Fiscal sustainability of Slovakia’s public debt compared over time and internationally

Abstract

The paper focuses on the analysis of the development of public debt of the Slovak Republic and its comparison within the European Union countries. Based on a time series analysis, the main trends in Slovakia’s debt are presented. In the framework of the international comparison, the Slovak public debt is assessed in the context of the Visegrad Four countries and other EU Member States. The paper also includes a cluster analysis, which allows grouping countries on the basis of static indicators (debt level, interest costs, GDP per capita, fiscal balance) and dynamic variables reflecting the evolution of debt. The results point to a gradual deterioration of Slovakia’s fiscal position and a growing need for consolidation of public finances in order to keep debt at a sustainable level. The analysis also underlines the importance of a combination of fiscal discipline and economic growth to preserve the credibility of the state in financial markets.