Monthly Information, September 2025

In the first eight months of this year, the state budget deficit, excluding intervention measures, was EUR 1.0 billion, whereas it was almost balanced in the same period last year. This deficit increase had been envisaged by the current budget. The projected deficit, excluding intervention measures, for the entire 2025 is EUR 1.9 billion, whereas last year, it stood at around EUR 0.2 billion.

This year’s budget deficit increase was exclusively the result of higher current expenditure. The increase in expenditure was broad-based and, as expected, it was mainly due to higher labour costs in light of the change in the pay system. At the same time, revenue growth stalled, which was partly due to the slowdown in economic activity and partly to a further decline in revenue from EU funds. This year, budget intervention measures have had a negligible impact on the overall state budget balance. Post-flood rehabilitation measures were predominantly funded with dedicated resources, while measures to mitigate the consequences of the epidemic and high cost of living expired last year.

The drafting of the 2026 and 2027 budgets is in its final stage. The Government must send the budget document proposals for assessment by the Fiscal Council and for adoption by the National Assembly by the end of September. Current data indicate that the realisation of expenditure for 2025 will again deviate from those envisaged by the current budget.

• Realistic basis for drafting the budget: The experience of the last four years shows that budget expenditures excluding intervention measures were, on average, approximately EUR 750 million lower than the estimates that formed the basis for adopting budgets for the following year. This difference is therefore not a consequence of addressing the impacts of various shocks with intervention measures as demonstrated by governments, but a proof of inadequate planning of regular public expenditure.
• Consequences of unrealistic budgetary drafting: Overestimating the planned spending brings with it a number of problems: (1) reduced credibility and, in the long term, weakened trust in the state budget as the central economic policy document; (2) encouraged less responsible spending, as it allows the use of pre-planned “surplus” for ad hoc projects; (3) more difficult presentation of the actual picture of available and needed funds, which can lead to inappropriate economic policy decisions; and (4) impaired long-term planning and postponed serious discussion of long-term challenges to future governments.
• The importance of a credible approach: Budget planning should be prudent and provide room to respond to potentially less favourable macroeconomic conditions. In times of uncertain economic conditions and major long-term challenges, realistic and prudent budget planning is essential to ensure transparent and efficient management of public money.