IMF Executive Board Concludes 2025 Article IV Consultation with the Republic of Slovenia
IMF News, January 26, 2026
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- Published: January 26, 2026
Overview and Executive Board assessment
- The Executive Board completed the Article IV Consultation and considered and endorsed the staff appraisal without a meeting on a lapse of time basis.
- The authorities consented to the publication of the Staff Report prepared for this consultation.
- Assessment highlights:
- Slovenia has shown resilience in face of multiple shocks.
- Improving fiscal balances in 2021-24 reversed a significant increase in public debt incurred during the pandemic and helped build fiscal buffers, while high scores on social indicators were preserved.
- The banking system appears healthy.
- Authorities have embarked on pension, long-term care, and health sector reforms to address population aging.
Recent developments and near-term outlook
- Growth and labor market:
- Real GDP contracted in the first quarter of 2025, as investment and exports fell amid weak external demand.
- Growth bounced back, supported by a pickup in investment and private consumption.
- Growth is projected at 0.8 percent in 2025.
- The labor market remains tight despite some softening; job vacancies are still above long-term averages.
- Inflation:
- Inflation fell sharply in 2024 from multi-decade highs in 2022-23, but increased temporarily in 2025, driven largely by food prices.
- External position:
- The external position in 2025 is assessed to be moderately stronger than the level implied by fundamentals and desirable policies, based on projected data.
Medium-term outlook and macroeconomic projections
- Growth projections and drivers:
- Growth is projected to strengthen in 2026-27 before moderating to its potential over the medium term, alongside a gradual decline in inflation.
- Growth is expected to strengthen in the next years from improved investor confidence and increased export demand.
- Projected to stabilize at just above 2 percent in the medium term, with investment and improved total factor productivity counterbalancing demographic headwinds.
- Inflation outlook:
- Inflation would gradually decline toward the 2 percent European Central Bank target as food and energy prices stabilize.
- Risks to the outlook:
- Tilted to the downside.
- External risks: escalating trade measures, prolonged uncertainty weakening export demand, undermining confidence, lowering investment; higher import prices slowing disinflation and reducing real incomes.
- Domestic risks: delays in implementing public investment or structural reforms, wage growth outpacing labor productivity eroding competitiveness and slowing income convergence.
- Upside: faster progress in deepening the EU single market.
Fiscal developments, assessment, and recommendations
- 2025 fiscal outcomes:
- General government deficit widened from 0.9 percent of GDP in 2024 to 2.2 percent of GDP in 2025, primarily reflecting higher post-flood reconstruction and a significant increase in the public sector wage bill from a public wage reform and a new winter holiday allowance.
- Gross public debt is projected to have declined slightly to 66 percent of GDP in 2025.
- Budget stance and recommendation:
- The 2026 budget will support activity; its stance is moderately expansionary and will help bolster growth given the still negative output gap.
- Staff view: a somewhat smaller deficit would have been preferable, implemented through measures to reduce current spending, to preserve fiscal space amid elevated uncertainty and medium-term pressures.
- Medium-term fiscal pressures and debt outlook:
- On top of growing costs for pension and healthcare as the population ages, there are spending needs for defense and the green and digital transitions.
- Incorporating the most acute pressures suggests public debt would remain at about 66 percent of GDP.
- Overall risk of sovereign debt distress is still assessed as low, but an extended forecast horizon would see an increase in the debt ratio reflecting further spending pressures.
- Fiscal policy recommendations:
- Fiscal consolidation is needed to reduce public debt and preserve the country’s ability to respond to shocks; recommend a gradual, growth-friendly consolidation to place the debt ratio on a downward path.
- Revenue-side measures: broaden bases of value added and personal income taxes; further improve revenue administration; reform the property tax.
- Reduce the high labor wedge to make the tax system more conducive to growth.
- Spending-side measures: focus on reducing spending inefficiencies.
- Public wage bill management: the significant increase following the public sector wage reform and the introduction of a winter holiday allowance warrants regular reviews to maintain effectiveness and sustainability.
- Defense spending above baseline assumptions should be accommodated by reprioritizing other expenditures, while protecting growth-enhancing public investment and well-targeted social spending.
- Fiscal reforms should continue, with implementing the 2025 pension reform described as the linchpin to public pension sustainability.
- Health and long-term care reforms: diversify revenue sources, improve efficiency, promote active aging, and address health sector labor shortages.
Financial sector and macroprudential stance
- Banking system resilience:
- Slovenia’s banking system remains resilient; banks are well capitalized, highly liquid, and profitable.
- Financial stability risks have increased slightly since the 2024 Article IV consultation.
- Credit risks have risen for some export-oriented manufacturers; close monitoring of asset quality, especially for exposed banks and portfolio segments, should continue.
- Policy stance:
- The macroprudential policy stance is appropriate.
- Letting the bank asset tax expire as planned at end-2028 will help preserve capital buffers.
Structural reforms to boost long-term growth
- Main reform priorities:
- Tackle persistent skilled labor shortages by better aligning education and training with market needs, expanding vocational and lifelong learning, and improving migrant integration and recognition of foreign qualifications.
- Enhance the business environment, including simplifying construction permits to speed project implementation and increase competition.
- Strengthen the innovation ecosystem and expand access to finance for young and innovative firms, including through venture capital, to support dynamic firm growth.
Key economic indicators (Slovenia: Selected Economic Indicators, 2024–30)
- Real sector (annual percentage change, unless noted otherwise)
- Real GDP growth: 2024: 1.7; 2025: 0.8; 2026: 2.2; 2027: 2.3; 2028: 2.1; 2029: (no value in source); 2030: (no value in source).
- Potential output growth: 2024: 2.6; 2025: 2.5.
- Output gap (in percent of potential GDP): 2024: 1.4; 2025: -0.2; 2026: 0.0.
- Prices (HICP)
- Consumer prices (period average): 2024: 2.0.
- Consumer prices (end of period): (no value in source for 2025–30).
- Employment and wages
- Unemployment rate (in percent, ILO definition): 2024: 3.7; 2025: 3.8; 2026: 3.9; 2027: 4.0.
- Real wages (all sectors) 1/: 2024: 4.1; 2025: 4.3; 2026: 3.2; 2027: 3.1.
- Public finance (percent of GDP)
- General government balance 2/: 2024: -0.9; 2025: -2.2; 2026: -2.6; 2027: -2.7; 2028: -2.8; 2029: -2.9.
- General government gross debt: 2024: 66.6; 2025: 66.0; 2026: 65.2; 2027: 65.3; 2028: 65.4; 2029: 65.9; 2030: 66.5.
- General government net debt: 2024: 49.8; 2025: 50.1; 2026: 50.5; 2027: 51.1; 2028: 51.7; 2029: 52.5; 2030: 53.3.
- Monetary and financial indicators
- Credit to the private sector: 2024: 5.6; 2025: 4.9; 2026: 4.4; 2027: 4.5.
- Balance of payments (percent of GDP)
- Current account balance: 2024: 3.6; 2025: 3.3.
- Terms of trade (goods and services, percent change): 2024: 1.5; 2025: 0.7; 2026: -0.5; 2027: -0.3; 2028: -0.1.
- Net international investment position: 2024: 9.9; 2025: 11.9; 2026: 15.0; 2027: 17.6; 2028: 20.0; 2029: 22.3; 2030: 24.4.
- Memorandum items
- Nominal GDP (millions of euros): 2024: 67,418; 2025: 70,194; 2026: 73,265; 2027: 76,495; 2028: 79,972; 2029: 83,404; 2030: 86,975.
- Population (millions): (no numeric values provided in source).
- GDP per capita (euros): 2024: 31,698; 2025: 32,942; 2026: 34,321; 2027: 35,789; 2028: 37,389; 2029: 38,983; 2030: 40,643.
Imf Executive Board Concludes 2025 Article IV Consultation with the Republic of Slovenia