Coalition MPs today approved a record-high budget that will climb to €17.7 billion next year and reach €18 billion the year after. The deficit will amount to €2.1 billion in both years. The opposition has described the budget as a “fiscal spiral,” while economist Dr. Štefan Šumah warns that it is setting a trap for the next government, which will be forced into drastic cuts.
The budget for the coming year was already adopted last year, so this time it only saw a 3.2% increase in expenditure. The Finance Minister explained the rise by pointing to growing labour costs and higher transfers to the pension and health-insurance funds. As a reminder, just days ago the President of the Fiscal Council, Davorin Kračun, told the National Assembly that this kind of budget planning is inadequate. “A telling example is the 2026 budget, for which the Ministry of Finance now projects a deficit almost €1 billion higher than it forecast last year. Given that the key factors behind the increased deficit – above all the public-sector wage reform – were already known at the time, this increase is primarily the result of inadequate planning,” he said at the time.
A similar story applies to 2027. The Golob government is projecting €16 billion in revenue and €18.1 billion in expenditure, producing a €2.1 billion deficit – nearly 3% of GDP.
The opposition was highly critical. SDS MP Suzana Lep Šimenko, for instance, said: “This is a fiscal spiral with no end in sight.” She added: “There isn’t a single serious reform measure in the budget – no measures to relieve the burden on the economy, no measures to improve competitiveness, no measures to boost productivity. The government is only increasing spending.”
Šumah: The opposition is right!
We asked economist Dr. Štefan Šumah for comment. He says the budgets in no way reflect a pursuit of sustainable public finances; instead, they bring record spending while revenues to the public purse are falling.“GDP growth forecasts are weak, and at this pace we will quickly push the debt-to-GDP ratio sharply higher. Another problem is that the government has left itself no fiscal room for manoeuvre that would allow an easier transition in the event of a major economic crisis, because fixed budget items (public-sector wages, interest payments, debt repayment, etc.) are extremely high. This government’s budget priorities are completely misguided, and the next government will have a very hard job: it will have to change them, which will require drastic cuts and restructuring – something that will be very painful for certain population groups,” Šumah comments.He also agrees with the opposition that the budgets are not development-oriented. The high fixed items “leave the government no room to respond in a crisis; too much money is going to things and activities that have no multiplicative effect on the economy but represent purely unproductive net consumption. With this, they have created a trap for the next government, which – precisely because of this government’s foolishness – will have to start making radical cuts if it wants to keep Slovenia competitive and in sound financial shape. That, however, could quickly drive people onto the streets.”
Ž. K.
