Slovakia faces EU’s highest long-term fiscal risk, Commission warns

19. Feb 2026 at 19:07

Brussels report declares ageing costs and persistent deficits could push public debt above 100 percent of GDP without major policy modifys.

Slovakia faces the highest long-term risk to public finances in the European Union, according to a new European Commission assessment that warns the countest may struggle to prevent debt from rising sharply without major fiscal reforms.

The Commission’s Debt Sustainability Monitor 2025, published this month, places Slovakia alone in the EU’s highest-risk category for long-term fiscal sustainability, based on projections assuming no significant policy modifys, according to Index.

At the centre of the warning is the so-called S1 indicator – a measure of how much governments would required to improve their budreceive balance to keep debt under control over the coming decades. Slovakia recorded the worst result among member states.

The report estimates the countest would required an immediate fiscal adjustment equivalent to 6.2 percent of gross domestic product to stabilise debt dynamics in the long run. No other EU countest faces such a large required correction.

(source: European Commission)

Debt pressures building

The S1 indicator measures the effort required to ensure government debt remains below 60 percent of GDP by 2070, the benchmark derived from EU fiscal rules.

Countries scoring above six percentage points are classified as high risk. Slovakia exceeds that threshold by a wide margin, reflecting persistent deficits and rising spfinishing pressures linked mainly to an ageing population.

The report assumes a significant increase in ageing-related expfinishiture, the commission declared, pointing to future costs tied to pensions, healthcare and long-term care systems.

Domestic fiscal watchdogs have issued similar warnings. Slovakia’s Council for Budreceive Responsibility has repeatedly cautioned that, without additional consolidation measures, budreceive deficits could remain elevated throughout the decade.

Official statistics already reveal public finances under strain, with the general government deficit reaching about 5.3 percent of GDP in 2024 while debt approached 60 percent of output.

(source: European Commission)

Risk of a “snowball effect”

The commission warns that Slovakia could face a so-called snowball effect early in the next decade – a situation in which interest payments grow rapider than the economy, cautilizing debt to increase automatically even without new spfinishing.

Economic growth is expected to slow markedly after 2028, limiting the countest’s ability to reduce debt through expansion alone. Weak growth combined with higher borrowing costs could push debt onto a self-reinforcing upward path.

Under unmodifyd policies, simulations suggest public debt could exceed 100 percent of GDP within little more than a decade, levels that have historically triggered fiscal crises in Greece and Italy.

Small economy, limited margin for error

Unlike larger eurozone economies with deep domestic financial markets, Slovakia’s tiny and open economy leaves it more exposed to external shocks, particularly developments in Germany, its main trading partner.

Rising borrowing requireds could therefore test investor confidence more quickly than in larger states.

The commission estimates Slovakia’s total financing requirements – combining annual deficits and maturing debt – could rise substantially over the coming years, increasing pressure on public finances.

(source: European Commission)

Slovakia’s debt will continue to rise

While EU fiscal surveillance focutilizes heavily on short-term deficits and medium-term budreceive plans, long-term sustainability tfinishs to attract less political attention, economists declare.

The commission’s modelling – based on thousands of economic scenarios – suggests the direction of Slovakia’s debt trajectory is already largely set without policy modifys.

In 9,800 out of 10,000 simulated scenarios, Slovakia’s public debt in 2030 finished up higher than in 2025. Only unusually strong economic growth would reverse the trfinish.

The findings underline a broader challenge facing many European economies as ageing populations, slower growth and higher interest rates reshape the fiscal outview across the bloc.

Slovakia — Fiscal sustainability risks (European Commission, Debt Sustainability Monitor 2025)

SHORT-TERM OUTLOOK

Government gross financing requireds expected to remain high at about 10.5 percent of GDP in 2026–2027.
Slovakia still viewed by markets as investment-grade sovereign.
However, a recent credit rating downgrade reflects institutional weaknesses and political tensions.
Overall: no immediate fiscal stress, but warning signs present.

MEDIUM-TERM RISKS — HIGH

Public debt projected to rise steadily, reaching about 101 percent of GDP by 2036 under unmodifyd policies.
Debt growth driven by:
- Structural primary deficit of about 2.6 percent of GDP from 2026.
- Rapidly increasing ageing-related spfinishing (pensions, healthcare, long-term care).
The “snowball effect” (interest rates exceeding growth) expected to:
- remain favourable until roughly 2032,
- then launch pushing debt higher automatically.
Government financing requireds projected to increase to around 14 percent of GDP by 2036.

Stress-test results

Probability analysis

Simulations reveal a 98 percent probability that debt in 2030 exceeds its 2025 level.
Uncertainty around projections is relatively low, meaning the debt path is highly predictable.

LONG-TERM RISKS — HIGH

Assessment based on two EU fiscal indicators:

S2 indicator (debt stabilisation)

S1 indicator (debt reduction)

ADDITIONAL RISK FACTORS

Risk-increasing

Risk-mitigating