Slovak Republic: 2026 Article IV Consultation-Press Release; and Staff Report

International Monetary Fund

No 2026/065, IMF Staff Country Reports from International Monetary Fund

Abstract: The 2026 Article IV Consultation discusses that the growth slowed sharply in 2025 in Slovakia, complicating efforts to reduce the fiscal deficit and put debt on a sustainable path. Meanwhile, structural headwinds related to geo-economic fragmentation and aging weigh on medium-term growth and raise concerns about Slovakia’s ability to converge to living standards in more advanced EU countries. The key objectives now are to put in place a multi-year strategy for restoring debt sustainability, while implementing structural reforms to strengthen productivity and support medium-term growth. Growth is expected to remain subdued in 2026, as robust net exports are offset by fiscal consolidation. Inflation will remain elevated due to the gradual withdrawal of energy price support but core inflation is expected to decline to 2 percent by mid-2027. The fiscal consolidation envisaged in 2026 is broadly appropriate though likely insufficient to meet budget targets. The greater emphasis on expenditure cuts is welcome given the increase in spending since 2023, but the consolidation package as a whole lacks strategic direction. Policies to bolster innovation, facilitate technology adoption, increase the labor force, reduce skills mismatches, and improve firms’ access to risk capital would support medium-term growth and efforts to keep debt on a sustainable trajectory.

Keywords: fund holding; expenditure review; exchange rate arrangement; IMF country report No.; fund relation; FSAP finding; Fiscal consolidation; Labor markets; Income; Europe; Global (search for similar items in EconPapers)
Pages: 66
Date: 2026-03-26
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