Jan 13, 2026
Slovakia's fiscal collapse: a friendly warning to our Czech neighbours
To our Czech friends,
As the Czech Republic begins a new chapter with the Babiš administration taking office in late 2025, we publish this analysis not as political criticism, but as an honest warning about the temptation of debt-fueled populism. We write as neighbours who share 70 years of common history, a language, and a lesson learned the hard way.
Slovakia was once called the 'Tatra Tiger'—the fastest-growing economy in Central Europe. Today, analysts call it the 'Lame Raccoon'—an opportunist scavenging for survival rather than building for the future.
Why now? Why you?
We have watched with admiration how the Czech Republic has developed since the Velvet Revolution and the peaceful separation of Czechoslovakia. Your institutions work. Your fiscal framework holds. Your investment climate remains attractive.
But no country can afford to simply "consume" power. Every administration must actively work to keep pace with more dynamic neighbours—particularly Poland, which invests in productive capacity even while running high deficits.
Slovakia is proof of what happens when citizens and institutions stop watching.
The numbers speak for themselves:
Public debt: 48% of GDP (2019) → 64% (2026)
GDP growth 2026: 1.0% (lowest in V4; Czech Republic: 1.9%)
Inflation 2026: 4.1% (Czech Republic: 2.1%)
Deficit 2026: -4.6% of GDP (Czech Republic: -2.2%)
Interest costs: €2 billion annually. In the Czech context, this fiscal burden is equivalent to 125 billion CZK—an amount exceeding the entire annual budget of your Ministry of the Interior.
Slovakia now operates under the EU's Excessive Deficit Procedure—a formal warning that public finances are in dangerous disarray.
What went wrong?
Two decades of systematic institutional erosion.
Since Robert Fico's rise to power in 2006, Slovakia has been shaped by structures that prioritise short-term political gains over long-term prosperity. Instead of investing in infrastructure and education—universal handouts. Instead of a professional state apparatus—36 state secretaries (vs. 15 under the Radičová government). Independent analysts point to significant overstaffing, though no comprehensive personnel audit has ever been conducted — itself an indictment of governance.
The flagship transaction tax, introduced in April 2025, collected 40% less than expected. "The transaction tax triggers negative responses and motivates avoidance, while threatening the collection of other taxes," warns Martin Hudcovský from the Economic Institute of the Slovak Academy of Sciences. Businesses adapted instantly—netting payments, shifting liquidity abroad, consolidating transactions. The consolidation strategy rests on shaky foundations.
Borrowing for consumption, not investment
The contrast with Poland is telling: both countries run high deficits, but Poland borrows for investment—defence spending (over 4% of GDP), infrastructure (the CPK airport and rail hub), nuclear energy. Markets tolerate such borrowing because it builds productive capacity.
Slovakia borrows for consumption. The 13th pension payment alone costs over €800 million annually. Energy subsidies covering 90% of households are politically popular but delay efficiency investments and deepen the deficit. An ever-growing share of spending goes to servicing past debts.
Our wish for the Czech Republic
We do not claim the Czech Republic is heading down the same path. Quite the opposite.
But as Slovakia's neighbours—bound by history, language, and friendship—we feel a legitimate duty to share what we've learned:
✅ Institutions that check power ✅ Fiscal responsibility that doesn't burden future generations ✅ Investment in productive capacity, not universal handouts ✅ Vigilance—because democracy works only when you guard it
We wish the new Czech administration a successful four years (2026–2029) and the Czech people good governance for decades to come.
Guard your institutions. They work only as long as you watch them.
Why we have standing to say this
Future Slovakia Forum is an independent think tank established not merely to diagnose Slovakia's challenges, but to develop policy foundations for reform. Our members and experts are actively working to initiate expert dialogue and prepare concrete reforms for implementation.
We don't only describe problems—we are committed to helping Slovakia reverse course. After nearly two decades of misgovernance, we believe its potential remains real. Read / Download the full analysis (PDF): 👇
WATCH AND LEARN A Warning from Slovakia: From Tatras Tiger to Europe's Lame Raccoon
10 cards - a PPT Presentation - download here 👇
Contact: Dávid Bořuta, Managing Lead Future Slovakia Forum forum@future-slovakia.eu PRESS RELEASE 👇
Future Slovakia Forum is an independent think tank focused on strategic challenges and evidence-based solutions for Slovakia. Learn more at www.future-slovakia.eu.