Fiscal deficit challenges in Central Europe

Central European nations are navigating fiscal challenges characterized by rising budget deficits and concerns over public debt.

In Slovakia, the government has approved a 2027 state budget proposal projecting revenues of 27.911 billion EUR and expenditures of 35.666 billion EUR. This results in a deficit of 7.754 billion EUR, or 4.94 percent of GDP. Finance Minister Ladislav Kamenický defended the proposal as a “responsible compromise” that complies with European Commission standards, despite exceeding the 3 percent target previously sought by the administration. To mitigate potential legislative or Constitutional Court hurdles, the ruling coalition introduced amendments to the budgetary provisional regime. These changes would grant the Finance Minister greater flexibility by removing monthly spending limits if the budget fails to pass. The opposition has criticized these amendments as a “back door” to bypass fiscal constraints.

This follows earlier reports from the Ministry of Finance confirming a September deficit exceeding 4 billion euros. While the Ministry maintains its projections respect EU rules, the Fiscal Responsibility Council has warned that the proposal may fail to halt public debt growth, which is projected to rise from 61.4 percent of GDP in 2025 to 71.8 percent by 2029.

In Serbia, the Ministry of Finance reported a consolidated budget deficit of 98.4 billion dinars for the first eight months of 2026, remaining below the planned 176.4 billion dinars. In the Czech Republic, the government is preparing tax increases to address an expected 386 billion CZK deficit next year. The Czech State Environmental Fund (SFŽP) is also projected to have expenditures of approximately 44 billion CZK next year.