New analyses provide a glimpse into the spending priorities and economic strategies behind many Central and Eastern European (CEE) countries. These results underscore where governments invest their priorities. This report is a study of the spending habits of these countries and Romania, Czechia, Hungary, Poland, Slovakia, Croatia, and Serbia. These results point a glaring difference in per capita spending, military allocations, and social services investments.
Romania’s general government expenditures are about 40% of its GDP. This figure represents an incredible investment in social services and social programs. Czechia and Hungary share fundamentally different spending dynamics. Czechia’s spending per capita reaches around USD 21,350, surpassing Hungary’s per capita expenditure of approximately USD 19,240. These disparities demonstrate two very different philosophies towards government spending and social welfare programs in the West.
Variability in Old-Age Spending
One of the most surprising trends found in government spending across CEE region is related to the unpredictability of old-age spending. Countries such as France and Finland show up as having a lot of spending on elderly care, due to their large social welfare programs. In contrast, Denmark has lower old-age spending, primarily due to a robust private pension system that alleviates some financial burdens from the state. This difference in expenditure starkly illustrates the variation between countries in priorities for elderly care and how much financial support they provide to their growing aging populations.
Yet as CEE countries adapt to new economic realities, ensuring the affordability of old-age spending will be an important part of the discussion. Policymakers can no longer afford to ignore the needs of our aging population while pretending to be fiscally responsible. Country-specific variability indicates that there is not a single best way to control these expenditures.
Upcoming Economic Indicators
You’ll look at where dollars are currently being spent. Future economic indicators will provide more critical information as to the fiscal health of individual CEE countries. Denmark and Slovakia are due to release unemployment data for October shortly. This new data will allow us to see where the labor market is succeeding and where it is failing. Likewise, Croatia will release its unemployment rate at 11 AM CET, which will be followed by real wage growth for September. These two figures in particular will be key in measuring the success of the economic recovery in these countries.
Poland’s Finance Minister, Andrzej Domanski, hopes to see his country join the euro zone by 2026. His cabinet promised to increase spending on defence to PLN 200 billion next year. This funding boost is indicative of the Polish government’s determination to strengthen their military amid the ongoing conflict in Eastern Europe. In many ways, this proposal underscores a dramatic shift away from strategic priorities. This move would have far-reaching impacts on the rest of public spending.
Slovakia, for example, recently announced a current account surplus of EUR 106 million. That would be consistent with a much healthier trade and investment flows. Serbia is now facing a large current account deficit of EUR -343.7 million. This unfortunate circumstance further highlights the economic inequities that are in desperate need of our focused attention and intentional action.
Romania’s Fiscal Adjustments
Faced with a deteriorating fiscal situation, Romania has issued a draft OUG calling for an overall 10% reduction of the total personnel budget of all ministries. This ambitious decision not only cuts through intergovernmental bureaucracy but responds to growing fiscal worries about public spending. Though these measures help ensure fiscal responsibility, they may not be in the best interest of the public services delivery.
CEE nations are wading through uncertain economic waters. Whether you’re a citizen or an elected official, understanding where the money goes is critical in informing how and why government spends money. These analyses in progress will help to assess those fiscal policies that are working and how they affect different sectors.