KOMISJONI TEATIS - COM(2026) 302

EN EN

EUROPEAN COMMISSION

Brussels, 3.6.2026

COM(2026) 302 final

REPORT FROM THE COMMISSION

Bulgaria, Germany, Estonia, Latvia, Slovenia

Report prepared in accordance with Article 126(3) of the Treaty on the Functioning of

the European Union

1

1. INTRODUCTION

Article 126 of the Treaty on the Functioning of the European Union (TFEU) lays down the

excessive deficit procedure. That procedure is further set out in Council Regulation (EC) No

1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure1,

which is part of the Stability and Growth Pact.

In accordance with Article 126(3) TFEU, the purpose of this report by the Commission is to

identify the Member States for which compliance with the deficit criterion and/or the debt

criterion has to be examined and to provide this assessment.2

The deficit criterion is fulfilled if the actual general government deficit for the previous year

(2025) and planned deficit for the current year (2026) do not exceed the 3% of GDP reference

value. If either does, the Commission examines whether the deficit ratio has declined

substantially and continuously, and comes close to the reference value. The Commission also

examines whether the deficit in excess over the reference value is exceptional and temporary,

and remains close to the reference value. Relevant factors are to be considered by the

Commission and the Council in the steps leading to the decision on the existence of an

excessive deficit based on the deficit criterion, if either i) the government debt does not exceed

60% of GDP, or ii) if the debt exceeds 60% of GDP, the deficit is close to 3% of GDP and the

excess over it is temporary.

The debt criterion is fulfilled if the general government gross debt at the end of the previous

year (2025) does not exceed the 60% of GDP reference value. If it does, the Commission

examines whether the debt ratio is sufficiently diminishing and approaching the reference value

at a satisfactory pace. In Regulation (EC) No 1467/97, the latter is operationalised, for a

Member State with a debt ratio exceeding 60% of GDP, through the respect of the maximum

net expenditure3 growth rates recommended by the Council,4 with upward and downward

deviations tracked in a control account.5 If general government debt exceeds 60% of GDP, the

1 OJ L 209, 2.8.1997 (ELI: http://data.europa.eu/eli/reg/1997/1467/2024-04-30) as last amended by Council

Regulation (EU) 2024/1264 of 29 April 2024 (OJ L, 2024/1264, 30.4.2024). The report also takes into

account the “Specifications on the implementation of the Stability and Growth Pact and guidelines on the

format and content of stability and convergence programmes”, adopted by the Economic and Financial

Committee on 1 December 2025, available at: https://economy-finance.ec.europa.eu/economic-governance-

framework/stability-and-growth-pact/legal-basis-stability-and-growth-pact_en. 2 Member States subject to a Council Decision establishing an excessive deficit under Article 126(6) TFEU

are not concerned by this report. The following Member States are in excessive deficit procedure: since April

2020: Romania; since July 2024: Belgium, France, Hungary, Italy, Malta, Poland, Slovakia; since June 2025:

Austria and since January 2026: Finland. 3 Article 2(2) of Regulation (EU) 2024/1263 defines 'net expenditure' as government expenditure net of

interest expenditure, discretionary revenue measures, expenditure on programmes of the Union fully

matched by revenue from Union funds, national expenditure on co-financing of programmes funded by the

Union, cyclical elements of unemployment benefit expenditure, and one-off and other temporary measures. 4 In accordance with Articles 17, 19 or 20 of Regulation (EU) 2024/1263 of the Parliament and of the Council

of 29 April 2024 on the effective coordination of economic policies and on multilateral budgetary

surveillance and repealing Regulation (EC) No 1466/97 (OJ L, 2024/1263, 30.4.2024, ELI:

http://data.europa.eu/eli/reg/2024/1263/oj). 5 The control account set up by the Commission in accordance with Article 22(2) of Regulation (EU)

2024/1263 records deviations of the observed net expenditure in a Member State from the recommended

maximum net expenditure growth rates set by the Council. Upward deviations from the recommended net

expenditure path are registered as debits, after taking into account escape clauses that may have been

activated.

2

fiscal position is not ‘close to balance or in surplus’6 and the debits in the Member State’s

control account exceed 0.3% of GDP annually or 0.6% of GDP cumulatively, the Commission

should prepare a report. In that report, relevant factors are to be considered by the Commission

and the Council in the steps leading to the decision on the existence of an excessive deficit

based on the debt criterion for all concerned Member States.

The report is structured as follows. Section 2 identifies the Member States for which

compliance with the deficit criterion must be examined (Bulgaria, Germany, Estonia, Latvia

and Slovenia) and provides this assessment before the consideration of relevant factors. Section

3 establishes that there are no Member States for which compliance with the debt criterion must

be examined. Section 4 reviews relevant factors. The final section formulates the overall

conclusions on compliance with the deficit and debt criteria. The format of this report −

covering all concerned Member States together, as in previous vintages − helps in the

comparability of the different cases, while the case of each Member State is considered on its

own merits.

2. DEFICIT CRITERION

For the assessment of the deficit criterion, this report concerns those Member States (not

currently in excessive deficit) for which the actual 2025 deficit ratio provided by Eurostat7 or

the planned deficit ratio for 2026 reported to Eurostat in the spring 2026 fiscal notification8

exceeds the reference value of 3% of GDP, or both. In the absence of data reported to Eurostat

on the planned deficit for 2026, the source is the Member State’s 2026 Annual Progress

Report9. This is the case for Slovenia. Bulgaria did not report a planned deficit for 2026, neither

to Eurostat, nor in its 2026 Annual Progress Report. In view of the Commission Spring 2026

Forecast10 showing a 2026 deficit for Bulgaria well above the reference value, this report also

provides an assessment of this projected deficit for 2026.

The general government deficit in Bulgaria exceeded the 3% of GDP reference value in 2025,

while Germany, Estonia, Latvia and Slovenia had government deficits below the 3% of GDP

reference value in 2025, but plan deficits for 2026 exceeding 3% of GDP (see Table 1).

Therefore, this report assesses compliance with the deficit criterion in Bulgaria, Germany,

Estonia, Latvia and Slovenia. For each of these Member States, the following paragraphs

analyse the deficits in excess of the reference value in terms of closeness, temporariness and

exceptionality. For this, the assessment considers the Commission Spring 2026 Forecast, with

a cut-off date of 4 May 2026 (Table 1).

In Bulgaria,the government deficit in 2025 stood at 3.5% of GDP. The Commission Spring

2026 Forecast projects the 2026 deficit at 4.1% of GDP. The deficits in 2025 and 2026 are

assessed as above and not close to the reference value. Based on the Commission Spring 2026

Forecast, the government deficit in Bulgaria is also projected to continue exceeding the

6 A fiscal position ‘close to balance or in surplus’ is defined as a general government deficit not exceeding

0.5% of GDP, according to recital 14 in Council Regulation (EU) 2024/1264. 7 See Eurostat Euro indicators of 22 April 2026 https://ec.europa.eu/eurostat/web/products-euro-

indicators/w/2-22042026-AP, in accordance with Article 14 of Council Regulation (EC) No 479/2009. 8 The complete set of tables reported to Eurostat by Member States is available at: http://ec.europa.eu

/eurostat/web/government-finance-statistics/excessive-deficit-procedure/edp-notification-tables. Planned

figures are reported by Member States to Eurostat, based on their most recent official forecasts, taking

account of budgetary decisions and economic developments and prospects. 9 The 2026 Annual Progress Reports are available on: https://economy-finance.ec.europa.eu/economic-and-

fiscal-governance/stability-and-growth-pact/preventive-arm/annual-progress-reports_en 10 European Commission Spring 2026 Forecast (European Economy Institutional Paper 341, May 2026).

3

reference value in 2027. Therefore, the deficits in excess of the reference value are assessed to

be not temporary. On 8 July 2025, the Council adopted a Recommendation11 under Article 26

of Regulation 2024/1263 (national escape clause) for Bulgaria12. This Recommendation allows

Bulgaria to temporarily deviate from the maximum growth rates of net expenditure as set by

the Council to accommodate the increase in defence spending13, by up to 1.5% of GDP over

the period 2025 to 2028 compared to the reference year 2024. The Recommendation

documented the exceptional circumstances outside the control of the government with a major

impact on public finances underpinning the increase in defence spending. The deficit in excess

of the reference value in 2025 is fully explained by an increase in defence spending since the

reference year14, while this is not the case for the projected deficit in excess of the reference

value for 2026. Overall, while the deficit in excess of the reference value in 2025 is assessed

as exceptional, the deficit in excess of the reference value in 2026 is assessed as not exceptional.

For Germany, the planned deficit for 2026 is 4.2% of GDP. The Commission Spring 2026

Forecast projects the deficit at 3.7%. The planned deficit in 2026 is therefore assessed as above

and not close to the reference value. Based on the Commission Spring 2026 Forecast, the

government deficit in Germany is projected to continue exceeding the reference value in 2027.

Therefore, the planned deficit in excess of the reference value is assessed to be not temporary.

On 10 October 2025, the Council adopted a Recommendation15 under Article 26 of Regulation

2024/1263 (national escape clause) for Germany. This Recommendation allows Germany to

temporarily deviate from the maximum growth rates of net expenditure as set by the Council

to accommodate the increase in defence spending, by up to 1.5% of GDP over the period 2025

to 2028 compared to the reference year 2021. The Recommendation documented the

exceptional circumstances outside the control of the government with a major impact on public

finances underpinning the increase in defence spending. The deficit in excess of the reference

value in 2026 is fully explained by an increase in defence spending since the reference year16.

In view of this, the planned deficit in excess of the reference value in 2026 is assessed as

exceptional.

For Estonia, the planned deficit for 2026 reported to Eurostat is 4.5% of GDP, which was

revised to 4.3% of GDP in its 2026 Annual Progress Report. The Commission Spring 2026

Forecast projects the deficit ratio at 4.5% of GDP. The planned deficit in 2026 is therefore

assessed as above and not close to the reference value. Based on the Commission Spring 2026

Forecast, the government deficit in Estonia is projected to continue exceeding the reference

11 Council Recommendation of 8 July 2025 allowing Bulgaria to deviate from the maximum growth rates of

net expenditure as set by the Council under Regulation (EU) 2024/1263 (Activation of the national escape

clause), (OJ C, C/2025/3961, 20.8.2025, ELI: http://data.europa.eu/eli/C/2025/3961/oj). 12 According to Article 2(1) of Regulation 1467/97, the excess of the government deficit over the reference

value shall be considered exceptional, in accordance with the second indent of point (a) of Article 126(2) of

the TFEU, if it results from the existence of a severe economic downturn in the euro area or the Union as a

whole established by the Council in accordance with Article 25 of Regulation (EU) 2024/1263 or from

exceptional circumstances outside the control of the government with a major impact on the public finances

of the Member State concerned, in accordance with Article 26 of that Regulation. 13 The defence spending relevant to the assessment of compliance is the nationally financed defence

expenditure as defined in the Classification of the functions of government (COFOG 02). 14 According to the Commission Spring 2026 Forecast, defence spending in Bulgaria was at 1.9% in 2025 and

projected to remain at that level in 2026. This is an increase by 0.6 pps. of GDP compared to 2024. 15 Council Recommendation of 10 October 2025 endorsing the national medium-term fiscal-structural plan of

Germany and allowing Germany to deviate from the maximum growth rates of net expenditure as set by the

Council under Regulation (EU) 2024/1263 (Activation of the national escape clause), (OJ C, C/2025/5635,

ELI: http://data.europa.eu/eli/C/2025/5635/oj). 16 According to the Commission Spring 2026 Forecast, defence spending in Germany is projected at 1.9% in

2026. This is an increase by 0.8 pps. of GDP compared to 2021.

4

value in 2027. Therefore, the planned deficit in excess of the reference value is assessed to be

not temporary. On 8 July 2025, the Council adopted a Recommendation17 under Article 26 of

Regulation 2024/1263 (national escape clause) for Estonia. This Recommendation allows

Estonia to temporarily deviate from the maximum growth rates of net expenditure as set by the

Council to accommodate the increase in defence spending, by up to 1.5% of GDP over the

period 2025 to 2028 compared to the reference year 2021. The Recommendation documented

the exceptional circumstances outside the control of the government with a major impact on

public finances underpinning the increase in defence spending. The deficit in excess of the

reference value in 2026 is fully explained by an increase in defence spending (capped at 1.5%

of GDP in line with the maximum flexibility under the national escape clause) since the

reference year18. In view of this, the planned excess over the reference value in 2026 is assessed

as exceptional. Note that the projected large increase in the deficit in Estonia from 2025 to

2026 is only partially related to the increase in defence spending in 2026. Most of the increase

in defence spending in Estonia took place in previous years.

For Latvia, the planned deficit for 2026 reported to Eurostat is 3.3% of GDP, which was

revised to 3.0% of GDP in its 2026 Annual Progress Report. The Commission Spring 2026

Forecast projects the deficit at 3.3% of GDP. The planned deficit in 2026 is therefore assessed

as above but close to the reference value. Based on the Commission Spring 2026 Forecast, the

government deficit in Latvia is projected to continue exceeding the reference value in 2027.

Therefore, the planned deficit in excess of the reference value is assessed to be not temporary.

On 8 July 2025, the Council adopted a Recommendation19 under Article 26 of Regulation

2024/1263 (national escape clause) for Latvia. This Recommendation allows Latvia to

temporarily deviate from the maximum growth rates of net expenditure as set by the Council

to accommodate the increase in defence spending, by up to 1.5% of GDP over the period 2025

to 2028 compared to the reference year 2021. The Recommendation documented the

exceptional circumstances outside the control of the government with a major impact on public

finances underpinning the increase in defence spending. The deficit in excess of the reference

value in 2026 is fully explained by an increase in defence spending (capped at 1.5% of GDP in

line with the maximum flexibility under the national escape clause) since the reference year20.

In view of this, the planned excess over the reference value in 2026 is assessed as exceptional.

For Slovenia, the planned deficit for 2026 is 3.4% of GDP. The Commission Spring 2026

Forecast projects the deficit at 3.3%. The planned deficit in 2026 is therefore assessed as above

but close to the reference value. Based on the Commission Spring 2026 Forecast, the

government deficit in Slovenia is projected to continue exceeding the reference value in 2027.

Therefore, the planned deficit in excess of the reference value is assessed to be not temporary.

On 8 July 2025, the Council adopted a Recommendation21 under Article 26 of Regulation

2024/1263 (national escape clause) for Slovenia. This Recommendation allowed Slovenia to

17 Council Recommendation of 8 July 2025 allowing Estonia to deviate from the maximum growth rates of net

expenditure as set by the Council under Regulation (EU) 2024/1263 (Activation of the national escape

clause), (OJ C, C/2025/3964, 20.8.2025, ELI: http://data.europa.eu/eli/C/2025/3964/oj). 18 According to the Commission Spring 2026 Forecast, defence spending in Estonia is projected at 4.6% in

2026. This is an increase by 2.5 pps. of GDP compared to 2021. 19 Council Recommendation of 8 July 2025 allowing Latvia to deviate from the maximum growth rates of net

expenditure as set by the Council under Regulation (EU) 2024/1263 (Activation of the national escape

clause), (OJ C, C/2025/3970, 20.8.2025, ELI: http://data.europa.eu/eli/C/2025/3970/oj). 20 According to the Commission Spring 2026 Forecast, defence spending in Latvia is projected at 4.1% in 2026.

This is an increase by 1.7 pps. of GDP compared to 2021. 21 Council Recommendation of 8 July 2025 allowing Slovenia to deviate from the maximum growth rates of

net expenditure as set by the Council under Regulation (EU) 2024/1263 (Activation of the national escape

clause), (OJ C, C/2025/3973, 20.8.2025, ELI: http://data.europa.eu/eli/C/2025/3973/oj).

5

temporarily deviate from the maximum growth rates of net expenditure as set by the Council

to accommodate the increase in defence spending, by up to 1.5% of GDP over the period 2025

to 2028 compared to the reference year 2021. The Recommendation documented the

exceptional circumstances outside the control of the government with a major impact on public

finances underpinning the increase in defence spending. The deficit in excess of the reference

value in 2026 is fully explained by an increase in defence spending since to the reference year22.

In view of this, the planned excess over the reference value in 2026 is assessed as exceptional.

In sum, this analysis − of whether the deficit remains close to the reference value as well as

whether the deficit in excess is exceptional and temporary − suggests that the deficit criterion

is not fulfilled, before the consideration of the relevant factors, by Bulgaria, Germany,

Estonia, Latvia and Slovenia.

22 According to the Commission Spring 2026 Forecast, defence spending in Slovenia is projected at 1.6% in

2026. This is an increase by 0.5 pps. of GDP compared to 2021.

6

Table 1 - General government balance

Percentage of

GDP

Data

provided by

Eurostat

April 2026 EDP

notification

Commission Spring 2026 Forecast

2025 2026 2026 2027

Member States for which compliance with the deficit criterion has to be further discussed

Bulgaria -3.5 − a -4.1 -4.3

Germany -2.7 -4.2 -3.7 -4.1

Estonia -2.0 -4.5 -4.5 -4.8

Latvia -2.5 -3.3 -3.3 -4.3

Slovenia -2.5 -3.4a -3.3 -3.5

Member States for which compliance with the deficit criterion is not discussed in this report

Czechia -2.1 -2.6 -2.8 -2.9

Denmark 2.9 0.7 0.9 0.5

Ireland 1.8 1.0 1.4 1.2

Greece 1.7 -0.2 0.8 0.6

Spain -2.4 -2.1 -2.4 -2.0

Croatia -3.0 -2.9 -2.9 -2.7

Cyprus 3.4 1.8 2.1 2.5

Lithuania -1.8 -2.7 -2.2 -2.7

Luxembourg -2.0 -1.2 -1.2 -1.5

Netherlands -1.6 -2.5 -2.5 -1.9

Portugal 0.7 0.1 -0.1 -0.4

Sweden -1.3 -2.6 -2.8 -2.5 Source: Eurostat (data for 2025), April 2026 EDP notification and Commission Spring 2026 Forecast (data for 2026 and

2027).

Note: Bold indicates that a deficit figure exceeds the reference value of 3% of GDP. The following Member States are in

excessive deficit procedure and therefore not covered in the table: since April 2020: Romania; since July 2024:

Belgium, France, Hungary, Italy, Malta, Poland, Slovakia; since June 2025: Austria and since January 2026: Finland.

(a) In the absence of data reported to Eurostat on the planned deficit for 2026 (in the context of the April 2026 EDP

notification), the source is the Member State’s 2026 Annual Progress Report. This is the case for Slovenia. Bulgaria

reported a planned deficit for 2026 neither to Eurostat nor in its 2026 Annual Progress Report.

7

3. DEBT CRITERION

For the assessment of the debt criterion, this report should discuss those Member States (not

currently in excessive deficit) where:

• the actual general government gross debt ratio-to-GDP, as provided by Eurostat,23

exceeded the reference value of 60% of GDP at the end of 2025,

• and the actual deficit in 2025, as also provided by Eurostat, exceeded 0.5% of GDP,

which corresponds to a budgetary position that cannot be considered as ‘close to balance

or in surplus’

• and, based on the Commission’s calculations24, the control account for 2025 shows a

debit exceeding the threshold of 0.3% of GDP annually and/or the threshold of 0.6% of

GDP cumulatively.

The corresponding data are shown in Table 2. At end of 2025, the general government gross

debt ratio exceeded the reference value in Germany, Greece, Spain, Portugal and Slovenia.

Greece and Portugal havebudgetary surpluses. Therefore, this report does not further consider

the debt criterion for these two Member States, as it is considered to be fulfilled.

Based on the Commission’s calculations, for Germany, the control account for 2025 recorded

credits, in annual and cumulative terms. Therefore, this report does not further consider the

debt criterion for Germany, as it is considered to be fulfilled.

For Spain and Slovenia, the control accounts in 2025 recorded deviations that exceed the

annual threshold, based on the Commission’s calculations (their debits remained below the

threshold in cumulative terms). However, Slovenia benefits from the national escape clause to

accommodate higher defence expenditure during the period 2025-202825. Meanwhile, on 22

May 2026, the Commission recommended the Council to activate the national escape clause

for Spain, following a positive assessment of Spain's request of 13 April 2026, to accommodate

the increase in defence expenditure during the period 2025-202826. Taking into account the

national escape clause for Slovenia and assuming that the Council will activate the national

escape clause for Spain, the augmented control accounts27 recorded either a credit (Spain) or a

debit within the 0.6% of GDP threshold (Slovenia). Therefore, this report does not further

consider the debt criterion for these two Member States, as it is considered to be fulfilled.

In sum, there are no Member States for which compliance with the debt criterion has to be

further examined in this report.

23 See Eurostat Euro indicators of 22 April 2026 https://ec.europa.eu/eurostat/web/products-euro-

indicators/w/2-22042026-ap 24 Fiscal Statistical Tables providing background data relevant for the assessment of the budgetary policies of

the Member States, SWD(2026)200 final, Brussels 3.6.2026. 25 Council Recommendation of 8 July 2025 allowing Slovenia to deviate from the maximum growth rates of

net expenditure as set by the Council under Regulation (EU) 2024/1263 (Activation of the national escape

clause), (OJ C, C/2025/3973, 20.8.2025, ELI: http://data.europa.eu/eli/C/2025/3973/oj). 26 Commission Recommendation for a Council Recommendation allowing Spain to deviate from the maximum

growth rates of net expenditure as set by the Council under Regulation (EU) 2024/1263 (activation of the

national escape clause), 22.5.2026, COM(2026)262 final. 27 For Member States benefitting from the national escape clause to accommodate higher defence spending,

actual deviations from the maximum growth rates of net expenditure set by the Council that are allowed

under the national escape clause are not to be recorded as debits in their control account. The augmented

control account excludes the deviations due to increases in defence spending that benefit from flexibility

under the national escape clause, and the remaining deviation is assessed against the threshold of 0.6% of

GDP cumulatively.

8

Table 2 – Identification of Member States for further assessment of the debt criterion

Percentage

of GDP

General

government debt

at end-2025

General

government

balance in 2025

Recorded deviations1 of net expenditure

growth in 2025 in the control account2

Annual

deviationCumulated

deviation

Cumulated

deviation

(augmented

control account3)

Member States with debt ratio exceeding 60% of GDP for which compliance with the debt criterion

is not to be discussed in this report

Germany4 63.5 -2.7 -0.3 -0.3 -0.7

Greece4 146.1 1.7-0.3 -1.3 -1.5

Spain4 100.7 -2.4 0.4 0.1 -0.1

Portugal4 89.7 0.70.2 0.4 0.4

Slovenia4 65.7 -2.5 1.4 0.5 0.3

Member States with debt ratio below 60% of GDP

Bulgaria4 29.9 -3.5 2.1 2.1 1.4

Czechia4 44.3 -2.1 0.2 -1.4 -1.7

Denmark4 27.9 2.9 1.0 -0.6 -1.6

Estonia4 24.1 -2.0 -2.0 -1.4 -2.9

Ireland 32.9 1.8 0.35 -0.15 n.a.6

Croatia4 56.3 -3.0 1.8 1.4 0.9

Cyprus 55.0 3.4 1.3 1.0 n.a.6

Latvia4 46.9 -2.5 -0.4 -1.9 -2.6

Lithuania4 39.5 -1.8 1.5 1.5 0.3

Luxembourg 26.5 -2.0 1.3 0.6 n.a.6

Netherlands 44.4 -1.6 1.55 1.05 n.a.6

Sweden 35.1 -1.3 -0.9 -1.1 n.a.6

Source: Eurostat and Fiscal Statistical Tables providing background data relevant for the assessment of the budgetary

policies of the Member States, SWD(2026)200 final, Brussels 3.6.2026.

Note:Bold figures denote that the relevant condition for examination of compliance with the debt criterion in the

present report as described in Section 3 is met. The following Member States are in excessive deficit procedure

and are therefore not covered in the table: since April 2020: Romania; since July 2024: Belgium, France,

Hungary, Italy, Malta, Poland, Slovakia; since June 2025: Austria and since January 2026: Finland. (1) A

positive deviation indicates net expenditure growth exceeding the Member State’s Council recommendation. (2)

See the Fiscal Statistical Tables (SWD(2026)200 final) for a detailed explanation of the control account and the

augmented control account. (3) The augmented control account excludes the deviations due to increases in

defence expenditure that benefit from flexibility under the national escape clause. (4) Member State benefitting

from flexibility provided by the national escape clause. This is assumed to extend to Spain, for which the

Commission on 22 May 2026 recommended to the Council to activate the national escape clause on defence.

(5) For Ireland and the Netherlands, deviations based on the maximum annual and cumulative net expenditure

growth rates established by the Member State’s Council Recommendations of 21 January 2025, which remain

valid for the year 2025. (6) Not applicable for Member States for which the national escape clause has neither

been activated nor recommended by the Commission to be activated.

9

4. RELEVANT FACTORS WHEN ASSESSING COMPLIANCE WITH THE DEFICIT

AND DEBT CRITERIA

Article 126(3) TFEU provides that, for each Member State, this report shall “take into account

whether the government deficit exceeds government investment expenditure and take into

account all other relevant factors, including the medium-term economic and budgetary

position of the Member State”. Those factors are further clarified in Article 2(3) of Regulation

(EC) No 1467/97 and refer to:

a) the medium-term debt position, i.e., “the degree of public debt challenges […], the

evolution of the government debt position and its financing, and the related risk factors,

in particular the maturity structure, the currency denomination of the debt and

contingent liabilities, including any implicit liabilities related to ageing and private

debt”;

b) “the developments in the medium-term budgetary position, including, in particular, the

size of the actual deviation from the net expenditure path as set by the Council, in

annual and cumulative terms as measured by the control account”;

c) “the developments the medium-term economic position, including potential growth,

inflation developments and cyclical developments compared to the assumptions

underlying the net expenditure path as set by the Council”;

d) “the progress in the implementation of reforms and investments, including in particular

policies to prevent and correct macroeconomic imbalances and policies to implement

the common growth and employment strategy of the Union, including those supported

by the Recovery and Resilience Facility […], and the overall quality of public finances,

in particular the effectiveness of national budgetary frameworks;” and

e) “the increase of government investment in defence, where applicable, considering also

the time of recording of military equipment expenditure.” The increase in government

investment in defence has been included among the relevant factors, as a result of the

reform of the economic governance framework.

Article 2(3) of Regulation (EC) No 1467/97 also provides that “any other factors which, in the

opinion of the Member State concerned, are relevant in order to comprehensively assess

compliance with the deficit and debt criteria and which the Member State has put forward to

the Council and the Commission” need to be given due consideration in this report.

Furthermore, in accordance with Article 2(4) of Regulation (EC) No 1467/97, the presence of

substantial public debt challenges is a key aggravating factor. Favourable cyclical economic,

budgetary and financial developments shall not be considered as mitigating factors, while

unfavourable developments may be considered as mitigating factors.

In line with the spirit of the new governance framework, the Commission considers that

deviations from the maximum recommended growth rates (point b) above), especially when

exceeding at least one of the thresholds (of 0.3% and 0.6% of GDP in annual and cumulative

terms, respectively), constitute a particularly important relevant factor.

Article 2(4) of Council Regulation (EC) No 1467/97 further provides that the relevant factors

can be taken into account by the Council and the Commission in the steps leading to the

decision on the existence of an excessive deficit based on the deficit criterion (i.e. under

Articles 126(5) and 126(6) TFEU) only when:

10

a) the government debt-to-GDP ratio does not exceed the reference value, or

b) if the government debt-to-GDP ratio exceeds the reference value, a double condition is

met – i.e. that the deficit remains close to the reference value and that the excess over

the reference value is temporary.

By contrast, relevant factors should always be taken into account in the steps leading to the

decision on the existence of an excessive deficit based on the debt criterion (i.e. under Articles

126(5) and 126(6) TFEU) for all concerned Member States.

Considering the Member States covered by this report’s examination of the deficit criterion,

the 2025 debt-to-GDP ratio, as shown in Table 2, does not exceed the reference value in

Bulgaria, Estonia and Latvia. Therefore, for these Member States, relevant factors can be

taken into account by the Council and the Commission in the steps leading to the decision on

the existence of an excessive deficit based on the deficit criterion.

For Germany and Slovenia, the 2025 debt-to-GDP ratio exceeds the reference value and the

double condition - necessary for relevant factors to be taken into account (closeness and

temporariness) - is not met. Therefore, for these Member States relevant factors cannot be taken

into account by the Council and the Commission in the steps leading to the decision on the

existence of an excessive deficit based on the deficit criterion.

In line with established practice, the relevant factors are, however, presented below even for

the Member States where they cannot be taken into account by the Council and the Commission

in the steps leading to the decision on the existence of an excessive deficit on the basis of the

deficit criterion. It should be noted in this regard that Article 2(6) of Regulation (EC) No

1467/97 states that, if the Council decides that an excessive deficit exists in a Member State

under Article 126(6) TFEU, the relevant factors referred to in Article 126(3) TFEU shall be

taken into account in the subsequent steps under the excessive deficit procedure28, for all

concerned Member States.

While the country-specific sections below refer to key information on the medium-term

macroeconomic position, including on the contributions to growth, and on the medium-term

budgetary and debt positions, more details on the macroeconomic and fiscal outlook can be

found in the Commission Spring 2026 Forecast29.

28 But not for a decision under Article 126(12) to abrogate decisions under the excessive deficit procedure. 29 For further information regarding the fiscal outlook, see also the 2026 Country Reports, as well as the Fiscal

Statistical Tables SWD(2026)200 published by the Commission on 3 June 2026.

11

4.1. Bulgaria

For Bulgaria, relevant factors can be considered by the Council and the Commission in the

steps leading to the decision on the existence of an excessive deficit.

Medium-term macroeconomic position. Real GDP increased by 3.4% in 2024. Real GDP

increased further by 3.1% in 2025, mainly driven by strong domestic demand. Economic

growth is projected at 2.5% in 2026 and 2.2% in 2027.Growth in 2026 is projected to be mainly

driven by continued growth in domestic demand components. HICP inflation increased from

2.6% in 2024 to 3.5% in 2025 and is projected at 4.2% in 2026 and 2.6% in 2027, mainly driven

by high food (in 2025) and energy prices (in 2026), and persistent services inflation.

Medium-term budgetary position, including investment. Bulgaria’s general government

deficit increased from 3.0% of GDP in 2024 to 3.5% in 2025, which mainly reflects the

increases in public sector salaries, notably in the areas of defence and security, increases in

social spending, including automatic pensions indexations, and investment grants in the

Bulgarian Energy Holding. Government investment stood at 3.2% of GDP in 2024 (of which

2.8% of GDP is nationally financed) and increased to 4.5% in 2025 (of which 3.1% of GDP is

nationally financed). Based on Commission estimates, the fiscal stance30, which includes both

nationally and EU financed expenditure, was expansionary, by 2.3% of GDP, in 2025. Growth

in nationally financed primary expenditure (net of discretionary revenue measures) in 2025

provided an expansionary contribution to the fiscal stance, amounting to 0.7% of GDP.

The Commission Spring 2026 Forecast projects a general government deficit of 4.1% of GDP

in 2026 and 4.3% in 2027. The increases in 2026 and in 2027 mainly reflect the continued

structural increases in public sector wages and social benefits in the absence of compensatory

measures. Government investment is projected to decrease to 4.4% of GDP in 2026 (of which

2.1% of GDP is nationally financed) and then 4.0% in 2027 (of which 2.8% of GDP is

nationally financed). Based on Commission estimates, the fiscal stance is projected to be

expansionary, by 1.0% of GDP, in 2026. Growth in nationally financed primary expenditure in

2026 is projected to provide an expansionary contribution to the fiscal stance, amounting to

0.3% of GDP.

Based on the Commission’s calculations31, net expenditure in Bulgaria grew by 12.3% in 2025.

The net expenditure growth in 2025 is above the recommended maximum growth rate32,

corresponding to a deviation of 2.1% of GDP in annual terms. Taking into account the

flexibility for higher defence spending provided for by the national escape clause33, the

cumulative deviation of net expenditure reduces to 1.4% of GDP.

In 2026, net expenditure in Bulgaria is projected to grow by 5.5%, and 18.5% cumulatively

over 2025 and 2026. The projected net expenditure growth in 2026 is above the recommended

30 The fiscal stance is defined as a measure of the annual change in the underlying budgetary position of the

general government. It aims to assess the economic impulse stemming from fiscal policies, both those that

are nationally financed and those that are financed by the EU budget. The fiscal stance is measured as the

difference between (i) the medium-term potential growth and (ii) the change in primary expenditure net of

discretionary revenue measures and including expenditure financed by non-repayable support (grants) from

the Recovery and Resilience Facility and other Union funds. 31 Fiscal Statistical Tables providing background data relevant for the assessment of the budgetary policies of

the Member States, SWD(2026)200 final, Brussels 3.6.2026. 32 Council Recommendation of 20 June 2025 endorsing the medium-term fiscal-structural plan of Bulgaria, OJ

C, C/2025/3700, 20.08.2025. ELI: http://data.europa.eu/eli/C/2025/3700/oj. 33 Council Recommendation of 8 July 2025 allowing Bulgaria to deviate from the maximum growth rates of

net expenditure as set by the Council under Regulation (EU) 2024/1263 (Activation of the national escape

clause), OJ C, C/2025/3961, 20.8.2025, ELI: http://data.europa.eu/eli/C/2025/3961/oj.

12

maximum growth rate, corresponding to a deviation of 0.2% of GDP in annual terms. When

considering 2025 and 2026 together, the projected cumulative growth rate of net expenditure

is also above the recommended maximum growth rate, corresponding to a deviation of 2.2%

of GDP in cumulative terms. Taking into account the flexibility for higher defence spending

provided for by the national escape clause, considering 2025 and 2026 together, the projected

cumulative deviation of net expenditure reduces to 1.6% of GDP.

As mentioned above, the Commission regards deviations from the maximum recommended

net expenditure growth (after considering the national escape clause) above the threshold as a

particularly important relevant factor.

Debt challenges and medium-term debt position. Government debt in Bulgaria increased

from 23.8% of GDP at the end of 2024 to 29.9% of GDP at the end of 2025. The debt-to-GDP

ratio is projected to increase further to 32.3% of GDP at the end of 2026 and 35.5% at the end

of 2027.

Overall, the debt sustainability analysis indicates medium risks over the medium term.34 The

debt ratio in the baseline of the sustainability analysis under unchanged policies is projected to

increase steadily, and the debt trajectory is sensitive to adverse macroeconomic shocks.

According to the stochastic projections, which simulate a large range of possible temporary

shocks to macroeconomic variables, there is a medium likelihood that the debt ratio in 2030

will be higher than in 2025.

Other factors need to be taken into account for an overall assessment of debt sustainability.

Risk-increasing factors are related to (i) the slightly increasing share of government debt held

by non-residents and (ii) the share of non-performing loans in the Bulgarian banking sector that

remains above the euro area average in a context of a high level of capitalization of the banking

sector. Risk-mitigating factors are related to (i) the low share of short-term government debt

and (ii) the small amount of general government contingent liabilities.

Implementation of reforms and investment. Structural reforms and investments under the

Recovery and Resilience Facility (RRF) are expected to have a positive impact on GDP growth

in the coming years. The implementation of reforms and investments included in the RRP is

underway and the final milestones and targets must be completed to ensure a full disbursement

of the allocated RRF financing. This requires a final focused effort to ensure the deadline of 31

August 2026 for milestone and target completion is met.

National budgetary framework. Bulgaria has a complex system of national fiscal rules in

place. Several rules target the same budgetary aggregates but the fact that they are expressed

according to different accounting standards (accrual and cash-based) may create conflicting

messages. The strength of its medium-term budgetary framework is in line with the EU

average. While the Fiscal Council of Bulgaria has so far had a relatively narrow mandate, its

role is about to be broadened following euro accession and the transposition into national

legislation of the Budgetary Frameworks Directive EU/2024/1265. Finally, reforms are

underway to improve the planning, selection and budgeting of nationally funded public

investments (see Annex 2 of the 2026 Country Report for Bulgaria).

Increase in government investment in defence. Based on data collected by Eurostat,

nationally financed government expenditure on defence35 in Bulgaria amounted to 1.9% of

34 Debt Sustainability Monitor 2025 (European Economy Institutional Paper 332, February 2026) based on the

Commission Autumn 2025 Forecast. 35 Nationally-financed defence expenditure as defined in the International Classification of the Functions of

Government (COFOG) in the framework of the European System of National Accounts (ESA2010).

13

GDP in 2025. Of this, government investment in defence represented 0.5% of GDP in 2025,

which was 0.4 percentage point higher than in 2024.

The Commission Spring 2026 Forecast projects government expenditure on defence in

Bulgaria to amount to 1.9% of GDP in 2026 and 2.2% of GDP in 2027. Of this, government

investment in defence is projected to represent 0.4% of GDP in 2026, which would be 0.1

percentage point lower than in 2025, and projected to then increase in 2027 by 0.3 percentage

point to 0.7%.

Other factors put forward by the Member State. On 7 May 2026, Bulgaria put forward

additional factors not mentioned above. Bulgaria notably refers to the delayed adoption of the

budget for 2025 in view of the political situation and to lower-than-expected revenues in 2025.

The latter reflected adverse external developments (although domestic developments remained

supportive of fiscal performance) as well as delays in the implementation of planned measures

to improve revenue collection and reduce the shadow economy.

14

4.2. Germany

For Germany, relevant factors cannot be considered by the Council and the Commission in the

steps leading to the decision on the existence of an excessive deficit.

Medium-term macroeconomic position. Real GDP decreased by 0.5% in 2024 and then

increased by 0.2% in 2025, mainly driven by a strong positive growth contribution of private

consumption which was offset by a strong negative growth contribution by net exports.

Economic growth is projected at 0.6% in 2026 and 0.9% in 2027.Growth in 2026 is projected

to be mainly driven by domestic demand, as public spending (including public investment)

ramps up and private consumption grows despite current geopolitical tensions and the inflation

shock, as confidence is expected to improve again over time. HICP inflation decreased from

2.5% in 2024 to 2.3% in 2025 and is projected at 2.9% in 2026 and 2.7% in 2027, mainly driven

by strong energy inflation in 2026 resulting from the conflict in the Middle East and subsequent

normalisation in 2027.

Medium-term budgetary position, including investment. Germany’s general government

deficit stood at 2.7% of GDP in 2024 and 2025. Government investment stood at 3.1% of GDP

in 2024 (of which 2.9% of GDP is nationally financed) and increased slightly to 3.3% in 2025

(of which 3.1% of GDP is nationally financed). Based on Commission estimates, the fiscal

stance, which includes both nationally and EU financed expenditure, was broadly neutral in

2025. Growth in nationally financed primary expenditure (net of discretionary revenue

measures) in 2025 provided a broadly neutral contribution to the fiscal stance.

The Commission Spring 2026 Forecast projects a general government deficit of 3.7% of GDP

in 2026 and 4.1% in 2027. The increase in 2026 and 2027 mainly reflects an increase in

infrastructure and defence-related spending and revenue-decreasing tax relief measures.

Government investment is projected to increase to 3.5% and 3.7% of GDP in 2026 and 2027,

respectively, of which 3.3% of GDP and 3.6% of GDP is nationally financed. Based on

Commission estimates, the fiscal stance is projected to be expansionary, by 1.3% of GDP, in

2026. Growth in nationally financed primary expenditure in 2026 is projected to provide an

expansionary contribution to the fiscal stance, amounting to 1.3% of GDP.

Based on the Commission’s calculations36, net expenditure in Germany grew by 3.8% in 2025.

Net expenditure growth in 2025 is below the recommended maximum growth rate.37

In 2026, net expenditure in Germany is projected to grow by 5.6%, and 9.7% cumulatively

over 2025 and 2026. The projected net expenditure growth in 2026 is above the recommended

maximum growth rate, corresponding to a deviation of 0.5% of GDP in annual terms. When

considering 2025 and 2026 together, the projected cumulative growth rate of net expenditure

is also above the recommended maximum growth rate corresponding to a deviation of 0.3% of

GDP in cumulative terms. However, the projected deviation is within the flexibility of the

national escape clause based on current projections for defence spending.

Debt challenges and medium-term debt position. Government debt in Germany increased

from 62.2% of GDP at the end of 2024 to 63.5% of GDP at the end of 2025. The debt-to-GDP

36 Fiscal Statistical Tables providing background data relevant for the assessment of the budgetary policies of

the Member States, SWD(2026)200 final, Brussels 3.6.2026. 37 Council Recommendation of 10 October 2025 endorsing the medium-term fiscal-structural plan of Germany

and allowing Germany to deviate from the maximum growth rates of net expenditure as set by the Council

under Regulation (EU) 2024/1263 (Activation of the national escape clause), OJ C, C/2025/5635,

22.10.2025, ELI: http://data.europa.eu/eli/C/2025/5635/oj.

15

ratio is projected to increase further to 65.8% of GDP at the end of 2026 and 68.0% at the end

of 2027.

Overall, the debt sustainability analysis indicates high risks over the medium term.38 The debt

ratio in the baseline of the sustainability analysis under unchanged policies is projected to

increase steadily, and the debt trajectory is sensitive to adverse macroeconomic shocks.

According to the stochastic projections, which simulate a large range of possible temporary

shocks to macroeconomic variables, there is a high likelihood that the debt ratio in 2030 will

be higher than in 2025.

Other factors need to be taken into account for an overall assessment of debt sustainability. On

the one hand, risk-increasing factors include a potential additional debt uptake (beyond the one

included in the DSA baseline) allowed by (i) the reform of the debt brake and (ii) the creation

of the special fund for infrastructure and climate neutrality. On the other hand, risk-mitigating

factors include the lengthening of debt maturity in recent years, relatively stable financing

sources with a diversified and large investor base, a low share of public debt held in foreign

currency, and Germany’s positive net international investment position.

As mentioned above, the presence of substantial public debt challenges is a key aggravating

relevant factor.

Implementation of reforms and investment. The Council recommendation on 10 October

2025 endorsing the medium-term plan of Germany specifies the set of reforms and investments

underpinning the extension of the adjustment period, along with a timeline for their

implementation. Taking into account the information provided by Germany in its April 2026

Annual Progress Report, the Commission finds that the implementation of the key steps of

these reforms and investments that were due by 30 April 2026 seems to be broadly on track.

The Commission considers that, overall, Germany has complied with its commitments in a

satisfactory manner.

In addition, structural reforms and investments under the Recovery and Resilience Facility

(RRF) are expected to have a positive impact on GDP growth in the coming years. The

implementation of reforms and investments included in the RRP is underway and the final

milestones and targets must be completed to ensure a full disbursement of the allocated RRF

financing. This requires a final focused effort to ensure the deadline of 31 August 2026 for

milestone and target completion is met.

National budgetary framework. The German fiscal framework is based on a number of fiscal

rules at different levels of government. In 2024, the strength of Germany’s fiscal rules was

close to the EU average level, as measured by data collected in the Fiscal Governance Database

of the European Commission. In 2025, some exceptions were introduced affecting the so-called

debt brake. Spending reviews are an established practice in Germany, but the country could

benefit from further institutionalisation of the review processes. Germany lags behind the EU

average when it comes to accrual accounting, which can improve transparency over a public

body’s financial position and performance, and can also support sustainability and

intergenerational equity. The German independent fiscal institution (the Advisory Board to the

Stability Council) is very small and has a narrow mandate.

Increase in government investment in defence. Based on data collected by Eurostat,

nationally financed government expenditure on defence in Germany amounted to 1.5% of GDP

38 Debt Sustainability Monitor 2025 (European Economy Institutional Paper 332, February 2026) based on the

Commission Autumn 2025 Forecast.

16

in 2025. Of this, government investment in defence represented 0.3% of GDP in 2025, which

was 0.1 percentage point higher than in 2024.

The Commission Spring 2026 Forecast projects government expenditure on defence in

Germany to amount to 1.9% of GDP in 2026 and 2.2% of GDP in 2027. Of this, government

investment in defence is projected to represent 0.4% of GDP in 2026, which is 0.1 percentage

point higher than in 2025, and projected to then increase to 0.5% in 2027.

Other factors put forward by the Member State. On 11 May 2026, Germany put forward

additional factors not entirely covered above. Germany drew attention to the adoption of

growth-enhancing reforms and explicitly mentioned improved investment depreciation rules,

as well as bureaucracy reduction, faster planning and permitting procedures, and labour supply

reforms. Those measures are also included in the Commission Spring 2026 Forecast. Germany

also mentioned upcoming reforms on cutting red tape and reducing labour taxes and stated that

a major public health insurance reform had been approved. In terms of fiscal impact, this

package of measures can be considered ambiguous. The measures could have a growth-

enhancing impact, which would be fiscally beneficial. However, the tax-related measures will

also reduce revenues.

17

4.3. Estonia

For Estonia, relevant factors can be considered by the Council and the Commission in the steps

leading to the decision on the existence of an excessive deficit.

Medium-term macroeconomic position. Real GDP fell by 0.1% in 2024 to then increase by

0.6% in 2025, driven by domestic demand, notably investment, government consumption and

accumulation of inventories. Economic growth is projected at 1.6% in 2026 and 1.7% in 2027.

Growth in 2026 is projected to be mainly driven by private and public consumption and public

investment, while net exports are set to weigh on growth, particularly as defence equipment is

largely imported. HICP inflation increased from 3.7% of GDP in 2024 to 4.8% in 2025 and is

projected at 4.4% in 2026 and 2.9% in 2027, mainly driven by higher prices of energy, food

and services in 2026 and prices of services and food in 2027.

Medium-term budgetary position, including investment. Estonia’s general government

deficit increased from 1.1% of GDP in 2024 to 2.0% in 2025, which mainly reflects stronger

expenditure dynamics, in particular public investment on large infrastructure projects, such as

Rail Baltica. Government investment stood at 6.2% of GDP (of which 5.4% of GDP is

nationally financed) in 2024 and increased to 6.7% in 2025 (of which 5.7% of GDP is nationally

financed). Based on Commission estimates, the fiscal stance, which includes both nationally

and EU financed expenditure, was contractionary, by 0.5% of GDP, in 2025. Growth in

nationally financed primary expenditure (net of discretionary revenue measures) in 2025

provided a contractionary contribution to the fiscal stance, amounting to 1.2% of GDP.

The Commission Spring 2026 Forecast projects a general government deficit of 4.5% of GDP

in 2026 and 4.8% in 2027. The increase in 2026 mainly reflects a decrease in revenue in

particular due to the personal income tax reform (transition to a universal tax-exemption

system) and an increase in expenditure mainly on the back of defence spending reaching 5%

of GDP, and of investment projects such as Rail Baltica. Government investment is projected

to increase to 7.9% of GDP in 2026 (of which 7.0% of GDP is nationally financed) and then

decrease to 7.2% in 2027 (of which 6.9% of GDP is nationally financed). Based on

Commission estimates, the fiscal stance is projected to be expansionary, by 2.8% of GDP, in

2026. Growth in nationally financed primary expenditure in 2026 is projected to provide an

expansionary contribution to the fiscal stance, amounting to 3.0% of GDP.

Based on the Commission’s calculations39, net expenditure in Estonia grew by 2.0% over 2025

and 5.7% cumulatively over 2024 and 2025. The net expenditure growth in 2025 is below the

recommended maximum growth rate40. When considering 2024 and 2025 together, the

cumulative growth rate of net expenditure is also below the recommended maximum growth

rate.

In 2026, net expenditure in Estonia is projected to grow by 12.0%, and 18.4% cumulatively

over 2024, 2025 and 2026. The projected net expenditure growth in 2026 is above the

recommended maximum growth rate, corresponding to a deviation of 2.8% of GDP in annual

terms. When considering 2024, 2025 and 2026 together, the projected cumulative growth rate

of net expenditure is also above the recommended maximum growth rate, corresponding to a

39 Fiscal Statistical Tables providing background data relevant for the assessment of the budgetary policies of

the Member States, SWD(2026)200 final, Brussels 3.6.2026. 40 Council Recommendation of 21 January 2025 endorsing the medium-term fiscal-structural plan of Estonia,

OJ C, C/2025/655, 10.02.2025. ELI: http://data.europa.eu/eli/C/2025/655/oj.

18

deviation of 1.5% of GDP in cumulative terms. However, the projected deviation is within the

flexibility of the national escape clause based on current projections for defence spending.

Debt challenges and medium-term debt position. Government debt increased from 23.5%

of GDP at the end of 2024 to 24.1% of GDP at the end of 2025. The debt-to-GDP ratio is

projected to increase further to 26.9% of GDP at the end of 2026 and 30.5% at the end of 2027.

Overall, the debt sustainability analysis indicates medium risks over the medium term.41 The

debt ratio in the baseline of the sustainability analysis under unchanged policies is projected to

increase steadily and the debt trajectory is sensitive to adverse macroeconomic shocks.

According to the stochastic projections, which simulate a large range of possible temporary

shocks to macroeconomic variables, there is a high likelihood that the debt ratio in 2030 will

be higher than in 2025.

Other factors need to be taken into account for an overall assessment of debt sustainability. On

the one hand, the large share of government debt held by non-residents can constitute a risk-

increasing factor. On the other hand, risk-mitigating factors include (i) the modest contingent

liabilities and (ii) the fact that the overall still low government debt is fully denominated in

euro.

Implementation of reforms and investment. Structural reforms and investments under the

Recovery and Resilience Facility (RRF) are expected to have a positive impact on GDP growth

in the coming years. The implementation of reforms and investments included in the RRP is

underwayand the final milestones and targets must be completed to ensure a full disbursement

of the allocated RRF financing.This requires a final focused effort to ensure the deadline of 31

August 2026 for milestone and target completion is met.

National budgetary framework. The national fiscal framework underwent a comprehensive

reform in 2014, when the Estonian Fiscal Council was established. The cornerstone of the

national fiscal framework is the structural balance rule. It was amended in 2017 and 2024, with

the latter amendment allowing higher structural deficits up to 1% of GDP, as long as the debt

level does not exceed 30% of GDP and long-term fiscal sustainability risks are low. The

Estonian Fiscal Council endorses the macroeconomic and fiscal forecasts and assesses both ex

ante and ex post compliance with the general government structural balance rule.

Increase in government investment in defence. Based on data collected by Eurostat,

nationally financed government expenditure on defence in Estonia amounted to 3.9% of GDP

in 2025. Of this, government investment in defence represented 1.6% of GDP in 2025,

remaining unchanged compared to 2024.

The Commission Spring 2026 Forecast projects government expenditure on defence in Estonia

to amount to 4.6% of GDP in 2026 and 4.9% of GDP in 2027. Of this, government investment

in defence is projected to represent 1.9% of GDP in 2026, which is 0.3 percentage point higher

than in 2025, and projected to then decrease in 2027 by 0.5 percentage point to 1.4%.

Other factors put forward by the Member State. The analysis presented in the previous

sections already covers the key factors put forward by Estonia on 11 May 2026.

41 Debt Sustainability Monitor 2025 (European Economy Institutional Paper 332, February 2026) based on the

Commission Autumn 2025 Forecast.

19

4.4. Latvia

For Latvia, relevant factors can be considered by the Council and the Commission in the steps

leading to the decision on the existence of an excessive deficit.

Medium-term macroeconomic position. Real GDP remained flat in 2024 and increased by

2.1% in 2025, mainly driven by a surge in private and public investments, a recovery in private

consumption and supportive public consumption. Economic growth is projected at 1.4% in

2026 and 1.6% in 2027.Growth in 2026 is projected to be mainly driven by private

consumption and investments. HICP inflation increased from 1.3% in 2024 to 3.8% in 2025

and is projected at 3.6% in 2026 and 2.2% in 2027, mainly driven by high energy inflation in

2026 and prices of food and services in 2027.

Medium-term budgetary position, including investment. Latvia’s general government

deficit increased from 1.8% of GDP in 2024 to 2.5% in 2025, which mainly reflects the adverse

fiscal impact of the personal income tax reform and a reduction in property income, affected

by lower dividend payments from state-owned enterprises and lower interest revenue.

Government investment stood at 6.3% of GDP in 2024 and in 2025 (of which 5.5% of GDP

and 4.4% of GDP is nationally financed, respectively). Based on Commission estimates, the

fiscal stance, which includes both nationally and EU financed expenditure, was expansionary,

by 1.1% of GDP, in 2025. Growth in nationally financed primary expenditure (net of

discretionary revenue measures) in 2025 provided a broadly neutral contribution to the fiscal

stance.

The Commission Spring 2026 Forecast projects a general government deficit of 3.3% of GDP

in 2026 and 4.3% in 2027. The increase in 2026 mainly reflects higher investment (including

in defence), increasing interest costs, and continued growth in social transfers, largely due to

pension and benefit indexation outpacing economic growth, and a rising number of pension

recipients. Government investment is projected to increase to 7.2% of GDP in 2026 (of which

5.1% of GDP is nationally financed) and then to decrease to 6.7% in 2027 (of which 5.3% of

GDP is nationally financed). Based on Commission estimates, the fiscal stance is projected to

be expansionary, by 1.5% of GDP, in 2026. Growth in nationally financed primary expenditure

in 2026 is projected to provide an expansionary contribution to the fiscal stance, amounting to

1.1% of GDP.

Based on the Commission’s calculations42, net expenditure in Latvia grew by 5.0% in 2025 and

10.2% cumulatively over 2024 and 2025. The net expenditure growth in 2025 is below the

recommended maximum growth rate43. When considering 2024 and 2025 together, the

cumulative growth rate of net expenditure is also below the recommended maximum growth

rate.

In 2026, net expenditure in Latvia is projected to grow by 6.7%, and 17.5% cumulatively over

2024, 2025 and 2026. The projected net expenditure growth in 2026 is above the recommended

maximum growth rate, corresponding to a deviation of 1.2% of GDP in annual terms. When

considering 2024, 2025 and 2026 together, the projected cumulative growth rate of net

expenditure is below the recommended maximum growth rate44.

42 Fiscal Statistical Tables providing background data relevant for the assessment of the budgetary policies of

the Member States, SWD(2026)200 final, Brussels 3.6.2026. 43 Council Recommendation of 21 January 2025 endorsing the medium-term fiscal-structural plan of Latvia,

OJ C, C/2025/652, 10.02.2025. ELI: http://data.europa.eu/eli/C/2025/652/oj. 44 As Latvia benefits from flexibility under the National Escape Clause, the assessment of compliance focusses

on the latter comparison.

20

Debt challenges and medium-term debt position. Government debt in Latvia increased from

46.2% of GDP at the end of 2024 to 46.9% of GDP at the end of 2025. The debt-to-GDP ratio

is projected to increase further to 48.8% of GDP at the end of 2026 and 53.8% at the end of

2027.

Overall, the debt sustainability analysis indicates medium risks over the medium term.45 The

debt ratio in the baseline of the sustainability analysis under unchanged policies is projected to

rise continuously and the debt trajectory is sensitive to adverse macroeconomic shocks.

According to the stochastic projections, which simulate a large range of possible temporary

shocks to macroeconomic variables, there is a high likelihood that the debt ratio in 2030 will

be higher than in 2025.

Other factors need to be taken into account for an overall assessment of debt sustainability. On

the one hand, risk-increasing factors include (i) the relatively large share of public debt held by

non-residents and (ii) the negative net international investment position, while being on a clear

improving path for several years. On the other hand, risk-mitigating factors include (i) the low

share of short-term debt in total debt and (ii) the fact that debt is largely denominated in euro.

Implementation of reforms and investment. Structural reforms and investments under the

Recovery and Resilience Facility (RRF) are expected to have a positive impact on GDP growth

in the coming years. The implementation of reforms and investments included in the RRP is

underway and the final milestones and targets must be completed to ensure a full disbursement

of the allocated RRF financing. This requires a final focused effort to ensure the deadline of 31

August 2026 for milestone and target completion is met.

National budgetary framework. The national fiscal framework of Latvia underwent a

comprehensive reform in 2013, when the Fiscal Discipline Law was adopted, with the Latvian

Fiscal Discipline Council (FDC) starting its operations in 2014. The FDC monitors compliance

with Latvia’s fiscal rules, including the structural balance rule and the expenditure rule. In

2024, the structural balance rule was amended, allowing higher structural deficits of up to 1%

of GDP as of 2025, with further amendments to accommodate defence expenditure foreseen

after the expiration of the national escape clause. The FDC endorses the macroeconomic

forecasts underpinning the budgetary process and communicates proactively on various aspects

of fiscal policy and sustainability of public finances. The FDC is a well-established

independent collegial institution actively participating in the domestic debate.

Increase in government investment in defence. Based on data collected by Eurostat,

nationally financed government expenditure on defence in Latvia amounted to 3.2% of GDP

in 2025. Of this, government investment in defence represented 1.1% of GDP in 2025, which

was 0.2 percentage point higher than in 2024.

The Commission Spring 2026 Forecast projects government expenditure on defence in Latvia

to amount to 4.1% of GDP in 2026 and 5.5% of GDP in 2027. Of this, government investment

in defence is projected to represent 1.8% of GDP in 2026, which is 0.7 percentage point higher

than in 2025, and projected to then increase in 2027 by 0.4 percentage point to 2.2%.

Other factors put forward by the Member State. The analysis presented in the previous

sections already covers the key factors put forward by Latvia on 11 May 2026.

45 Debt Sustainability Monitor 2025 (European Economy Institutional Paper 332, February 2026) based on the

Commission Autumn 2025 Forecast.

21

4.5. Slovenia

For Slovenia, relevant factors cannot be considered by the Council and the Commission in the

steps leading to the decision on the existence of an excessive deficit.

Medium-term macroeconomic position. Real GDP increased by 1.7% in 2024. Real GDP

increased further by 1.1% in 2025, mainly driven by domestic demand. Economic growth is

projected at 1.9% in 2026 and 2.3% in 2027.Growth in 2026 is projected to be mainly driven

by private and public consumption. HICP inflation increased from 2.0% in 2024 to 2.5% in

2025 and is projected at 3.5% in 2026 and 2.5% in 2027, mainly driven by rising global energy

and food prices.

Medium-term budgetary position, including investment. Slovenia’s general government

deficit increased from 0.9% of GDP in 2024 to 2.5% in 2025, which mainly reflects weaker-

than-expected revenue growth and a rise in current expenditures and record-high public

investments. Government investment stood at 5.1% of GDP in 2024 (of which 4.7% of GDP

is nationally financed) and increased to 5.6% in 2025 (of which 5.0% of GDP is nationally

financed). Based on Commission estimates, the fiscal stance, which includes both nationally

and EU financed expenditure, was expansionary, by 1.6% of GDP, in 2025. Growth in

nationally financed primary expenditure (net of discretionary revenue measures) in 2025

provided an expansionary contribution to the fiscal stance, amounting to 1.3% of GDP.

The Commission Spring 2026 Forecast projects a general government deficit of 3.3%46 of GDP

in 2026 and 3.5% in 2027. The increase in 2026 mainly reflects increase in current expenditures

driven by government intermediate consumption, social benefits and public wages. The

increase of the deficit in 2027 mainly reflects the expiry of EU transfers from RRF grants

against a sustained high level of public investments. Government investment is projected

decrease slightly to 5.5% of GDP in 2026 (of which 4.4% of GDP is nationally financed) and

then to decrease to 5.1% in 2027 (of which 4.6% of GDP is nationally financed). Based on

Commission estimates, the fiscal stance is projected to be expansionary, by 1.3% of GDP, in

2026. Growth in nationally financed primary expenditure in 2026 is projected to provide an

expansionary contribution to the fiscal stance, amounting to 0.7% of GDP.

On 11 May 2026, after the cut-off date of the Commission Spring 2026 Forecast, additional

deficit-increasing measures were adopted by the National Assembly, in the area of personal

income tax, social contributions, taxes on products and social transfers, which, based on

currently available information, are estimated by the Commission to have a total budgetary

cost between 0.5% and 1.0% of GDP in 2026. Most of these measures are expected to be not

temporary and they would increase the deficit in 2026 and beyond. The impact of these

additional measures is only considered in this report when explicitly mentioned, and only in

qualitative terms.

Based on the Commission’s calculations47, net expenditure in Slovenia grew by 8.8% in 2025

and 13.2% cumulatively over 2024 and 2025. The net expenditure growth in 2025 is above the

recommended maximum growth rate48, corresponding to a deviation of 1.4% of GDP in annual

terms. When considering 2024 and 2025 together, the cumulative growth rate of net

expenditure is also above the recommended maximum growth rate, corresponding to a

46 Based on policy measures known at the cut-off date of 4 May 2026 in the Commission Spring 2026 Forecast. 47 Fiscal Statistical Tables providing background data relevant for the assessment of the budgetary policies of

the Member States, SWD(2026)200 final, Brussels 3.6.2026. 48 Council Recommendation of 8 July 2025 2025 endorsing the medium-term fiscal-structural plan of Slovenia,

OJ C, C/2025/3973, 20.8.2025, ELI: http://data.europa.eu/eli/C/2025/3973/oj.

22

deviation of 0.5% of GDP in cumulative terms. Taking into account the flexibility for higher

defence spending provided for by the national escape clause49, considering 2024 and 2025

together, the cumulative deviation of net expenditure amounts to marginally above 0.3% of

GDP.

In 2026, net expenditure in Slovenia is projected to grow by 7.2%, and 21.3% cumulatively

over 2024, 2025 and 2026. The projected net expenditure growth in 2026 is above the

recommended maximum growth rate, corresponding to a deviation of 1.2% of GDP in annual

terms. When considering 2024, 2025 and 2026 together, the projected cumulative growth rate

of net expenditure is also above the recommended maximum growth rate, corresponding to a

deviation of 1.7% of GDP in cumulative terms. Taking into account the flexibility for higher

defence spending provided for by the national escape clause, considering 2024, 2025 and 2026

together, the projected cumulative deviation of net expenditure reduces to 1.2% of GDP.

As mentioned above, the Commission regards deviations from the maximum recommended

net expenditure growth (after considering the national escape clause) above the threshold as a

particularly important relevant factor.

Debt challenges and medium-term debt position. Government debt in Slovenia decreased

from 66.4% of GDP at the end of 2024 to 65.7% of GDP at the end of 2025. The debt-to-GDP

ratio is projected to decrease further to 64.9% of GDP at the end of 2026 to then increase to

65.1% at the end of 2027.

Overall, the debt sustainability analysis indicates medium risks over the medium term.50 The

debt ratio in the baseline of the sustainability analysis under unchanged policies is projected to

decrease slightly until 2027 before increasing again over the medium term, reaching around

75% of GDP in 2036. The debt trajectory is sensitive to adverse macroeconomic shocks.

According to the stochastic projections, which simulate a large range of possible temporary

shocks to macroeconomic variables, there is a medium likelihood that the debt ratio in 2030

will be higher than in 2025.

Other factors need to be taken into account for an overall assessment of debt sustainability. On

the one hand, risk-increasing factors relate to the large share of government debt held by non-

residents. On the other hand, risk-mitigating factors include (i) the stabilisation of debt maturity

at high levels in recent years and (ii) the high cash buffer.

Implementation of reforms and investment. Structural reforms and investments under the

Recovery and Resilience Facility (RRF) are expected to have a positive impact on GDP growth

in the coming years. The implementation of reforms and investments included in the RRP is

underway and the final milestones and targets must be completed to ensure a full disbursement

of the allocated RRF financing. This requires a final focused effort to ensure the deadline of 31

August 2026 for milestone and target completion is met.

National budgetary framework. The Slovenian Fiscal Council is one of Slovenia's two

independent fiscal institutions and focuses on the monitoring of compliance with fiscal rules

and assessing the fiscal forecast of the government (see Annex 2 of the 2026 Country Report

on Slovenia). Slovenia adopted a comprehensive new national framework in 2025, including

the Fiscal Rules Act and amendments to the Public Finance Act. National fiscal rules require

49 Council Recommendation of 8 July 2025 allowing Slovenia to deviate from the maximum growth rates of

net expenditure as set by the Council under Regulation (EU) 2024/1263 (Activation of the national escape

clause), OJ C, C/2025/3973, 20.8.2025, ELI: http://data.europa.eu/eli/C/2025/3973/oj. 50 Debt Sustainability Monitor 2025 (European Economy Institutional Paper 332, February 2025) based on the

Commission Autumn 2025 Forecast.

23

the net expenditure path to follow the national medium-term fiscal-structural plan, to achieve

respect of the reference values of 3% and 60% for the deficit and debt ratio respectively, and

to remain below these values in the medium term. The medium-term fiscal-structural plan plays

a central role in the revised medium-term budgetary framework.

Increase in government investment in defence. Based on data collected by Eurostat,

nationally financed government expenditure on defence in Slovenia amounted to 1.3% of GDP

in 2025. Of this, government investment in defence represented 0.3% of GDP in 2025, which

was 0.1 percentage point lower than in 2024.

The Commission Spring 2026 Forecast projects government expenditure on defence in

Slovenia to amount to 1.6% of GDP in 2026 and 1.8% of GDP in 2027. Of this, government

investment in defence is projected to represent 0.3% of GDP in 2026, remaining unchanged

compared to 2025, and projected to then increase in 2027 by 0.2 percentage point to 0.5%.

Other factors put forward by the Member State. On 12 May 2026, Slovenia put forward

additional factors not mentioned above. Slovenia highlighted cost saving measures that were

adopted to create additional fiscal buffers, while the impact of the structural reforms

implemented is associated with higher costs in the short-term but positive effects on the mid-

to long-term fiscal sustainability. Those measures that were specified in sufficient detail by the

cut-off date were reflected in the Commission Spring 2026 Forecast and thus taken into account

in the preceding analysis. Slovenia also mentioned that further deficit decreasing measures

intended to create additional fiscal buffers were being compiled by the outgoing government:

these were not reflected in the Commission Spring 2026 Forecast as they had not been credibly

announced with sufficient detail by the cut-off date of the forecast. It should however be noted

that the Slovenia did not mention the additional deficit-increasing measures adopted on 11 May

by the National Assembly, nor their likely impact. Slovenia also mentions that several

statistical issues are having an impact on public finance statistics51. These issues have been

reflected in the Commission Spring 2026 Forecast and in the calculation of the above

deviations from the recommended net expenditure path.

51 Namely, the reclassification of two units in 2025 (Šoštanj Thermal Power Plant and Velenje Coal Mine) and

the change in the service model by the Company for the management of public passenger transport (DUJPP)

in 2026.

24

5. CONCLUSIONS

Based on the preceding analysis, the conclusions on compliance with the deficit criterion for

the different countries covered by the report, after considering relevant factors as appropriate,

are as follows.

5.1. Bulgaria

The government deficit in Bulgaria exceeded the reference value of 3% of GDP in 2025 and,

while Bulgaria has not reported a planned deficit for 2026, the Commission projects the deficit

in 2026 at 4.1%. Both deficits in excess of the reference value are assessed as above and not

close to the reference value. They are assessed as not temporary − based on the Commission

forecast − with the deficit in excess in 2025 as exceptional, but not exceptional in 2026.

For Bulgaria, relevant factors can be taken into account in the assessment of compliance with

the deficit criterion, as government debt was below 60% of GDP in 2025. The relevant factors

examined in this report for Bulgaria are assessed as, on balance, aggravating. Overall, taking

into account all relevant factors as appropriate and, in particular, as the deficit is increasing to

well above 3% of GDP in 2026, the deficit criterion is assessed as not fulfilled in Bulgaria.

On 8 July 2025, the Council activated the national escape clause to facilitate an increase in

defence expenditure during the period 2025-2028 for Bulgaria. Defence expenditure increased

from 1.3% of GDP in 2024 to 1.9% in 2025, and is projected to be 1.9% of GDP also in 2026,

based on the Commission Spring 2026 Forecast. Without this increase in defence expenditure

since the reference year 2024, the deficit in 2025 would be 2.9% of GDP, below the 3% of

GDP reference value. However, in 2026, the deficit without the increase in defence

expenditure, as projected by the Commission amounts to 3.5% of GDP, thus exceeding the

reference value.

After considering the opinion of the Economic and Financial Committee as established

under Article 126(4) TFEU, the Commission will consider proposing to open an excessive

deficit procedure for Bulgaria by recommending to the Council to adopt a Decision under

Article 126(6) TFEU establishing the existence of an excessive deficit as well as a

Recommendation under Article 126(7) TFEU with a view to correcting the excessive

deficit.

5.2. Germany

Germany had a government deficit not exceeding the reference value in 2025 but has reported

a planned deficit above and not close to 3% of GDP in 2026; the Commission forecast likewise

projects a deficit assessed as above and not close to 3% of GDP in 2026. Germany’s planned

deficit in excess of the reference value is assessed as not temporary − based on the Commission

forecast − butas exceptional.

For Germany, relevant factors cannot be taken into account in the assessment of compliance

with the deficit criterion, as government debt was above 60% of GDP in 2025 and the double

condition (i.e. that the deficit remains close to the reference value and that the excess over the

reference value is temporary) is not met. Therefore, the deficit criterion is assessed as not

fulfilled in Germany.

On 10 October 2025, the Council activated the national escape clause to facilitate an increase

in defence expenditure during the period 2025-2028 for Germany. Defence expenditure

increased from 1.1% of GDP in 2021 to 1.5% in 2025 and is projected to be 1.9% of GDP in

2026, based on the Commission Spring 2026 Forecast. Without this increase in defence

25

expenditure since 2021, the deficit in 2026 projected by the Commission would be 2.9% of

GDP, thus not exceeding the reference value.52 Not to reach a conclusion on the existence of

an excessive deficit inGermanyat this stage is therefore in accordance with Article 2(5) of

Regulation (EU) No 1467/97.

In light of this assessment, the Commission is of the view that there is no case to open an

excessive deficit procedure for Germany. Fiscal developments in Germany will be

reassessed in autumn 2026.

5.3. Estonia

Estonia had a government deficit not exceeding the reference value in 2025 but has reported a

planned deficit above and not close to 3% of GDP in 2026; the Commission forecast likewise

projects a deficit assessed as above and not close to 3% of GDP in 2026. Estonia’s planned

deficit in excess of the reference value is assessed as not temporary − based on the Commission

forecast − butas exceptional.

For Estonia, relevant factors can be taken into account in the assessment of compliance with

the deficit criterion, as government debt was below 60% of GDP in 2025. The relevant factors

examined in this report for Estonia are assessed as, on balance, presenting a mixed picture.

Overall, taking into account all relevant factors as appropriate, the deficit criterion is assessed

as not fulfilled in Estonia.

On 8 July 2025, the Council activated the national escape clause to facilitate an increase in

defence expenditure during the period 2025-2028 for Estonia. Defence expenditure increased

from 2.0% of GDP in 2021 to 3.9% in 2025, and is projected to be 4.6% of GDP in 2026, based

on the Commission Spring 2026 Forecast. Without this increase in defence expenditure since

the reference year 2021 − capped at 1.5% of GDP in line with the maximum flexibility under

the national escape clause − the deficit in 2026 as projected by the Commission would be 3.0%

of GDP, thus not exceeding the reference value.53 Not to reach a conclusion on the existence of

an excessive deficit inEstoniaat this stage is therefore in accordance with Article 2(5) of

Regulation (EU) No 1467/97.

In light of this assessment, the Commission is of the view that there is no case to open an

excessive deficit procedure for Estonia. Fiscal developments in Estonia will be reassessed

in autumn 2026.

5.4. Latvia

Latvia had a government deficit not exceeding the reference value in 2025 but has reported a

planned deficit above but close to 3% of GDP in 2026; the Commission forecast likewise

projects a deficit assessed as above but close to 3% of GDP in 2026. Latvia’s planned deficit

52 In line with the Commission Communication of 19 March 2025, C(2025) 2000 final, if the national escape

clause for defence spending is activated, the Commission and Council may decide not to reach a conclusion

regarding the existence of an excessive deficit in case of an excess of the deficit exceeding 3% of GDP, when

this is due to an increase in defence expenditure. 53 The projected large increase in the deficit in Estonia from 2025 to 2026 is only partially related by the

increase in defence spending in 2026. Most of the increase in defence spending in Estonia took place in

previous years.

26

in excess of the reference value is assessed as not temporary − based on the Commission

forecast − butas exceptional.

For Latvia, relevant factors can be taken into account in the assessment of compliance with the

deficit criterion, as government debt was below 60% of GDP in 2025. The relevant factors

examined in this report for Latvia are assessed as, on balance, mitigating.

The relevant factors considered for Latvia are assessed as sufficiently mitigating to

conclude that, overall, the deficit criterion is assessed as fulfilled. Fiscal developments in

Latvia will be reassessed in autumn 2026.

5.5. Slovenia

Slovenia had a government deficit not exceeding the reference value in 2025 but has reported

a planned deficit above but close to 3% of GDP in 2026; the Commission forecast likewise

projects a deficit assessed as above but close to 3% of GDP in 2026. Slovenia’s planned deficit

in excess of the reference value is assessed as not temporary − based on the Commission

forecast − butas exceptional.

For Slovenia, relevant factors cannot be taken into account in the assessment of compliance

with the deficit criterion, as government debt was above 60% of GDP in 2025 and the double

condition (i.e. that the deficit remains close to the reference value and that the excess over the

reference value is temporary) is not met. Therefore, the deficit criterion is assessed as not

fulfilled in Slovenia.

On 8 July 2025, the Council activated the national escape clause to facilitate an increase in

defence expenditure during the period 2025-2028 for Slovenia. In Slovenia, defence

expenditure increased from 1.1% of GDP in 2021 to 1.3% in 2025 and is projected to be 1.6%

of GDP in 2026, based on the Commission Spring 2026 Forecast. Without this increase in

defence expenditure since the reference year 2021, the deficit in 2026 projected by the

Commission would be 2.8% of GDP.

After the cut-off of the Commission Spring 2026 Forecast, Slovenia adopted a number of

measures that, therefore, are not considered in the data discussed above. In particular, deficit-

increasing measures in the areas of personal income tax, consumption taxes, social

contributions and pensions were adopted by the National Assembly on 11 May (amounting to

between 0.5% and 1% of GDP). The Commission understands that a number of savings

measures are also being prepared. Therefore, there is at this stage uncertainty about the fiscal

outlook for 2026, including on the projected deficit in excess of 3% of GDP, and on the extent

to which such an excess is related to the increase in defence expenditure.

In light of this assessment, the Commission is of the view that there is no case to open an

excessive deficit procedure for Slovenia at this stage. Fiscal developments in Slovenia will

be reassessed in autumn 2026. If sufficient corrective measures are not taken in a credible

and timely manner, this may lead to the opening of the excessive deficit procedure for

Slovenia in autumn.

_________________