditure reviews?
Expenditure reviews are in-depth analyses of public expenditure. Their purpose is to identify more efficient and cost-effective ways of delivering public services. The objective is not to achieve savings at the expense of the quality or accessibility of public services, but to ensure better value for money. Efficient use of public money is one of the key elements of fiscal sustainability.
Why are they important?
They assist states in planning their budgets more effectively, directing funds to where they are needed most, and enhancing the efficiency of the public sector. The majority of EU Member States already conduct expenditure reviews on a regular basis – often with strong political support and clearly defined accountability for the implementation of proposed measures.
What are the prerequisites for a successful expenditure review?
The key prerequisites are political will, clear accountability and a systematic approach. The objectives and outcomes must be clearly defined in advance and communicated publicly, even if they are not politically favourable. They should constitute a regular part of the budgetary process and be accompanied by an up-to-date overview of their planned contents.
Why does Slovenia need regular reviews of public expenditure?
Long-term pressures on public finances in Slovenia are becoming increasingly severe, ranging from population ageing and healthcare investments to the costs of the green transition and other public services. That is why it is crucial to use public funds efficiently.
Where is Slovenia falling behind?
In Slovenia, expenditure reviews are not conducted regularly, lack sufficient political support, and their findings are rarely applied in practice. Despite recommendations and guaranteed external support, the situation has not improved significantly in recent years.
What needs to be done?
Slovenia needs a systematic approach: expenditure reviews should become an integral part of the regular budgetary process, with clear and transparent objectives and results. It is vital that the findings are actually taken into account when making decisions about public spending.
The state budget had a deficit of -EUR 551 million in the first five months of the year, compared to a surplus in the same period last year. The balance thus deteriorated by EUR 765 million in one year.
Revenues were down year-on-year, while expenditure growth more than doubled compared to the same period last year.
The dynamics of all key revenue categories are slowing down. In order to meet the projections of the current budget, their growth should pick up significantly over the rest of the year.
The stronger expenditure growth is broad-based, mainly driven by higher labour costs with the introduction of the new wage system. The main underperformer of the current budget projections is investment spending, which is lower year-on-year, mainly due to lower EU funding.
The post-flood reconstruction is behind schedule, with only about one tenth of the planned funds disbursed for measures in the first five months of this year. At the end of May, the Fund for the Reconstruction of Slovenia had almost EUR 700 million at its disposal.
The Fiscal Council has been invited to attend the 42st extraordinary meeting of the Commission for Public Finance Control, held on 29 May 2025to discuss the agenda item: Decline in gross domestic product in Slovenia.
Under the Fiscal Rule Act, the Fiscal Council is obliged to submit a report on its activities in the previous year to the National Assembly of the Republic of Slovenia by the end of May each year. In accordance with this Act, which was adopted in June 2015 and amended in 2025 following the reform of the EU economic governance framework, the Fiscal Council is an independent and autonomous state body that prepares and makes publicly available assessments of the compliance of fiscal policy with fiscal rules.
In 2024, the Fiscal Council fulfilled all its obligations prescribed by the law. In doing so, it strove to ensure the transparency of public finances, cooperated with the media and institutions at home and abroad, and regularly monitored fiscal trends. In 2024, the Fiscal Council’s warnings focused mainly on the lack of accuracy in fiscal planning.
Following the reform of the economic governance framework at EU level, Slovenia has prepared a medium-term fiscal structural plan for 2025-2028 in 2024. In formal terms, this plan meets the requirements, as it keeps the deficit below -3% of GDP and the debt on a declining path toward 60% of GDP. In its assessment of the plan, the Fiscal Council concluded that fiscal trends are likely to remain in line with commitments this year. However, risks are increasing over time, particularly because the continued implementation of the wage agreement will significantly increase public expenditure. Geopolitical risks are also increasing, which could lead to lower revenues and higher expenditure, with all the resulting consequences for the public deficit and public debt.
Towards the end of last year, efforts to adopt a revised Fiscal Rule Act were stepped up as well. The Fiscal Council agreed with the proposal of the revised Act which was submitted by the Government to the National Assembly for consideration in 2025. The area which the Fiscal Council has made the greatest efforts to improve, in coordination with the Ministry of Finance, is greater national ownership of medium-term budgetary planning. The final proposal of the Act thus maintains the existing important role of the National Assembly in decision-making and debate, and the role of the Fiscal Council in providing an independent assessment of medium-term budgetary documents and their implementation.
Effective implementation of the revised fiscal rules and responsible planning of the medium-term budgetary policy will be key to maintaining the stability of public finance. At the same time, it remains important to ensure transparency and realistic and consistent budgetary planning. The Fiscal Council will therefore continue to independently monitor these processes and draw attention to any deviations that might jeopardize the sustainability of public finance.
The state budget recorded a deficit of approximately -EUR 280 million in the first four months of the year. In the same period last year, it recorded a surplus of around EUR 170 million. The gap between revenue (1.7%) and expenditure growth (11.8%) remains high. Revenue growth is slowing across all major components.
The expenditure growth is driven by higher subsidy and interest payments, as well as certain discretionary factors, and remains high despite a decline in investment. In the coming months, expenditure growth could increase further, primarily due to the effects of the public sector wage agreement.
The Fiscal Council assesses that fiscal trends in 2024 have contributed to medium-term fiscal sustainability. The general government deficit in 2024 was lower than in 2023 and, in line with the Fiscal Council’s expectations, significantly below the government’s autumn projections. Net expenditure growth was lower than the commitments made in the medium-term fiscal-structural plan drafted last autumn. The Fiscal Council’s projections, based on the assumption that current policies will remain in place, indicate a deterioration of the fiscal position over the next three years. It would therefore be reasonable to address the various risks, including longer-term challenges, in the autumn budget documents and through the adoption of the reforms currently being prepared, in order to avoid the need for excessive fiscal adjustment in the future.