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Slovakia belongs to the countries with the highest deficit; we must improve the sustainability of public finances

Bratislava, June 11, 2024 – The public administration deficit in Slovakia saw a substantial year-on-year increase. The Supreme Audit Office (SAO) of the Slovak Republic, has brought this to the attention of the MPs in the opinion on the Draft state final account of the Slovak Republic for the year 2023. This report, officially presented today at the parliamentary finance committee by the head of the office, Ľubomír Andrassy, reveals that the public administration deficit in Slovakia was higher than the EU average in 2023, with only five countries achieving a worse result, namely Poland, France, Romania, Hungary and Italy. The total public administration debt was 68.83 billion last year, which represents 56% of GDP and increased by 5.45 billion year-on-year. On the other hand, real GDP grew by 1.6%, which was the fastest growth among the V4 countries. Inflation decreased during the year, food prices declined the most, and energy price growth was dampened mainly by government compensation measures. The head of the inspectors emphasized that "the application of the public expenditure limit could contribute to the improvement of the state economy."

The reason for the growing indebtedness is inadequate measures to mitigate the effects of rising energy prices and steps aimed at maintaining or improving the social standard of senior citizens. The debt per inhabitant is constantly growing; last year, it reached the level of 12,679 euros, while for comparison, in 2010, it was less than 5,150 euros. Total cash expenditures of the state budget increased year-on-year by 7.8 billion. 2.92 billion went to aid schemes related to the increase in energy prices. (9.3% of state budget expenditures). Reserves of 2.4 billion were prepared in the budget, and 4.3 billion was actually drawn from the reserves.

"The largest items financed from the reserves were the initially unbudgeted supplementary financing of the Social Insurance Company in the historically highest amount of 1.16 billion. EUR, and additional coverage of 13th pensions in 439 million. EUR, while a total of 709 mil. was paid out for the 13th pensions. Last year, the Social Insurance Company documented a record increase in people who retired early, which impacted the labour market and its economy when contributors became net recipients," pointed out Ľ. Andrassy. In 2023, the total expenditure on old-age pensions increased by 21.3% year-on-year (EUR 1.4 billion), the highest in the last ten years. The number of newly granted early retirement pensions in 2023 increased by 41.2% year-on-year, while the amount of pension benefits in the case of early retirement pensions begins to exceed the average amount of retirement pensions by 29.3 euros/month from 2023.

The data from the state final account confirm the sad fact that the indebtedness of medical facilities has not been managed systematically for over 20 years. "The indebtedness of the 13 largest hospitals under the jurisdiction of the Ministry of Health is severe because these hospitals provide the widest range of financially demanding services. Their total indebtedness exceeded one billion euros last year, and the total debt in the public health sector reached two billion," said Ľ. Andrassy. The total volume of expenses in the public health insurance system has been growing recently. While in 2015, 4.2 billion passed through health insurance, in 2023, it was 7.2 billion euros, while, for example, savings in medicine expenses or more efficient management of state hospitals have repeatedly failed to be met.

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