The state budget deficit in 2024 amounted to EUR 808 million; excluding the direct impact of intervention measures, the deficit was EUR 275 million.
The much lower overall deficit in 2024 compared to the previous year was mainly due to the reduced impact of intervention measures. It was approximately EUR 1 billion lower than in 2023, also partly due to dedicated revenues and EU funds for flood recovery. The lower deficit excluding intervention measures was the result of stronger revenue growth and a reduction in investment, while growth in other expenditure remained high and well above the long-term average.
As expected by the Fiscal Council, the actual outturn in 2024 again deviated significantly from the estimate made by the Ministry of Finance three months before the end of the year. Realistic and transparent projections are a prerequisite for decisions that support economic growth, the sustainability of public finances and the well-being of society. Precaution in fiscal planning is generally appropriate, but systematic overestimation of expenditure and the resulting deficit can lead to the inappropriate use and allocation of otherwise limited public resources, undermine public and financial market confidence in the ability to manage public finances, and result in sub-optimal choice of measures.
The general government deficit, which averaged 1.4% of GDP in the first three quarters of 2024, was also lower than in the same period of the previous year. We estimate that the deficit for the year as a whole will again be lower than the Ministry of Finance’s October projection. The continued decline in the gross government debt ratio, which stood at 66.9% of GDP at the end of the third quarter, continues to be driven mainly by inflation. The net government debt remains much lower (around 45% of GDP), due to the maintenance of high liquidity reserves.
According to preliminary data, the state budget deficit for the first eleven months of the year amounted to EUR 396 million, less than a third of the deficit recorded in the same period last year. According to the latest available estimate by the Ministry of Finance, the end-of-year deficit is expected to amount to EUR 1,407 million, implying a deficit of as much as EUR 1 billion in December.
The balance excluding the direct impact of intervention measures showed a surplus of EUR 100 million, similar to the same period last year (EUR 80 million). Total expenditure on intervention measures amounted to EUR 496 million, just four tenths of the amount spent in the same period last year. According to the latest available estimate by the Ministry of Finance, EUR 713 million is earmarked for intervention measures this year (excluding the Reconstruction Fund).
The growth in “core” expenditure (excluding intervention measures) was 9.3%, an increase compared to the same period last year (7.2%). The main reasons for this year’s growth were contributions to budgetary funds, in particular to the newly established Reconstruction Fund, and the transfer to the Pension and Disability Insurance Institute of Slovenia (ZPIZ) due to the high indexation of pensions.
Like the Fiscal Council, the European Commission has assessed that the Medium-Term Fiscal Structural Plan 2025–2028 formally meets the requirements of European legislation. However, the European Commission also warns of risks that actual net expenditure growth will be higher than required or allowed as a result of changes to the public sector pay system, the introduction of long-term care, the reform of the healthcare system and deviations from the planned implementation of major investment projects. The possibility that net expenditure growth could be significantly higher than required is also indicated by the adopted amendment to the state budget for 2025, which projects a growth in non-intervention spending of 12.3%. According to the Plan, the growth in net general government expenditure in 2025 could be no higher than 5.6%.
On 14 November 2024, the Fiscal Council hosted a delegation of the Internation Monetary Fund (IMF) within its consultative meeting in Slovenia.
The purpose of the visit was familiarisation with the near- and medium-term fiscal policy and reforms and adherence to the new EU fiscal rules and fiscal risks.
According to preliminary data, the state budget deficit for the first ten months of the year amounted to EUR 553 million, which was around half of the deficit in the same period last year. According to the latest available estimate by the Ministry of Finance, the end-of-year deficit is expected to amount to EUR 1,407 million, making the deficit in the last two months EUR 854.
Excluding the direct effect of the intervention measures, the deficit amounted to EUR 109 million, compared to a surplus of 96 EUR million in the same period last year. Total expenditure on intervention measures amounted to EUR 444 million, around two-thirds lower than in the same period last year. According to the latest available estimate by the Ministry of Finance, this year, EUR 713 million is earmarked for intervention measures (excluding the Reconstruction Fund).
The growth in “core” expenditure (excluding intervention measures) was 10.3% and strengthened compared to the same period last year (8.0%). The main reasons for this year’s growth were the transfer to the Pension and Disability Insurance Institute of Slovenia (ZPIZ) due to the high regular pension indexation and the high growth in payments to budgetary funds, in particular due to the establishment of the Reconstruction Fund.
The Fiscal Council, as part of its tasks under the Fiscal Rule Act, regularly warns of risks to medium-term fiscal sustainability. Such risks are also posed by the proposed Act Determining Intervention Measures for the Provision of Heat Supply in the Šalek Valley, which is not included in the regular budget documents. We assess that its fiscal implications will reduce the fiscal policy’s room for manoeuvre, that the proposed Act does not adequately present all possible solutions, and that it could also raise expectations for government action in other areas.
The Fiscal Council publishes Assessment of budgetary documents for 2025 and 2026 and opinion on the Medium-Term Fiscal and Structural Plan 2025–2028
According to preliminary data, the state budget deficit for the first nine months of the year amounted to EUR -462 million, which is EUR 300 million lower than in the same period last year. According to the latest available estimate by the Ministry of Finance, the end-of-year deficit is expected to amount to EUR -1,407 million, which is EUR 814 million lower than foreseen in the current budget adopted in October last year. Such a large reduction confirms the Fiscal Council’s view that the deficit projection at the time of last year’s budget adoption was again exaggerated.
Excluding the direct effect of the intervention measures, the deficit amounted to EUR -70 million and was approximately EUR 60 million higher than last year. Total expenditure on intervention measures amounted to EUR 393 million, almost a third less than in the same period last year. According to the latest available estimate from the Ministry of Finance, this year, EUR 713 million is earmarked for intervention measures (excluding the Reconstruction Fund).
The growth in “core” expenditure (excluding intervention measures) was 8.3% and slightly higher than in the same period last year (7.5%). The main reasons for this year’s growth were the transfer to the Pension and Disability Insurance Institute of Slovenia (ZPIZ) due to the high regular pension indexation and the high growth in contributions to budgetary funds, in particular due to the establishment of the Reconstruction Fund.
On 30 September, the Fiscal Council received the draft state budgets for 2025 and 2026 and the draft Medium-Term Fiscal-Structural Plan 2025–2028. As the existing Fiscal Rule Act (ZFisP) is inconsistent with the changes to the economic governance system in the EU, the role of the Fiscal Council in the adoption of the budgetary documents is not clear until the ZfisP is amended. Nevertheless, we will provide an opinion on the draft Plan together with the assessment of the state budget proposals in accordance with the Public Finance Act by 20 October. The Committee on Finance of the National Assembly of the Republic of Slovenia will discuss the draft Plan at its session on 4 October 2024.