Fiscal Database

Gross and Net Public Sector Debt

An important fiscal indicator describing the state of public finance is general government, or public, debt. Public debt is typically expressed either in nominal terms (in euros) or relatively as the debt-to-GDP ratio, represented as a percentage. Since nominal debt figures do not indicate the severity of debt or the extent of fiscal imbalance, the debt-to-GDP ratio is preferred for its relativity in terms of % of GDP.

Within public sector debt, we differentiate between gross and net debt:

  • Gross Debt: This represents the total volume of liabilities of public sector entities to other economic entities, including the foreign ones. These liabilities primarily consist of bonds, treasury bills, and loans.
  • Net Debt: This is gross debt adjusted for liquid financial assets, such as cash on government accounts.

In Slovakia, a fiscal rule was introduced under the constitutional law on budgetary responsibility, establishing a limit on the level of gross public sector debt—referred to as the “debt brake.” Its purpose is to prevent Slovakia’s debt from reaching critical levels through corrective and sanction mechanisms. An evaluation of compliance with this rule in previous years is available at this link.