Efficient Public Spending: Pathways for Fiscal Sustainability

Selected Issues Papers, April 8, 2026

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Slovakia’s fiscal position has weakened considerably over the past 15 years, with public debt and expenditure rising faster than in peer countries.
Given limited scope for additional revenue-based consolidation, policy efforts will increasingly need to focus on the expenditure side.
The paper benchmarks the level, efficiency and allocation of public spending in Slovakia relative to peer countries to identify reform areas that can generate savings and strengthen the country’s fiscal position.

Most of Slovakia’s recent increase in public expenditure is mainly due to rising spending on social protection.
Rising social protection spending is driven by intensifying demographic pressures as well as generous pension and family benefits.
Spending efficiency gaps relative to international benchmarks span multiple government functions.

Demographic pressures contributing to higher social protection spending.
Generous pension and family benefits increasing expenditure burdens.
Limited room for additional revenue-based consolidation, shifting focus to expenditure-side measures.

Multiple government functions exhibit spending efficiency gaps relative to international benchmarks.
Allocation of resources could be rebalanced toward more growth-enhancing areas to improve fiscal outcomes.

Increase the efficiency of public service delivery.
Ensure that social transfers are specifically targeted at the most vulnerable.
Reallocate resources toward more growth-enhancing areas to improve the fiscal outlook and safeguard long-term debt sustainability.