DEVELOPMENT OF PUBLIC DEBT IN THE SLOVAK REPUBLIC AND THE RISKS OF ITS DEEPENINING

Abstract

The problem of over-indebtedness began to manifest itself significantly in the Euro area in 2009. Permanent government deficits and the global financial crisis have increased public debt in many, especially the southern Euro area countries, well above the Maastricht criterions. The Slovak Republic is not one of the countries with disproportionaly high debt, but in the era of its autonomy, it had to deal with three periods when the debt was increasing. It was a period of transformation of the economy from centrally managed to market economy after 1993, a period of economic recession due to the global financial and economic crisis and the current coronavirus pandemic, accompanied by a deep economic downturn. The need to tackle a number of inadequate social inequalities is also puttig pressure on the public finances. The aim of this article is to assess development of public debt in Slovakia and to draw attention to the risks of its deepening. Slovakia achieved relatively high levels of economic growth. These periods have not been sufficiently used to reduce public debt, which currently accounts for 48% of GDP. While its share to GDP is falling, the absolute volume of debt is increasing. Economic consequences of the current global coronavirus pandemic will cause further growth in public debt. Slovakia did not take enough opportunity in good times to prepare for the crisis period.