GKI analysis: We are further away from eurozone membership than we were 10 years ago

The budget deficit exceeded the 3% of GDP required by the criterion every year between 2004 and 2011. After that, a prudent budget policy was pursued between 2012 and 2019; and the deficit criterion was met at that time. The period of fiscal discipline in our country ended with COVID: the domestic deficit more than doubled the criterion every year between 2020 and 2023, but it remained around 5% in 2024. The rather optimistic 2025 budget set a deficit target of 3.7%.

According to the criterion, public debt should not exceed 60% of GDP, or if it is higher, it should approach it. Between 2004 and 2011, not only did it not approach the magic 60%, but it increasingly moved away from it. A trend reversal occurred in 2012 (made possible by the nationalization of the vast majority of private pension fund assets, which amounted to 10.5% of GDP at the time). Subsequently, due to the extremely low international and domestic interest rates, the public debt ratio gradually decreased, and we met the relevant criterion. As a result of the coronavirus crisis, the ratio jumped, and since then only a slight decrease can be observed in the indicator. Overall, nominal public debt has doubled since 2010, and GDP is proportionally at the 2017 level.