Slovakia Slams Moody's Downgrade as 'Improper and One-Sided'

Slovakia's Finance Minister, Igor Matovic, has criticized Moody's downgrade of the country's credit rating, calling it "improper and one-sided." The downgrade, from A3 to A2, reflects concerns over political tensions and worsening state debt. Moody's also cited increased political fragmentation and challenges in policymaking, particularly on the fiscal front. The government, however, maintains that its efforts to improve public finances are being overlooked. The current government has pushed through a package of measures aimed at reducing the fiscal deficit to 4.7% of economic output in 2025, from nearly 6% this year. The planned increases in existing taxes and introduction of new levies are expected to slow economic growth and accelerate inflation, while the country's debt is projected to rise above 60% of GDP by 2027.



The downgrade comes as Slovakia faces increasing political tensions and judicial reforms that have weakened the country's institutional environment. The government's changes to the judiciary and media have been criticized for eroding checks and balances, while increased political fragmentation challenges policymaking, particularly on the fiscal front. Despite the government's commitment to reducing the deficit, Moody's expects the general government's debt burden to rise further, above those of similarly-rated sovereigns.



Slovakia's government has been implementing several policies to reduce its deficit and stabilize public debt. These include a package of measures aimed at reducing the fiscal deficit to 4.7% of economic output in 2025, from nearly 6% this year. The planned increases in existing taxes and introduction of new levies are expected to slow economic growth and accelerate inflation, while the country's debt is projected to rise above 60% of GDP by 2027. The government is also pushing through a package of measures aimed at reducing the deficit in adherence with EU rules.

The downgrade highlights the importance of political stability and institutional strength in maintaining a country's creditworthiness. Slovakia's government must address the concerns raised by Moody's and work towards improving the country's fiscal situation and institutional environment. Despite the criticism, Slovakia remains committed to reducing its deficit and implementing structural reforms to address the identified risks.