In May, the state budget recorded a deficit, while the gap between revenue and expenditure growth widened again.
In the first five months, the deficit reached almost EUR 900 million. Despite relatively strong revenue growth, the deficit primarily reflected expenditure growth of around 16%. The growth in expenditure was driven by the allocation of dedicated revenues to budget funds and by higher labour costs, social transfers and investment spending.
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, the Fiscal Council is an independent and autonomous state body that prepares and publicly publishes assessments of the compliance of public finance policy with fiscal rules.
In 2025, the Fiscal Council fulfilled all 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. The Fiscal Council’s warnings in 2025 were primarily directed at the anticipated fiscal trends, which had already indicated a tendency to deviate from the commitments set out in the Medium-Term Fiscal and Structural Plan for 2025–2028.
In 2025, a revised Fiscal Rule Act was adopted, bringing it in line with the amended EU legislation. Fiscal Council took an active part in the process of amending legislation, which added certain new tasks to its workload while maintaining its current role as an independent institution in budgetary processes. The year 2025 also marked the first year of implementation of the reformed economic governance framework in the EU, which places greater emphasis on medium-term planning, growth in net adjusted expenditure and the responsibility of Member States for their own fiscal commitments. It is therefore crucial that national budgetary planning is not merely reduced to a formal fulfilment of EU requirements, but becomes an actual framework for forming a stable, predictable and sustainable fiscal policy.
The Fiscal Council will continue to independently monitor public finance trends, the implementation of the Medium-Term Fiscal and Structural Plan, and the consistency of fiscal policy with ensuring public finance sustainability. It will also warn of risks that could threaten sustainability and contribute to a more transparent public debate on the country’s priorities. Sustainable public finances are not an end in themselves. They are a prerequisite for a stable economic environment, for maintaining trust and for the state’s ability to ensure the development and well-being of the population even in uncertain circumstances.
The updated population projections up to 2100 indicate that, under the baseline scenario, the ratio of the older to the working-age population could be higher during the last three decades of this century than previously projected. Our estimates suggest that this would result in a somewhat larger increase in long-term expenditure on pensions, long-term care and healthcare as a share of GDP.
Population ageing represents one of the main long-term risks to the sustainability of public finances. In the absence of further adjustments to social protection systems, Slovenia’s public debt could become unsustainable. In our assessment, achieving a fiscal adjustment sufficient to stabilise the public debt-to-GDP ratio at its current level over the long term would be challenging. Measures to increase productivity would only partially alleviate these fiscal pressures. Ensuring long-term fiscal sustainability will therefore require the timely implementation of coordinated fiscal and structural measures.
In April, the state budget recorded a surplus, which was the result of stronger revenue growth due to the settlement of the previous year’s corporate income tax liabilities and the partial recording of new payments of RRF funds.
In the first four months of the year, the deficit totalled approximately EUR 420 million, while the expenditure growth remained high at more than 10%. It was mostly due to the higher costs of labour which are expected to increase further in the coming months. The strong growth was also mainly due to higher social transfers resulting from the statutory indexation for inflation, discretionary measures and higher investment. In addition to defence expenditure, investment in health and education infrastructure is also increasing this year.
Fiscal trends in 2025 diverged from fiscal sustainability due to exceptionally high expenditure growth. The cumulative deviation from the commitments set out in the medium-term fiscal-structural plan remained within the threshold, but only because of using up the fiscal space created in 2024. Projections by the Fiscal Council and the Ministry of Finance suggest that the cumulative deviation will already exceed the permitted threshold this year. At the same time, we estimate that further deviation could even double by the end of the current plan in 2028. Fiscal space, including for addressing the consequences of shocks, is therefore significantly constrained despite the adoption of the pension reform. In such circumstances, measures that would further worsen the public finance position must be avoided. Otherwise, given the current public spending efficiency, the risks to fiscal sustainability, and thus to the well-being of the population, will increase even further.
In 2025, the general government deficit increased to 2.5% of GDP (0.9% of GDP in 2024), mainly as a result of a significant growth in expenditure. Expenditure growth was mainly due to higher labour costs triggered by the start of the salary system reform and the introduction of winter bonus, continued increase in social benefits and stronger investments. The revenue growth slowed down, which was mainly due to poorer corporate results and slower labour market.
The general government gross debt (65.7%) decreased to the pre-COVID-19 level, mainly due to inflation. During the last month, financial market situation has deteriorated as a result of geopolitical tensions, but most of Slovenia’s borrowing for this year was done on favourable conditions.
In the first three months of this year, the state budget showed a deficit of EUR 700 million, an increase on the same period last year. Revenue growth remained solid (7.0%), mainly due to higher receipts from VAT, EU funds, and personal income taxes. However, it continues to be considerably lower than increase in expenditure (13.0%). This was mainly due to higher labour costs associated with the introduction of a new salary system and stepped up investment activity, particularly in defence. Expenditure growth is further driven by transfers to individuals and households and to the health insurance fund. The current budget forecast for the entire year shows a deficit of EUR 2.1 billion.
In accordance with the Fiscal Rule Act, the Government is required to submit to the National Assembly and to the Fiscal Council for assessment a draft of the annual report on the progress in the implementation of the medium-term plan. According to the law, the Fiscal Council will prepare an assessment of compliance of data on the outturn of the general government budgets including the net expenditure path set out in the medium-term plan within seven days of receiving the annual progress report.