Slower growth, pensions pressure Slovakia's 2023 budget deficit

The 2023 budget was approved last year targeting a fiscal gap of over 6% of gross domestic product as the government had sought to ramp up spending to help people hit by soaring energy costs and inflation. The state budget deficit was approved at 8.34 billion euros.

Slovakia's budget shortfall could swell by 1.2 billion euros ($1.09 billion) in 2023 due to slower economic growth and a jump in pension payments, the finance ministry forecast on Thursday. The ministry released new macroeconomic forecasts in which it saw growth in 2023 at 1.2%, a touch slower than 1.3% previously forecast.

At the same time, it forecast a 20% rise this year in pension spending - double the rate that state income should rise - due to a pension hike valid from July, according to a presentation of its new outlook. "The overall impact (of the two factors) is 1.2 billion," said Juraj Valachy, head of the ministry's institute for financial policy.

A caretaker government took power last month to lead the country into early elections in September, after a previous centre-right government fell apart last year. The 2023 budget was approved last year targeting a fiscal gap of over 6% of gross domestic product as the government had sought to ramp up spending to help people hit by soaring energy costs and inflation.

The state budget deficit was approved at 8.34 billion euros. ($1 = 0.9164 euros)