On 6 November 2025, the Fiscal Council hosted a delegation of the International Monetary Fund (IMF) within its regular annual consultation mission in Slovenia.
The purpose of the visit was to review fiscal developments and projections, to assess fiscal policy, and to exchange views on Slovenia’s future fiscal challenges.
The state budget deficit, excluding intervention measures, was around EUR 900 million in the first ten months of this year. This is approximately half of the Ministry of Finance’s projected full-year deficit.
The increase in the deficit this year is entirely due to higher current expenditure. The increase in expenditure is broad-based, and as expected with the largest contributions coming from higher labour costs following changes to the public sector salary system. Meanwhile, revenue growth is significantly lower than last year. This is partly due to a slowdown in economic activity and partly due to a further decline in revenue from EU funds. Intervention measures have had a negligible impact on the overall state budget balance this year, as flood recovery measures are predominantly financed from dedicated sources.
The planned winter bonus will further contribute to the deterioration of the fiscal situation this year and in the coming years. When the budget documents were assessed, we have not included the impact of the winter bonus in the general government balance projections, where, the deficit is already expected to increase, even without the winter bonus, primarily due to the significantly underestimated effect of the salary reform. The bonus will put permanent pressure on public finances, introducing it would increase the general government deficit by around 0.3 percentage points of GDP in the medium term. This increase would bring the deficit close to 3% of GDP, effectively eliminating the fiscal manoeuvring space to address the consequences of potential future shocks, which are becoming increasingly frequent.
The fiscal policy is deviating from the trajectory outlined in the Medium-Term Fiscal and Structural Plan for the 2025–2028 period. Despite Slovenia’s commitment to gradual consolidation, the state of public finances began to deteriorate already in 2025. According to the Fiscal Council’s projection, the general government deficit will increase further, reaching approximately 2.5% of GDP by 2028. The primary factor driving this deterioration is the change in the public sector salary system and the resulting growth in current expenditure, which will exceed projected economic growth. Such developments call for measures to address fiscal risks and ensure public finance sustainability. The budget documents, however, do not contain such measures, and without timely intervention, more severe adjustments will be required in the coming years.
The state budget deficit, excluding intervention measures, amounted to just under EUR 1.0 billion in the first nine months of the year, compared to an almost balanced budget in the same period last year. An increase in the deficit had been projected both in the current budget and in the revised estimate presented alongside the draft budget documents. The deficit excluding intervention measures is expected to total around EUR 1.8 billion for the entire year, compared to around EUR 0.2 billion last year. However, based on the outturn for the first nine months of the year, the full-year deficit could be lower than the current estimate, which serves as the basis for budget planning for the coming years.
The increase in the deficit this year is entirely due to higher current expenditure. As expected, the increase in expenditure is broad-based, with the largest contributions coming from higher labour costs following changes to the public sector salary system. Meanwhile, revenue growth has stalled, which was partly due to a slowdown in economic activity as well as a further decline in revenue from EU funds. Intervention measures have had a negligible impact on the overall state budget balance this year, as flood recovery measures are predominantly financed from dedicated sources.
On 30 September, the Fiscal Council received the proposed amendments to the 2026 state budget and the 2027 draft budget. In accordance with the provisions of the Fiscal Rule Act, the Fiscal Council will provide its assessment within ten days of receiving the general government revenue and expenditure projections, which are expected by 10 October 2025 at the latest.
At the 31st session of the Committee on Finance, held on 9 September 2025, the President of the Fiscal Council presented the Report on the Fiscal Council’s opeerations in 2024 and, on this occasion, also assessed the current fiscal position.
(31st session of the Committee on Finance, the first 12 minutes of the recording)
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.