The climate-fiscal timebomb: Slovakia

08 March 2026

Fiscal outlook

Slovakia recorded a 5.5% deficit and a debt-to-GDP ratio of 59.7% in 2024. The country has been subject to an excessive deficit procedure since 2024, with the Council of the European Union recommending that deficits be brought down by 2027.

Deficit measures the level of borrowing in a given year. Debt-to-GDP compares the total public debt to the size of the economy. Both are currently used to determine how much borrowing a member state is allowed to undertake. However, neither measure in itself determines a government’s capacity to sustain higher levels of public investment. Fiscal sustainability depends on growth, the multiplier effects of investment, interest rates, inflation, the structure of the economy and external risks such as climate change. NEF advocates moving away from strict numerical debt targets.

Rising climate costs

Slovakia’s water supply is under increased pressure due to climate change. Reports state that the country could lose half of its water resources by 2075. Higher temperatures have led to lower precipitation and higher evaporation, making Slovakia drier than ever before. Despite warnings, the government has consistently failed to invest in water infrastructure, leaving it with a backlog of investment of several billion euro. While the south of the country is experiencing heatwaves and wildfires, the north is being hit by severe rainfall and storms. Between 1980 and 2023, Slovakia’s total economic losses caused by floods are estimated at €603m.

What NEF’s modelling shows

Organisation for Economic Co-operation and Development (OECD) projections show Slovakia’s GDP declining by 11% by 2050 and 15% by 2070 under current policies. Our modelling shows the following:

Under current policies (BAU – business as usual), Slovakia’s debt is 60 pps higher than the climate-agnostic baseline in 2050 and 216 pps higher in 2070.

With early EU mitigation and sufficient adaptation spending, debt is 46 pps higher in 2050 and 89 pps in 2070.

Delayed EU investments and insufficient adaptation results in higher debt levels of 54 pps in 2050 and 108 pps in 2070.

EU early action combined with global cooperation results in 3 pps higher debt levels than the climate-agnostic baseline in 2050 and 18 pps lower levels in 2070.

Progressive taxation, such as a wealth tax, combined with EU early action would increase debt by 34 pps in 2050 and by 65 pps in 2070 compared to the climate-agnostic baseline.