Primary fiscal balances vary across the CEE

Today, we look deeper into the fiscal performance of the region, focusing on the primary budget balance, which excludes interest rate costs. Most countries in the region entered this turbulent decade in relatively good shape, except for Romania. In 2019, Romania's primary balance was -3.3% of GDP, while the next worst country, Slovakia, had primary balance of zero. All other primary budgets were in surplus before 2020. Looking ahead, none of the CEE countries is expected to have a positive primary balance next year, highlighting greater disparity within the region. According to the European Commission forecasts, Poland, Slovakia, and Romania are projected to have deeply negative primary balances, with Romania reaching -5.8% of GDP. The risk of delays in fiscal consolidation has increased following the presidential elections. Slovakia faces a challenging situation, as further consolidation is required after this years reforms. Poland's high primary deficit is primarily driven by defense expenditure. Conversely, Hungary has made significant progress in consolidation compared to 2022, although their deficit remains high when interest expenses are included. Out of the region, Slovenia, Hungary and Croatia will have their primary balances higher than the Eurozone average.