Prime Minister Robert Fico at a press conference on September 17, 2024, in Bratislava, outlining the package of consolidation measures. (source: TASR)
Prime Minister Robert Fico and his ministers have unveiled a comprehensive suite of measures aimed at consolidating Slovakia’s public finances, necessitating a fiscal adjustment of up to €2.7 billion for the upcoming year.
“Consolidation is, as the English say, ‘a must’. We had to do it,” said PM Fico.
At a press conference on Tuesday, he condemned previous administrations for their financial management, claiming that their actions led the European Commission to label Slovakia’s public finances as the worst in the EU.
The government has set a target of reducing the deficit from an estimated almost 6 percent to 4.7 percent of GDP next year.
The prime minister assured that the consolidation measures would be socially sustainable, stating, “We have found a balance.” He explained that while adjustments would be made to tax bonuses and parental pensions, the introduction of a thirteenth pension would help mitigate the impact. Working children will no longer contribute to their parents’ pensions but can donate 2 percent of their taxes instead. The tax bonus will decrease based on the parent’s income, starting to decline at €2,480 and vanishing entirely for incomes above €3,632. The bonus will not apply to children over 18.
Additionally, PM Fico announced what he described as a historic compromise on VAT rates. The standard rate will rise from 20 to 23 percent for most goods, while a 19 percent rate will apply to foods. However, basic food items, which previously had a 10 percent VAT, will see a reduction to 5 percent, as will textbooks and medicines.
