By: Vida Kocjan
For the past three years, during the coalition of Svoboda, SD and Levica under the leadership of Robert Golob, the Slovenian public has been hearing a unified and confident message: public finances are stable, the economy is successful, and Slovenia is achieving results that “the whole world envies.” Yet behind this glossy rhetoric lies a completely different reality.
The public‑finance deficit increased sharply in a short period of time, reaching 2.5 percent of GDP in 2025 (up from 0.9 percent in 2024). Economic growth slowed significantly, while real GDP dynamics lagged far behind the explosive growth of public spending. This was not the result of an external shock or crisis, but of systematic political decisions and a deliberate preference for permanent spending beyond the country’s real capacities.
Revenues grew moderately, while expenditures increased much faster – in some periods almost twice as fast as economic growth. The result is a fiscal expansion that creates permanent obligations without adequate funding and poses a long‑term threat to the sustainability of public finances.
Current state of public finances
According to the Statistical Office of the Republic of Slovenia and Eurostat, the general‑government deficit in 2025 amounted to approximately €1.79 billion, or 2.5 percent of GDP – an increase of 1.6 percentage points compared to the previous year. The rise in the deficit was driven by a pronounced increase in expenditures, particularly public‑sector wage costs, social transfers, and interest payments on borrowed funds. Revenues grew by around 3 to 4 percent, while expenditures rose by 9 to 11 percent in key segments.
In the first quarter of 2026, the state budget had already recorded a deficit of around €700 million, indicating a continuation of the trend. The Golob government had planned for spending to exceed revenues by €2.1 billion for the entire year. By 22 April, expenditures had already surpassed revenues by €1.1 billion, including €563.8 million paid solely in interest on existing loans. The Fiscal Council estimates that the deficit will increase slightly further in 2026, and some projections suggest that, without policy changes, it could exceed 3 percent of GDP. Some even mention 3.5 percent if current trends continue.
Warnings from the Fiscal Council of the Republic of Slovenia
The Fiscal Council has been warning for some time about the dangers of such policies. Its messages have become exceptionally clear: fiscal policy is drifting away from medium‑term sustainability and becoming pro‑cyclical. This means that spending is increasing instead of building reserves for future challenges.
In its April 2026 assessment of the draft “Annual Progress Report 2026,” the Fiscal Council finds that public‑finance developments in 2025 “moved away from sustainability” due to exceptionally high expenditure growth. The cumulative deviation from the commitments in the medium‑term fiscal‑structural plan remained within the allowed range only because of the manoeuvring space created in 2024, but this space will likely be exceeded already in 2026. The room for manoeuvre is exhausted, and additional measures without compensations would further increase risks. The president of the Fiscal Council, Davorin Kračun, emphasises the need for prudent fiscal policy and warns that public finances are not sustainable without corrective measures.
Particularly problematic is that expenditure growth is not directed toward productive investment but toward permanent obligations: higher public‑sector wages, social transfers, and programme expansion. This increases fixed costs that will be difficult to reduce in the future.
Draft Stability Report of the Republic of Slovenia
The EU‑aligned document “Annual Progress Report 2026” (the draft submitted by the government to Brussels in line with the revised EU fiscal rules) clearly shows a narrowing of fiscal space. In the draft, the government acknowledges that the growth of adjusted expenditures in 2025 exceeded the limits, although national escape clauses (e.g., for defence) kept it formally within the permissible deviations.
The Fiscal Council warns that, under unchanged policies, the deviation could even double by 2028. The deficit could reach around 3.5 percent of GDP instead of the planned one to two percent, while public debt would be roughly five percentage points higher than projected in the medium‑term plan. The Council highlights the risks posed by additional laws without compensatory measures, which could increase the deficit by around €900 million annually – more than one percentage point of GDP. Key pressures stem from long‑term obligations in the pension and healthcare systems due to demographic trends, as well as from the current growth of ongoing expenditure.
On 22 April, the National Assembly discussed the draft report and the government’s position on the Fiscal Council’s critical assessment in the finance committee and other relevant working bodies. At a correspondence session the same day, the government adopted its position, arguing that the report is based on a no‑policy‑change scenario and provides a realistic depiction of the situation.
The debate once again revealed a deep divide between government rhetoric and independent assessments. Representatives of the outgoing coalition parties stressed that measures, including the wage reform and social transfers, are essential for social cohesion and that risks can be managed through economic growth. MPs, likely future members of the emerging centre‑right coalition, sharply criticised the pro‑cyclical nature of the outgoing Golob government’s policies, the lack of structural reforms (rationalisation, digitalisation of the public sector), and the fact that Slovenia is drifting away from its own fiscal commitments and European rules. They emphasised that the new government will inherit a difficult fiscal legacy requiring immediate corrective measures and consolidation. The report has not yet been formally adopted at the National Assembly’s plenary session; it is part of the regular annual procedure that concludes with submission to Brussels. The Fiscal Council, however, has delivered a clear diagnosis: without prudent fiscal policy and more effective public‑finance management, Slovenia risks a lasting imbalance.
Letter from the Minister of Finance
Equally telling is the letter sent by the outgoing Minister of Finance, Klemen Boštjančič, now an MP of Svoboda, to budget users, urging them to limit spending. Messages like this usually signal that the gap between political promises and reality has already widened significantly. Although the outgoing minister argued earlier this year that the 2025 deficit would be lower than planned (2.4 percent of GDP instead of 2.6 percent), the data indicate a structural deterioration driven by higher labour costs and transfers. In the first quarter of 2026, the deficit was already rising faster than last year.
Concealed before the elections
Why was none of this highlighted before the elections, when Robert Golob claimed that “the whole world envies our results”? The key political question remains: why was there almost no public debate about these risks before the vote? The dominant narrative was one of success, stability, and economic growth. Warnings from the Fiscal Council were pushed aside because they did not fit the electoral logic of “goodies” and expanding entitlements. Much of the responsibility for concealing the data lies with pro‑government media, led by the national broadcaster. Fiscal reality does not follow electoral cycles – the bills arrive later, often with delay and greater pain.
Fiscal reality versus left‑wing optimism
Current fiscal policy is built on short‑term political optimism that ignores long‑term constraints. Public finances do not operate according to political wishes but according to economic fundamentals. Permanent growth in public spending without serious reforms (rationalisation, digitalisation, reduction of administrative burdens) is a recipe for instability. The public‑sector wage reform has indeed brought higher salaries (total costs will amount to around €1.4 billion by 2028), but without accompanying reorganisation it simply means a larger apparatus without the necessary improvement in efficiency.
Higher spending today means less freedom tomorrow – more interest payments, less money for services and investment. Political optimism eventually collides with reality. The only question is under what conditions, and at whose expense, the adjustment will come. The new government emerging after the March 2026 elections will have to act quickly if it wants to prevent fiscal imbalances from becoming entrenched for decades.
What awaits us in the coming months?
If the trend does not reverse, Slovenia faces a period of fiscal consolidation. Possible scenarios include further borrowing, higher taxes, or spending cuts – each with its own cost. The greatest danger is delay, as late adjustments tend to be more painful and less controlled.
Economists highlight similar concerns:
- Igor Masten emphasises the pro‑cyclical nature of policy: in good times, spending increases instead of building reserves.
- Matej Lahovnik stresses that key expenditures (wages and transfers) are politically almost untouchable, making consolidation difficult.
- Davorin Kračun (Fiscal Council) warns that the room for manoeuvre is exhausted and that additional unfunded measures could increase the deficit by nearly €1 billion.
Fiscal Council: The room for manoeuvre is exhausted
On 20 April 2026, the Fiscal Council published a sharp assessment of the draft Stability Report of the Republic of Slovenia. Key quotes from the assessment are unequivocal:
- Public‑finance developments in 2025 moved away from sustainability due to exceptionally high expenditure growth.
- The cumulative deviation from the commitments in the medium‑term fiscal‑structural plan remained within the allowed range only because of the manoeuvring space created in 2024. Projections by the Fiscal Council and the Ministry of Finance indicate that the deviation will exceed the allowed limit already this year.
- The room for manoeuvre is exhausted. Additional measures with negative fiscal impact would, without compensations, further increase risks to the sustainability of public finances.
- Public finances are not sustainable without corrective measures.
Note: The interview was originally published in the print edition of Demokracija.