Scope Ratings GmbH (Scope) monitors and reviews its credit ratings on an ongoing basis and at least annually, or every six months in the cases of sovereigns, sub-sovereigns and supranational organisations.

Scope performs monitoring reviews to determine whether material changes and/or changes in macro-economic or financial-market conditions could have an impact on the credit ratings. Scope considers all available and relevant information when undertaking the monitoring review.

Monitoring reviews are conducted by performing a peer comparison, benchmarking against the rating-change drivers, and/or reviewing the credit rating’s performance over time, as deemed appropriate by the Lead Analyst or Analytical Team Head, in addition to an assessment of all aspects of the relevant methodology/ies, including key rating assumptions and model(s). Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review on the Slovak Republic (long-term local- and foreign-currency issuer and senior unsecured debt ratings of A and Stable Outlook; short-term local- and foreign-currency issuer ratings of S-1 and Stable Outlook) on 15 January 2025.

This monitoring note does not constitute a credit-rating action, nor does it indicate the likelihood that Scope will conduct a credit-rating action in the short term. Information about the latest credit-rating action connected with this monitoring note along with the associated ratings history can be found on www.scoperatings.com.

Key rating factors

For the updated rating report accompanying this review, please see here.

The Slovak Republic’s single-A long-term ratings are supported by: i) the nation’s memberships of the European Union and euro area – representing a strong anchor for policy making and backing the resilience against external crises; ii) competitive, export-oriented industries; and iii) a moderate level of government debt. The long-term ratings are nevertheless challenged by: i) significant budget deficits even though moderated by recently-announced budgetary-consolidation measures alongside a steady rise of the government debt ratio; ii) institutional risk and governance challenges, as well as associated effects for past delays in EU funding; iii) elevated dependence on external demand and global value chains; and iv) the effects of adverse demographics on long-run economic and budgetary health.

The Slovak economy has a robust manufacturing sector benefitting from inward foreign direct investment, especially into the nation’s automotive sector, amid the ongoing global transition towards electric and hybrid vehicles. The manufacturing industry underpins output growth currently seen at 2.0% for this year, similar to last year’s, followed by 2.2% in 2026.

The Slovak economy is furthermore aided by meaningful grant allocations under the EU Recovery and Resilience Plan (totalling EUR 6.4bn). Despite the nation’s rule-of-law contentions with European institutions, the European Commission has recently distributed a delayed tranche of EUR 799m from the Recovery and Resilience Facility late October, after the Slovak parliament amended the criminal code increasing the punishment for crimes involving the misuse of EU financing. Nevertheless, risks for the growth outlook remain from the historically low absorption of EU financing and the risk of further delays of such disbursements. In addition, geopolitical risks potentially disrupting value chains and Slovakia’s continued, although reduced, economic dependence on Russian oil and gas challenge the economic outlook.

The sovereign’s fiscal path is undermined by meaningful budget deficits given rising public expenses, such as on health-care and social-assistance costs, interest payments and defence. The government aims at curtailing the budget deficit by one percentage point each year from this year on to trim this deficit to 3.0% of GDP and to stabilise government debt at 60.5% by year 2027. The specific measures in the government’s revenue-driven consolidation plan announced last September ought to help to trim the deficit to an estimate of 4.4% of GDP this year, from the estimated 5.4% last year. Nevertheless, the reduction of the budget deficit in line with the consolidation proposal to 2027 requires the detailing of further structural measures. The extension of the electricity price cap for households this year furthermore adds to fiscal demands, as do potentially parliamentary elections due by 2027. On such bases, Scope sees general government debt on an increasing trajectory from the estimate of 57.6% of GDP at end-2024, surpassing 60% by 2027.

Institutional risks remain after an amendment of the penal code last February included an abolition of the special prosecutor’s office. The government’s majority has been under a degree of risk since November last year after three former members of parliament left the coalition, leaving the government having a narrower 76-of-150 parliamentary seat majority. The latest call of a no-confidence vote on prime minister Robert Fico by the political opposition complicates the efficacy of policy making.

The Stable Outlook represents the view that risks for the ratings are currently balanced.

The long-term ratings/Outlooks could be downgraded if, individually or collectively: i) budget deficits result in the continuation of a steadily-rising path of government debt; ii) institutional risks or political instability increases, increasing the materiality of governance concerns and/or challenging European fund inflows; and/or iii) the economic outlook weakens, as an example from an external crisis.

The ratings/Outlooks could be upgraded if, individually or collectively: i) the outlook on fiscal sustainability improves, as an example due to a sustained reduction of budget deficits seeing the stabilisation of the government debt ratio; ii) institutional risks decrease and/or political stability improves, enhancing the efficacy of governance and ensuring the continuity of EU funding; and/or iii) the outlook for trend growth improves meaningfully.

The methodology applicable for the reviewed ratings and/or rating Outlooks (Sovereign Rating Methodology, 29 January 2024) is available on https://scoperatings.com/governance-and-policies/rating-governance/methodologies.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst Dennis Shen, Senior Director

© 2025 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Fund Analysis GmbH, Scope Innovation Lab GmbH and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5, D-10785 Berlin.