Slovakia Projects a 4.94% Deficit for 2027: S&P Affirms A Rating; Industry Contracts by 0.2%

Slovakia is projecting a deficit of 4.94% of GDP for 2027. The Ministry of Finance in Bratislava expects the deficit to be 4.37% in 2026. Parliament passed the budget on October 14. Nine days later, the rating agency S&P affirmed its A rating with a stable outlook. In April, it had downgraded Slovakia from A+.

Budget: Deficit Rises, Debt-to-GDP Ratio Approaches 70%

The general government deficit will amount to approximately 7.4 billion euros in 2027. Originally, the government had planned for only 4.1% in 2026. The debt-to-GDP ratio is projected to reach 69.6% by the end of the planning horizon. This will only be the case if further austerity measures are implemented after 2027. Without them, the ratio will exceed the 70% mark, according to the Ministry of Finance.

The plans for subsequent years remain contingent on certain conditions. The deficit is projected to fall to 4.5% in 2028 and to 4.0% in 2029. This will only be achieved with additional measures. Without them, it will rise to 5.26% and 5.41%.

The ministry itself quantifies the required savings. It states in its budget plan: “This strategy requires measures amounting to 0.8% of GDP in 2028.” This passage is translated from Slovak. The government is allocating 250 million euros for energy price subsidies. In addition, there is a 482 million euro reserve for new social legislation. Public sector salaries will increase by 8.4% starting July 1, 2027.

Finance Minister Ladislav Kamenický commented on the rating decision as follows: “Standard & Poor’s has confirmed our A rating with a stable outlook.” He added: “This is very important because the financial markets pay attention to this.” Both quotes are from Slovak and have been translated. The opposition criticizes the rating as the lowest since 2014.

Industry: Electronics Plunge 47.3%

Industrial production fell by 0.2% year-over-year in August, according to the Statistical Office of the Slovak Republic (ŠÚ SR). It is the fifth decline this year, but the smallest. From January through August, the decline stands at 0.3%. Oil refining fell by more than 12%. Production of computers and electronic products fell by 47.3%. Vehicle manufacturing contracted by 3.3% due to postponed plant holidays.

Other sectors grew. Mechanical engineering rose by 9.5%, energy supply by 7.2%, and the metal industry by 6.6%.

Implications for German Exporters and Investors

German suppliers in the electronics and automotive sectors should take greater steps to secure orders from Slovak customers. Mechanical engineering remains a growth market for German plant manufacturers. Investors should expect new consolidation measures in 2028. The confirmed A rating keeps the government’s refinancing costs within manageable limits for the time being.

Sources: Ministry of Finance of Slovakia (SK), Štatistický úrad SR (SK), S&P Global Ratings (EN), TASR News Agency (SK)

SK, Frankfurt