Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Slovakia
Date: 2024-06-19
Institutions: European Commission, Secretariat-General
Subjects: Slovakia, budget policy, competitiveness, economic policy, economic recovery, economic reform, employment policy, social policy, stability pact

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   EUROPEAN COMMISSION  Brussels, 19.6.2024  COM(2024) 625 final  Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Slovakia {SWD(2024) 600 final} - {SWD(2024) 625 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the economic, social, employment, structural and budgetary policies of Slovakia 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Regulation (EU) 2024/1263 of the European Parliament and of the Council 
of  29  April  2024  on  the  effective  coordination  of  economic  policies  and  on  multilateral 
budgetary surveillance and repealing Council Regulation (EC) No 1466/971, and in particular 
Article 3(3) thereof, 

Having  regard  to  Regulation  (EU)  No  1176/2011  of  the  European  Parliament  and  of  the 
Council  of  16  November  2011  on  the  prevention  and  correction  of  macroeconomic 
imbalances2, and in particular Article 6(1) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council3,  which 
established  the  Recovery  and  Resilience  Facility,  entered  into  force  on  19  February 
2021. The Recovery and Resilience Facility provides financial support to the Member 
States  for  the  implementation  of  reforms  and  investment,  entailing  a  fiscal  impulse 
financed by the EU. In line with the European Semester priorities, it helps achieve the 
economic and social recovery and implement sustainable reform6s and investments, in 
particular  to  promote  the  green  and  digital  transitions  and  make  the  Member  States’ 
economies  more  resilient.  It  also  helps  strengthen  public  finances  and  boost  growth 
and job creation in the medium and long term, improve territorial cohesion within the 
EU and support the continued implementation of the European Pillar of Social Rights.  

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OJ L 2024/1263, 30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1263/oj. 
OJ L 306, 23.11.2011, p. 25, ELI: http://data.europa.eu/eli/reg/2011/1176/oj. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021 
(OJ  L  57,  18.2.2021,  p.  17),  ELI: 
establishing 
http://data.europa.eu/eli/reg/2021/241/oj. 

the  Recovery  and  Resilience  Facility 

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(2) 

(3) 

(4) 

(5) 

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The  REPowerEU  Regulation4,  adopted  on  27  February  2023,  aims  to  phase  out  the 
EU’s  dependency  on  Russian  fossil  fuel  imports.  This  would  help  achieve  energy 
security  and  diversify  the  EU’s  energy  supply,  while  increasing  the  uptake  of 
renewables,  energy  storage  capacities  and  energy  efficiency.  Slovakia  added  a  new 
REPowerEU chapter to its national recovery and resilience plan in order to finance key 
reforms and investments that will help achieve the REPowerEU objectives. 

On  16  March  2023,  the  Commission  issued  a  Communication  on  the  ‘Long-term 
competitiveness of the EU: looking beyond 2030’5, in order to inform policy decisions 
and  create  the  framework  conditions  for  increasing  growth.  The  Communication 
frames competitiveness along nine mutually reinforcing drivers. Among these drivers, 
access to private capital, research and innovation, education and skills, and the single 
market  emerge  as  paramount  policy  priorities  for  reform  and  investment  to  address 
current productivity challenges as well as to build up the long-term competitiveness of 
the EU and its Member  States.  On 14 February  2024, the Commission  followed this 
Communication  with  the  Annual  Single  Market  and  Competitiveness  Report6.  The 
report  details  the  competitive  strengths  and  challenges  of  Europe's  Single  Market, 
tracking yearly developments according to the nine competitiveness drivers identified.   

On 21 November 2023, the Commission adopted the 2024 Annual Sustainable Growth 
Survey7, marking the start of the 2024 cycle of the European Semester for economic 
policy  coordination.  The  European  Council  endorsed  the  priorities  of  the  survey 
around  the  four  dimensions  of  competitive  sustainability  on  22  March  2024.  On  21 
November 2023, on the basis of Regulation (EU) No 1176/2011, the Commission also 
adopted  the  2024  Alert  Mechanism  Report,  in  which  it  identified  Slovakia as  one  of 
the  Member  States  that  may  be  affected  or  may  be  at  risk  of  being  affected  by 
imbalances, and for which an in-depth review would be needed. The Commission also 
adopted a recommendation for a Council recommendation on the economic policy of 
the euro area, which the Council adopted on 12 April 2024, as well as the proposal for 
the 2024 Joint Employment Report analysing the implementation of the Employment 
Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights,  which  the 
Council adopted on 11 March 2024. On 16 January 2024, the Commission adopted an 
opinion on the 2024 Draft Budgetary Plan of Slovakia. 

On  30  April  2024,  the  EU’s  new  economic  governance  framework  came  into  force. 
The  framework  includes  the  new  Regulation  of  the  European  Parliament  and  of  the 
Council  (EU)  2024/1263  on  the  effective  coordination  of  economic  policies  and 
multilateral  budgetary  surveillance  and  repealing  Council  Regulation  (EC)  No 
1466/97.  It  also  includes  the  amended  Regulation  (EC)  No  1467/97  on  the 
implementation  of  the  excessive  deficit  procedure  and  the  amended  Directive 
2011/85/EU  on  the  budgetary  frameworks  of  Member  States8.  The  objectives  of  the 

Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council  of  27  February  2023 
amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans 
and  amending  Regulations  (EU)  No  1303/2013,  (EU)  2021/1060  and  (EU)  2021/1755,  and  Directive 
2003/87/EC (OJ L 63, 28.2.2023, p. 1), ELI: http://data.europa.eu/eli/reg/2023/435/oj. 
COM(2023) 168 final. 
COM(2024) 77 final. 
COM(2023) 901 final. 
Council  Regulation  (EU)  2024/1264  of  29  April  2024  amending  Regulation  (EC)  No  1467/97  on 
speeding  up  and  clarifying  the  implementation  of  the  excessive  deficit  procedure  (OJ  L,  2024/1264, 
30.4.2024,  ELI: http://data.europa.eu/eli/reg/2024/1264/oj)  and  Council  Directive  (EU)  2024/1265  of 

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new  framework  are  public  debt  sustainability  and  sustainable  and  inclusive  growth 
through gradual  fiscal consolidation  as  well as reforms  and investments.  It  promotes 
national  ownership  and  has  a  greater  medium-term  focus,  combined  with  more 
effective and coherent enforcement. Each Member State should submit to the Council 
and  to  the  Commission  a  national  medium-term  fiscal-structural  plan.  National 
medium-term  fiscal-structural  plans  contain  the  fiscal,  reform  and  investment 
commitments  of  a  Member  State,  covering  a  planning  horizon  of  4  years  or  5  years 
depending on the regular length of the national legislature. The net expenditure9 path 
in  the  national  medium-term  fiscal-structural  plans  should  comply  with  the 
requirements of Regulation (EU) 2024/1263, including the requirements to put or keep 
general government debt on a plausibly downward path by the end of the adjustment 
period  at  the  latest,  or  for  it  to  remain  at  prudent  levels  below  60%  of  GDP,  and  to 
bring  and/or  maintain  the  government  deficit  below  the  3%  of  GDP  reference  value 
over  the  medium  term.  Where  a  Member  State  commits  to  a  relevant  set  of  reforms 
and investments in accordance with the criteria set out in Regulation (EU) 2024/1263, 
the  adjustment  period  may  be  extended  by  3  years  at  most.  For  the  purpose  of 
supporting the preparation of those plans, on [21 June] 2024, the Commission is set to 
provide Member States with guidance on the content of the plans and the subsequent 
annual progress reports that they will need to submit and, in accordance with Article 5 
of Regulation (EU) 2024/1263, will transmit to them technical guidance on the fiscal 
adjustments  (reference  trajectories  and  technical  information,  where  applicable).   
Member  States  should  submit  their  medium-term  fiscal-structural  plans  by  20 
September  2024,  unless  the  Member  State  and  the  Commission  agree  to  extend  the 
deadline by a reasonable period of time. Member States should ensure the involvement 
of their national parliaments, and the consultation of independent fiscal institutions, of 
social partners and other national stakeholders, as appropriate.  

In 2024, the European Semester for economic policy coordination continues to evolve 
in  line  with  the  implementation  of  the  Recovery  and  Resilience  Facility.  The  full 
implementation  of  the  recovery  and  resilience  plans  remains  essential  for  delivering 
the policy priorities under the European Semester, as the plans help effectively address 
all  or  a  significant  subset  of  challenges  identified  in  the  relevant  country-specific 
recommendations  issued  in  recent  years.  The  2019,  2020,  2022  and  2023  country-
specific  recommendations  remain  equally  relevant  also  for  recovery  and  resilience 
plans  revised,  updated  or  amended  in  accordance  with  Articles  14,  18  and  21  of 
Regulation (EU) 2021/241.  

On 29 April 2021, Slovakia submitted its national recovery and resilience plan to the 
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant 
to  Article  19  of  Regulation  (EU)  2021/241,  the  Commission  assessed  the  relevance, 
effectiveness,  efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in 
accordance with the assessment guidelines of Annex V to that Regulation. On 13 July 
2021,  the  Council  adopted  its  Decision  on  the  approval  of  the  assessment  of  the 

29  April  2024  amending  Directive  2011/85/EU  on  requirements  for  budgetary  frameworks  of  the 
Member States (OJ L, 2024/1265, 30.4.2024, ELI: http://data.europa.eu/eli/dir/2024/1265/oj). 
Net expenditure as defined in Article 2 of Council Regulation (EU) 2024/1263 of 29 April 2024 (OJ L 
2024/1263,  30.4.2024.  ELI:  http://data.europa.eu/eli/reg/2024/1263/oj).  Net  expenditure  means 
government  expenditure  net  of  (i)  interest  expenditure,  (ii)  discretionary  revenue  measures,  (iii) 
expenditure  on  programmes  of  the  Union  fully  matched  by  Union  funds  revenue,  (iv)  national 
expenditure  on  co-financing  of  programmes  funded  by  the  Union,  (v)  cyclical  elements  of 
unemployment benefit expenditure, and (vi) one-offs and other temporary measures. 

(6) 

(7) 

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(8) 

(9) 

recovery  and  resilience  plan  for  Slovakia10,  which  was  amended  on  14  July  2023 
following Article 18(2) of Regulation (EU) 2021/241 to update the maximum financial 
contribution for non-repayable financial support, as well as to include the REPowerEU 
chapter11. The release of instalments is conditional on a decision by the Commission, 
taken in accordance with Article 24(5) of Regulation (EU) 2021/241, that Slovakia has 
satisfactorily  fulfilled  the  relevant  milestones  and  targets  set  out  in  the  Council 
Implementing  Decision.  Satisfactory  fulfilment  presupposes  that  the  achievement  of 
preceding milestones and targets has not been reversed. 

On  24  April  2024,  Slovakia  submitted  its  2024  National  Reform  Programme  and  its 
2024 Stability Programme, in line with Article 4(1) of Regulation (EC) No 1466/97. In 
accordance with  Article  27 of Regulation  (EU) 2021/241,  the  2024 National  Reform 
Programme  also  reflects  Slovakia’s  biannual  reporting  on  the  progress  made  in 
achieving its recovery and resilience plan.  
The Commission published the 2024 country report for Slovakia12 on 19 June 2024. It 
assessed  Slovakia’s  progress 
relevant  country-specific 
in  addressing 
recommendations  adopted by the Council  between 2019  and  2023 and  took stock of 
Slovakia’s implementation of the recovery and resilience plan. Based on this analysis, 
the  country  report  identified  gaps  with  respect  to  those  challenges  that  are  not 
addressed  or  only  partially  addressed  by  the  recovery  and  resilience  plan,  as  well  as 
new  and  emerging  challenges.  It  also  assessed  Slovakia’s  progress  on  implementing 
the  European  Pillar  of  Social  Rights  and  on  achieving  the  EU  headline  targets  on 
employment, skills and poverty reduction, as well as progress in  achieving the UN’s 
Sustainable Development Goals.  

the 

(10)  The  Commission  carried  out  an  in-depth  review  under  Article  5  of  Regulation  (EU) 
No 1176/2011 for Slovakia. The main findings of the Commission’s staff assessment 
of  macroeconomic  vulnerabilities  for  Slovakia  for  the  purposes  of  that  Regulation 
were  published  in  March  202413.  On  19  June  2024,  the  Commission  concluded  that 
Slovakia  is  experiencing  macroeconomic  imbalances.  In  particular,  Slovakia  faces 
vulnerabilities  related  to  cost  competitiveness,  external  balance,  housing  market  and 
household debt which persist despite some recent improvements, and policy action has 
not  been  forthcoming.  Slovakia  was  subject  to  an  In-depth  review  in  2023,  and  its 
vulnerabilities were assessed as not amounting to macroeconomic imbalances as they 
were expected to ease over the medium term. These vulnerabilities have eased, but not 
as  quickly  as  expected  one  year  ago.  The  improvements  moreover  appear  to  be 
cyclical, with structural vulnerabilities appearing to be entrenched, while policy action 
has  been  lacking.  The  large  current  account  deficit  improved  last  year,  but  it  is 
expected  to  remain  visibly  negative,  leading  to  the  persistence  of  the  significantly 
negative Net International Investment Position. Core inflation has proven stickier than 
expected and has remained higher than the euro area average, while unit labour costs 
continue growing more than in most trading partners. These price and cost pressures 
are  not  expected  to  dissipate  markedly  this  year  or  next,  potentially  hampering 

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Council Implementing Decision of 13 July 2021 on the approval of the assessment of the recovery and 
resilience plan for Slovakia (ST 10156/2021; ST 10156/2021 ADD 1; ST 10156/2021 COR 1).   
Council Implementing Decision of 14 July 2023 amending the Implementing Decision of 13 July 2021 
on  the  approval  of  the  assessment  of  the  recovery  and  resilience  plan  for  Slovakia  (ST  11205/2023 
INIT, ST 11205 2023 ADD 1.). 
SWD(2024) 625 final. 
SWD(2024) 84 final. 

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improvements  in  competitiveness  and  the  trade  balance.  Household  borrowing  has 
been  rising  significantly  over  the  years  and  decelerated  in  2023  amid  a  drop  in 
mortgage  credit.  House  prices  have  fallen  but  are  still  somewhat  overvalued  and  are 
expected  to  rise  again  as  housing  supply  remains  constrained.  Housing  demand  is 
supported  by  policy  interventions  such  as  the  recently  adopted  mortgage  allowances 
that  hamper  monetary  policy  transmission  and  are  fiscally  costly.  Fiscal  adjustment 
has  been  delayed,  and  the  high  government  deficit  is  forecast  to  worsen  this  year, 
while  the  government  debt-to-GDP  ratio  is  expected  to  edge  up  in  2024  and  2025 
despite supportive GDP growth, which puts upward pressure on the domestic demand. 
Overall, policy action has not been sufficient to address the identified vulnerabilities, 
contributing  to  their  entrenchment.  Fiscal  adjustment  would  contribute  to  reducing 
core  inflation  and  strengthening  the  external  position  as  well  as  containing  rises  in 
government debt; the launch of the Excessive Deficit Procedure should underpin such 
an adjustment. Action is also needed to improve price and non-price competitiveness 
and  to  reduce  risks  related  to  the  housing  market  and  household  debt  accumulation, 
including by developing a functioning rental market.  

(11)  Based on data validated by Eurostat14, Slovakia’s general government deficit increased 
from 1.7% of GDP in 2022 to  4.9% in 2023, while the general government debt fell 
from 57.7% of GDP at the end of 2022 to 56.0% at the end of 2023. As announced in 
the  fiscal  policy  guidance  for  202415,  the  Commission  is  taking  the  first  step  for  the 
opening of deficit-based excessive deficit procedures in spring 2024 on the basis of the 
outturn  data  for  2023,  in  line  with  existing  legal  provisions.  On  19  June  2024,  the 
Commission  adopted  a  report  under  Article  126(3)  of  the  TFEU16.  That  report 
assessed the budgetary situation of Slovakia, as its general government deficit in 2023 
exceeded the reference value of 3% of GDP. The report concluded that in the light of 
this  assessment,  and  after  considering  the  opinion  of  the  Economic  and  Financial 
Committee  as  established  under  article  126(4)  TFEU,  the  Commission  intends  to 
propose  in  July  to  open  an  excessive  deficit  procedure,  by  recommending  to  the 
Council  to  adopt  a  Decision  under  Article  126(6)  establishing  the  existence  of  an 
excessive deficit for Slovakia. 

(12)  On 12 July 2022, the Council recommended17 that Slovakia ensure in 2023 a prudent 
fiscal  policy,  in  particular  by  limiting  the  growth  of  nationally  financed  primary 
current expenditure below medium-term potential output growth18, taking into account 
continued temporary and targeted support to households and firms most vulnerable to 
energy price hikes and to people fleeing Ukraine. At the same time, Slovakia should 
stand  ready  to  adjust  current  spending  to  the  evolving  situation.  Slovakia  was  also 
recommended  to  expand  public  investment  for  the  green  and  digital  transitions,  and 
for  energy  security  taking  into  account  the  REPowerEU  initiative,  including  by 
making use of the Recovery and Resilience Facility and other Union funds.  In 2023, 

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Eurostat-Euro Indicators, 22.4.2024. 
COM(2023) 141 final. 
Report  from  the  Commission,  prepared  in  accordance  with  Article  126(3)  of  the  Treaty  on  the 
Functioning of the European Union, 19.6.2024, COM(2024)598 final. 
Council Recommendation of 12 July 2022 on the  2022  National Reform Programme of  Slovakia and 
delivering a Council opinion on the 2022 Stability Programme of Slovakia, OJ C 334, 1.9.2022, p. 205. 
Based on the Commission 2024 spring forecast, the medium-term potential output growth of Slovakia 
in 2023 is estimated at 12.4% in nominal terms, based on the 10-year average real potential growth rate 
and the 2023 GDP deflator. 

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according to the Commission estimates, the fiscal stance19 was expansionary, by 6.1% 
of  GDP,  in  a  context  of  high  inflation.  The  growth  in  nationally  financed  primary 
current  expenditure  (net  of  discretionary  revenue  measures)  in  2023  provided  an 
expansionary  contribution  to  the  fiscal  stance  of  3.8%  of  GDP.  This  includes  the 
reduced  cost  of  the  targeted  emergency  support  measures  to  households  and  firms 
most vulnerable to energy price hikes by 0.2% of GDP. This also includes lower costs 
to  offer  temporary  protection  to  displaced  persons  from  Ukraine  (by  0.1%  of  GDP). 
The  expansionary  contribution  of  nationally  financed  primary  current  expenditure  in 
excess of medium-term potential output growth was therefore not due to the targeted 
emergency support to households and firms most vulnerable to energy price hikes, and 
to  people  fleeing  Ukraine.  The  expansionary  growth  in  nationally  financed  primary 
current expenditure (net of discretionary revenue measures) was driven by untargeted 
emergency  energy  measures,  permanent  increases  in  public  sector  wages  and  social 
benefits,  higher  spending  on  healthcare  and  the  reduction  in  VAT  rates  on  selected 
items. In sum, the growth of nationally financed primary current expenditure in 2023 
was not in line with the Council recommendation. Expenditure financed by Recovery 
and Resilience Facility grants and other EU funds amounted to 3.2% of GDP in 2023. 
Nationally  financed  investment  amounted  to  3.2%  of  GDP  in  2023,  representing  an 
annual  increase  of  0.8  percentage  points  as  compared  to  2022.  Slovakia  financed 
additional  investment  through  the  Recovery  and  Resilience  Facility  and  other  EU 
funds.  It  financed  public  investment  for  the  green  and  digital  transitions,  and  for 
energy security, such as  investments  in  energy infrastructure  and transport  with  zero 
emissions and energy efficiency of buildings, which are partly funded by the Recovery 
and Resilience Facility and other EU funds. 

(13)  The key projections in the 2024 Stability Programme can be summarised as follows. 
The  macroeconomic  scenario  underpinning  the  budgetary  projections  foresees  real 
GDP  growth  at  2.0%  in  2024  and  3.1%  in  2025,  while  it  projects  HICP  inflation  at 
3.2%  in  2024  and  4.4%  in  2025.  The  general  government  deficit  is  expected  to 
increase  to  5.9%  of  GDP  in  2024  and  decline  to  5.4%  of  GDP  in  2025,  while  the 
general government debt-to-GDP ratio is set to increase to 58.6% by the end of 2024 
and 59.8% by the end of 2025. After 2025, the general government deficit is projected 
to  decrease  gradually  to  5.2%  of  GDP  in  2026  and  increase  to  5.5%  in  2027. 
Therefore, the general  government  balance is  not  planned to  return below the 3% of 
GDP  deficit  reference  value  over  the  programme  horizon.  In  turn,  after  2025,  the 
general government debt-to-GDP ratio is projected to increase to 63.6% in 2026 and to 
67.8% in 2027.  

(14)  The  Commission  Spring  2024  Forecast  projects  real  GDP  to  grow  by  2.2%  in  2024 
and 2.9% in 2025, and HICP inflation to stand at 3.1% in 2024 and 3.6% in 2025. 

(15)  The Commission Spring 2024 Forecast projects a government deficit of 5.9% of GDP 
in 2024, while the general government debt-to-GDP ratio is set to increase to 58.5% 
by the end of 2024. The increase of the deficit in 2024 mainly reflects a continuation 

19 

The fiscal stance is defined as a measure of the annual change in the underlying budgetary position of 
the  general  government.  It  aims  to  assess  the  economic  impulse  stemming  from  fiscal  policies,  both 
those  that  are  nationally  financed  and  those  that  are  financed  by  the  EU  budget.  The  fiscal  stance  is 
measured as the difference between (i) the medium-term potential growth and (ii) the change in primary 
expenditure  net  of  discretionary  revenue  measures  (and  excluding  temporary  emergency  measures 
related to the COVID-19 crisis) and including expenditure financed by non-repayable support (grants) 
from  the  Recovery  and  Resilience  Facility  and  other  Union  funds.  A  negative  (positive)  sign  of  the 
indicator indicates an expansionary (contractionary) fiscal policy. 

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of existing energy prices support measures and new measures increasing  expenditure 
such  as  a  permanent  increase  in  the  13th  pension  payment,  increased  spending  on 
healthcare, the creation of a new Ministry of Tourism and Sports, an amendment to the 
Education Act introducing a legal right to admission to the kindergarten for children 
older than 3 years and improving rights of children with special education needs, and 
the  introduction  of  performance-based  contracts  at  public  universities.  Based  on  the 
Commission’s estimates, the fiscal stance is projected to be contractionary by 1.4% of 
GDP in 2024. 

(16)  Expenditure amounting to 1.2% of GDP is expected to be financed by non-repayable 
support  (“grants”)  from  the  Recovery  and  Resilience  Facility  in  2024,  compared  to 
0.5%  of  GDP  in  2023,  according  to  the  Commission  Spring  2024  Forecast.  
Expenditure  financed  by  Recovery  and  Resilience  Facility  grants  will  enable  high-
quality investment and productivity-enhancing reforms without a direct impact on the 
general government balance and debt of Slovakia.  

(17)  On  14  July  2023,  the  Council  recommended20  that  Slovakia  ensure  a  prudent  fiscal 
policy,  in  particular  by  limiting  the  nominal  increase  in  net  nationally  financed 
primary  expenditure21  in  2024  to  not  more  than  5.7%.  When  executing  their  2023 
budgets  and  preparing  their  Draft  Budgetary  Plans  for  2024,  Member  States  were 
invited  to  take  into  account  that  the  Commission  would  propose  to  the  Council  the 
opening  of  deficit-based  excessive  deficit  procedures  based  on  the  outturn  data  for 
2023.  According  to  the  Commission  Spring  2024  Forecast,  Slovakia’s  net  nationally 
financed primary expenditure is projected to increase by 6.2% in 2024, which is above 
the recommended maximum growth rate. This excess spending over the recommended 
maximum growth  rate in  net  nationally financed  primary expenditure  corresponds  to 
0.2% of GDP in 2024. This risks being not fully in line with what was recommended 
by the Council. 

(18)  Moreover,  the  Council  recommended  that  Slovakia  take  action  to  wind  down  the 
emergency energy support measures in  force, using the related savings to  reduce the 
government  deficit,  as  soon  as  possible  in  2023  and  2024.  The  Council  further 
specified  that,  should  renewed  energy  price  increases  necessitate  new  or  continued 
support  measures,  Slovakia  should  ensure  that  these  were  targeted  at  protecting 
vulnerable  households  and  firms,  fiscally  affordable,  and  preserve  incentives  for 
energy savings. According to the Commission Spring 2024 Forecast, the net budgetary 
cost22 of emergency energy support measures is estimated at 2.1% of GDP in 2023 and 
projected  at  0.4%  in  2024,  and  0.0%  in  2025.  In  particular,  a  cap  on  gas  prices  for 
households is assumed to remain in force in 2024. If the related savings were used to 
reduce  the  government  deficit,  as  recommended  by  the  Council,  these  projections 
would  imply  a  fiscal  adjustment  of  1.7%  of  GDP  in  2024,  whereas  net  nationally 
financed  primary  expenditure23  provides  a  contractionary  contribution  to  the  fiscal 

20 

21 

22 

23 

Council Recommendation of 14 July 2023 on the 2023 National Reform Programme of  Slovakia and 
delivering a Council opinion on the 2023 Stability Programme of Slovakia, OJ C 312, 1.9.2023, p. 233. 
Net primary expenditure is defined as nationally financed expenditure net of  (i) discretionary revenue 
measures, (ii) interest expenditure, (iii) cyclical unemployment expenditure, and (iv) and one-offs and 
other temporary measures. 
The figure represents the level of the annual budgetary cost of those measures, including revenue and 
expenditure and, where applicable, net of the revenue from taxes on windfall profits of energy suppliers. 
This contribution is measured as the change in general government primary expenditure, net of  (i) the 
impact  of  discretionary  revenue  measures,  (i)  one-offs,  (iii)  cyclical 
incremental  budgetary 
unemployment  expenditure  and  (iv)  expenditure  financed by  non-repayable  support  (grants)  from  the 

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(19) 

stance of 0.2% of GDP in that year. The emergency energy support measures are not 
projected to be wound down as soon as  possible in  2023 and 2024. This risks being 
not in line with what was recommended by the Council. Moreover, the related savings 
are  not  projected  to  be  fully  used  to  reduce  the  government  deficit.  This  also  risks 
being not in line with the Council recommendation. The budgetary cost of emergency 
energy  support  measures  targeted  at  protecting  vulnerable  households  and  firms  is 
estimated at 0.0% of GDP in 2024 (0.0% in 2023). 

In addition, the Council also recommended that Slovakia preserve nationally financed 
public  investment  and  ensure  the  effective  absorption  of  Recovery  and  Resilience 
Facility  grants  and  other  EU  funds,  in  particular  to  foster  the  green  and  digital 
transitions.  According  to  the  Commission  Spring  2024  Forecast,  nationally  financed 
public investment is projected to decrease to 3.0% of GDP in 2024, from 3.2% of GDP 
in 2023. This decrease is driven by the end of the 2014-2020 programming period of 
EU structural funds, for which funds were available until 2023. This is also due to the 
postponement  of  a  delivery  of  military  equipment  until  2025.  Taking  into  account 
these  additional  factors,  public  investment  in  2024  is  assessed  as  respecting  the 
Council recommendation. In turn, public expenditure financed from revenues from EU 
funds,  including  Recovery  and  Resilience  Facility  grants,  is  expected  to  decrease  to 
2.0% of GDP in 2024 from 3.2% of GDP in 2023. This decrease is driven by the end 
of  the  2014-2020  programming  period  of  EU  structural  funds,  for  which  funds  were 
available until 2023. 

(20)  Based on policy measures known at the cut-off date of the forecast and on a no-policy-
change  assumption,  the  Commission  Spring  2024  Forecast  projects  a  government 
deficit  of  5.4%  of  GDP  in  2025.  The  decrease  of  the  deficit  in  2025  mainly  reflects 
stronger revenues  due to  higher nominal  GDP on the back of stronger inflation.  The 
general government debt-to-GDP ratio is set to increase to 59.9% by the end of 2025. 
Prudent fiscal policy should contribute to reducing core inflation, which is well above 
the  euro  area  average  and  could  lead  to  competitiveness  losses  if  persistent,  and 
strengthening the external position too. 

(21)  Slovakia’s  tax  system  could  benefit  from  a  more  growth-friendly  tax  mix  to  boost 
labour  market  participation,  while  promoting  environmental  protection  and  fiscal 
sustainability  and  improving  fairness.  Currently,  taxes  on  labour  income  as  a 
percentage  of  total  taxes  are  the  fifth  highest  in  the  EU  at  52.4%.  Slovakia  has  a 
relatively  high  tax  wedge  for  lower  income  earners,  disincentivising  labour  market 
participation, in a context where taxation of labour income is less progressive than the 
EU  average.  Public  revenues  and  working  conditions  are  negatively  impacted  by  a 
large  gap  in  tax,  social  contributions  and  non-tax  compulsory  payments  between 
employees and self-employed people, resulting in the highest share of self-employed 
people  who  display  characteristics  of  dependency  in  the  EU.  In  Slovakia,  recurrent 
property  tax  revenues  lag  behind  those  of  the  EU,  standing  at  just  0.4%  of  GDP, 
compared  to  an  EU  average  of  2.1%.  This  discrepancy  stems  from  Slovakia’s  area-
based  taxation  system,  which  calculates  taxes  based  on  property  size  rather  than 
market value, leading to stagnant tax revenues, while house prices have risen in recent 
years.  In  the  area  of  environmental  taxation,  Slovakia  performed  remarkably  well  in 
2022, surpassing the EU average in environmental taxes, both relative to GDP and as a 
share  of  total  taxation.  However,  this  was  mostly  due  to  robust  energy  tax  revenues 

Recovery  and  Resilience  Facility  and  other  EU  funds,  relative  to  the  medium-term  (10-year)  average 
potential nominal GDP growth rate, expressed as a ratio to nominal GDP. 

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(22) 

the  application  of 

stemming from  a considerable tax base. Conversely,  revenues derived from  taxes on 
transport, pollution and resources were below the EU average, indicating potential to 
strengthen 
the  ‘polluter  pays’  principle.  Despite  marked 
improvements in recent years, the value added tax compliance gap remains above the 
EU average. However, Slovakia was able to significantly reduce it from 2010 to 2021, 
due  to  the  mandatory  reporting  of  all  domestic  and  intra-EU  transactions  introduced 
since 2014, coupled with a wider application of the reverse charge mechanism. Action 
to  streamline  the  tax,  social  contribution,  and  non-tax  compulsory  payment  systems, 
along with measures to reduce administrative and compliance costs, can boost public 
revenues  and  support  fiscal  sustainability.  In  recent  years,  Slovakia  has  adopted 
several untargeted measures with potential negative effects on, for instance, property 
prices  and  price  competitiveness,  also  leading  to  an  unfair  resource  distribution. 
Additionally,  the  insufficient  implementation  of  existing  spending  reviews  in  the 
budgetary  process  prevents  the  realisation  of  identified  savings  that  could  benefit 
public  finances.  Moreover,  further  improvements  in  the  digitalisation  of  tax 
administration,  especially  in  the  domains  of  electronic  invoicing  and  pre-filled  tax 
returns,  could  help  further  reduce  the  leaks  in  the  tax  system,  make  tax  compliance 
easier and reduce its cost.  

In accordance with Article 19(3), point (b), and Annex V, criterion 2.2 of Regulation 
(EU) 2021/241, the recovery and resilience plan includes an extensive set of mutually 
reinforcing reforms and investments to be implemented by 2026. These are expected 
to  help  effectively  address  all  or  a  significant  subset  of  challenges  identified  in  the 
relevant  country-specific  recommendations.  Within  this  tight  timeframe,  proceeding 
swiftly  with  the  effective  implementation  of  the  plan,  including  the  REPowerEU 
chapter, is essential to boost Slovakia’s long-term competitiveness through the green 
and digital transition, while ensuring social fairness. To deliver on the commitments of 
the plan by August 2026, it is essential for Slovakia to continue the implementation of 
reforms  and  to  accelerate investments  by addressing emerging delays while  ensuring 
effective  governance  and  strong  administrative  capacity.  Slovakia  faces  various 
obstacles hampering the successful implementation of the recovery and resilience plan, 
implemented. 
with  several 
Implementation of investments is slowing down especially in the areas of healthcare, 
building 
industry  decarbonisation,  nature  protection  and  water 
management. Some ongoing reforms are also not progressing as planned, for example 
in  the  area  of  landscape  planning,  and  may  present  further  obstacles.  The  Slovak 
public  administration  suffers  from  structurally  low  effectiveness  and  a  lack  of 
administrative  capacity  at  various  levels  of  government  for  the  implementation  of 
complex  reforms  and  investments.  Other  obstacles  to  be  addressed  are  linked,  for 
instance,  to  public  procurement  and  lengthy  permitting  procedures,  which  cause 
substantial delays. The systematic involvement of local and regional authorities, social 
partners, civil society and other relevant stakeholders remains essential to ensure broad 
ownership for the successful implementation of the recovery and resilience plan.  

investment  projects  at  risk  of  not  being 

renovations, 

large 

(23)  As  part  of  the  mid-term  review  of  the  cohesion  policy  funds,  in  accordance  with 
Article  18  of  Regulation  (EU)  2021/1060,  Slovakia  is  required  to  review  its 
programme  by  March  2025,  taking  into  account,  among  other  things,  the  challenges 
identified in the 2024 country-specific recommendations, as well as its national energy 
and climate plan. This  review  forms the basis for the definitive allocation of the EU 
funding  included  in  each  programme.  Slovakia  has  made  progress  in  implementing 
cohesion  policy  and  the  European  Pillar  of  Social  Rights,  but  significant  regional 
disparities in economic and social development persist between the capital region and 

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the other regions. It is crucial to accelerate the implementation of the cohesion policy 
programme and continue to implement the priorities agreed in the programme, which 
remain  relevant.  It  is  particularly  important  to  strengthen  the  administrative  capacity 
of local, regional and national authorities, and to improve partnership and ownership, 
including  through  stronger  involvement  of  civil  society  stakeholders.  Strengthening 
the social and economic inclusion of marginalised Roma communities, by improving 
their living  conditions, ensuring access  to  high-quality  non-segregated education and 
training and supporting their integration in the labour market will still require effort. 
At  the  same  time,  the  planned  drinking  water  and  wastewater  infrastructure 
investments  need  to  be  completed.  Additionally,  planned  investments  in  the  circular 
economy,  waste  management  and  greater  energy  efficiency  in  public  and  residential 
buildings  are  key  to  the  green  transition.  Making  further  progress  in  developing 
renewable  energy  sources  and  decarbonising  the  economy  remains  equally  essential. 
Active  labour  market  policies  need  to  be  strengthened  to  combat  long-term 
unemployment. In this regard, effective reskilling and adult learning schemes are key. 
Finally,  providing  quality  and  affordable  early  childhood  education  and  care  for 
children under the age of 3 is essential to boost gender equality in the labour market 
and society.  

In the context of the mid-term review of the cohesion policy programme, it is worth 
paying further attention to the potential to boost investment in the sustainable use of 
natural  resources,  especially  given  the  backlog  of  investments  in  this  area  from  the 
previous  programming  period.  Slovakia  could  also  make  use  of  the  Strategic 
Technologies  for  Europe  Platform  initiative  in  the  areas  of  digital  technologies  and 
deep-tech innovation, clean and resource-efficient technologies, and biotechnology to 
support the transformation of industry. 

(24) 

(25)  Beyond the economic and social challenges addressed by the recovery and resilience 
plan  and  other  EU  funds,  Slovakia  faces  several  additional  challenges  related  to  the 
judicial  and  anti-corruption  framework,  the  lack  of  transparency  and  competition  in 
public  procurement  procedures,  the  labour  market,  the  insufficient  basic  skills 
attainment, the lack of inclusion and low enrolment rates in early childhood education 
and  care,  and  climate  adaptation,  conservation  of  natural  resources  and  the  circular 
economy framework. 

(26)  Recent legislative changes, in particular the amendments to the Criminal Code and the 
dismantling  of  the  Special  Prosecutor’s  Office,  lead  to  serious  concerns  about  the 
independence  and  integrity  of  the  justice  and  law  enforcement  system  in  Slovakia. 
Without  appropriate  safeguards,  these  developments  risk  weakening  the  capacity  of 
the  criminal  justice  system  and  the  effectiveness  of  the  fight  against  corruption, 
including  the  deterrence,  investigation  and  prosecution  of  high-level  corruption  and 
fraud cases. The situation risks being further impacted by the envisaged reorganisation 
of  the  police  specialised  in  tackling  corruption  (NAKA).  Furthermore,  the  recent 
dismissal of several members of the Judicial Council before the end of their term and 
the  lack  of  safeguards  to  ensure  the  Judicial  Council’s  independence  also  raise 
concern.  These  developments  risk  hampering  Slovakia’s  business  and  regulatory 
environment, and hence its competitiveness.  

(27)  The  fragmented  governance  system  in  Slovakia  and  weak  coordination  between 
various public administration layers hamper the business environment and, especially, 
the  country’s  ability  to  effectively  implement  policies  and  investment  projects. 
Moreover, the  provision  of quality  public services and the financial independence of 
local and regional governments are generally weak. This, together with the continued 

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use  of  fast-track  legislative  procedures,  results  in  a  lack  of  predictability  in  the 
regulatory framework. At the same time, while the recovery and resilience plan seeks 
to simplify public procurement procedures in Slovakia, challenges linked to the lack of 
transparency and competition in public procurement persist. This is exemplified by the 
fact that in 2023, 33% of public procurement contracts were awarded to single bidders. 
As a result of these challenges, public procurement is not sufficiently and strategically 
used  to  advance  important  policy  objectives,  stifling  progress  towards  the  green  and 
digital transitions and hampering Slovakia’s ability to improve its economic potential. 
Recently proposed changes to the public procurement framework and new legislation 
on  strategic  investments  may  further  hamper  transparency  and  competition  in  public 
procurement  and  risk  reducing  appropriate  safeguards,  especially  for  large-scale 
investments. 

for  students 

(28)  A  relatively  high  proportion  of  Slovakia’s  young  students  lack  a  minimum  level  of 
proficiency in basic skills in the areas of mathematics, reading and science. The 2022 
Programme  for  International  Student  Assessment  (PISA)  survey  of  the  Organisation 
for Economic Co-operation and Development shows that Slovakia is among the worst 
performing  countries  in  basic  skills,  with  over  30%  of  students  underperforming  in 
mathematics and reading, and a decline in the share of top performers, which hampers 
the  country’s  long-term  innovation  potential  and  competitiveness.  The  results  also 
from  socio-economically 
show  a  pronounced  attainment  gap 
disadvantaged  backgrounds,  including  from  marginalised  Roma  communities,  with 
62.6% not obtaining basic skills in mathematics. This matches wider disparities in the 
Slovak  education  system.  The  Slovak  recovery  and  resilience  plan  contains  many 
measures in the domain of education but is insufficiently targeted to increase the share 
of  children  with  basic  skills.  The  education  and  training  of  teaching  professionals 
would  benefit  from  being  more  focussed  on  supporting  basic  skills  development 
among pupils. In addition, the teaching profession is insufficiently attractive to address 
the  shortage  of  qualified  staff  and  there  is  scope  to  improve  the  quality  of  the 
education  and  training  of  teachers  and  to  increase  the  availability  of  teaching 
assistants,  as  well  as  peer  learning  and  mentoring  opportunities.  Moreover,  there  is 
large  potential  for  increasing  the  enrolment  of  children  in  early  childhood  education 
and care (ECEC) by increasing the availability of ECEC places and incentivising their 
use by parents.  Whereas the Slovak  recovery  and resilience plan  supports increasing 
the enrolment rate of children from the age of 3, only 1% of all children under the age 
of  3  participated  in  ECEC  in  2023,  which  is  the  lowest  enrolment  rate  in  the  EU. 
Increasing  the  participation  in  ECEC  helps  to  better  prepare  children  to  learn  skills 
later in life, reduces early school leaving, and fosters the labour market participation of 
parents, in particular women. 

(29)  Slovakia’s net  carbon removals in the land-use, land-use change and forestry sectors 
are projected to  significantly  decline, indicating that  the country  will fall short of its 
target  of  –6 821 kt  of  CO2  equivalent  by  2030  under  the  LULUCF  Regulation.  This 
goes hand in hand with Slovakia’s insufficient climate risk assessment and challenges 
in translating climate risk information into practical solutions. To reverse this trend in 
the  coming  years,  it  will  be  important  to  advance  climate-adaptation  measures, 
including nature-based solutions, and integrate them into relevant national policies, to 
complete  the  zonation  of  nature  protected  areas  and  to  promote  sustainable  use  of 
natural  resources.  At  the  same  time,  further  policy  action  is  needed  to  boost  the 
transition towards a circular economy. Slovakia is at risk of not meeting its 2025 target 
for  municipal  solid  waste,  for  which  it  still  fell  19.2  percentage  points  short  of  the 
2025 target of 55% in 2020, as well as its target for packaging waste, for which it fell 

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(30) 

(31) 

5.3  percentage  points  short  of  the  2025  target  of  65%  in  202024.  Slovakia  would 
benefit from improved resource waste management to curb landfilling and increase the 
reuse of  municipal and  packaging  waste, and  the  use of  circular material in  industry 
and construction. 

In view of the close interlinkages between the economies of euro area Member States 
and of their collective contribution to the functioning of the Economic and Monetary 
Union,  in  2024  the  Council  recommended  that  the  euro  area  Member  States  take 
action,  including  through  their  recovery  and  resilience  plans,  to  implement  the 
the  euro  area.  For  Slovakia, 
recommendation  on 
recommendations  (1),  (2)  and  (3)  help  implement  the  first,  second,  third,  fourth  and 
fifth euro area recommendations.  

the  economic  policy  of 

in 

recommendations  (1)  and 

In  light  of  the  Commission’s  in-depth  review  and  its  conclusion  on  the  existence  of 
imbalances,  recommendations under Article 6 of Regulation  (EU) No 1176/2011  are 
reflected 
in 
recommendation  (1)  help  to  address  vulnerabilities  linked  to  the  housing  market, 
household  debt  and  the  external  position. Policies referred to  in  recommendation (3) 
help  to  address  vulnerabilities  linked  to  cost  competitiveness.  Recommendations  (1) 
and 
the 
recommendation for the euro area, in line with recital 30. 

(3)  below.  Policies  referred 

to  both  addressing 

imbalances  and 

(3)  contribute 

implementing 

to 

HEREBY RECOMMENDS that Slovakia take action in 2024 and 2025 to:  

1. 

2. 

24 

25 

Submit  the  medium-term  fiscal-structural  plan  in  a  timely  manner.  In  line  with  the 
requirements  of  the  reformed  Stability  and  Growth  Pact,  limit  the  growth  in  net 
expenditure25  in  2025  to  a  rate  consistent  with  reducing  the  general  government 
deficit  towards  the  3%  of  GDP  Treaty  reference  value  and  keeping  the  general 
government  debt  at  a prudent  level  over the medium  term. Make the tax mix more 
efficient,  including  by  reducing  disincentives  on  the  labour  market,  and  making  a 
stronger  use  of  environmental  and  recurrent  property  taxation.  Reduce  costly 
spending measures, also by implementing spending reviews. Continue to strengthen 
tax compliance, including by further digitalising tax administration. Reduce the risks 
related  to  household  debt  by  supporting  housing  supply  and  the  expansion  of  the 
rental market.  

Ensure  effective  governance,  strengthen  administrative  capacity  to  manage  EU 
funds,  accelerate  investments  and  maintain  momentum  in  the  implementation  of 
reforms.  Address  emerging  delays  to  allow  for  continued,  swift  and  effective 
implementation  of  the  recovery  and  resilience  plan,  including  the  REPowerEU 
chapter, ensuring completion of reforms and investments by August 2026. Accelerate 
the implementation of the cohesion policy programme. In the context of its mid-term 
review, continue focusing on the agreed priorities, taking action to better address the 
investment  needs  in  the  sustainable  use  of  natural  resources,  while  considering  the 
opportunities  provided by  the Strategic  Technologies for Europe Platform initiative 
to improve competitiveness.  

EEA and ETC/CE (2022). Early Warning Assessment Related to the 2025 Targets for Municipal and 
Packaging Waste (https://www.eea.europa.eu/publications/country-profiles-early-warning-assessments) 
According  to  Article  2(2)  of  Regulation  (EU)  2024/1263,  ‘net  expenditure’  means  government 
expenditure net of interest expenditure, discretionary revenue measures, expenditure on programmes of 
the  Union  fully  matched  by  revenue  from  Union  funds,  national  expenditure  on  co-financing  of 
programmes funded by the Union, cyclical elements of unemployment benefit expenditure, and one-offs 
and other temporary measures. 

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3. 

Strengthen  the  effectiveness,  independence  and  integrity  of  the  judicial  and 
anti-corruption  system,  including  by  ensuring  that  adequate  safeguards  for  the 
effective  investigation  and  prosecution  of  high-level  corruption  cases  are  in  place. 
Improve  competitiveness  and  productivity,  including  by  ensuring  transparency  and 
competition  in  public  procurement  processes,  to  promote  good  governance  and 
improve the effectiveness of public spending. Strengthen the teaching of basic skills, 
including  for  children  from  disadvantaged  backgrounds  such  as  from  marginalised 
Roma communities, and increase the availability and use of affordable high-quality 
early  childhood  education  and  care  for  children  under  the  age  of  3.  Strengthen 
resource  waste  management  and  reuse  of  municipal  and  packaging  waste,  and  the 
conservation  of  natural  resources  by  mainstreaming  nature-based  solutions  and 
finalising zonation of nature-protected areas.  

Done at Brussels, 

For the Council 
The President 

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