Slovak Republic--Joining the EU : A Development Policy Review

The Slovak Republic's external current account and fiscal deficits (net of privatization receipts) are unsustainably high (at about 8 percent of GDP in 2002), despite some recent declines. With a capital account surplus of perhaps 20 percent of GDP this year, the Slovak Republic may not find it particularly difficult to finance these deficits, but this favorable situation will not last. Furthermore, through its impact on the real exchange rate, this policy mix is undermining the employability of large segments of the population (particularly those with low skill levels) and will ultimately choke growth (projected at 4 percent for 2002). While much policy attention has gone to stimulating investment, future growth will also depend on raising the employment rate, currently one of the lowest among the Central and East European Countries (CEECs). This report lays out the broad thrust of a policy strategy to bolster the recovery and bring the economy towards convergence with the EU. This strategy consists of three key elements: (a) Continued trade, finance, and enterprise reform to complete the structural transformation of the economy and align it with the EU framework (b) Fiscal consolidation, focusing on cutting back expenditure and stabilizing revenues, while redirecting revenue and expenditure policies to become more fully supportive of growth and employment objectives (c) Labor market reform, directed at enhancing labor market flexibility by relaxing legal provisions on working arrangements (such as part-time work, self-employment, and fixed term contracts), by decentralizing collective bargaining, and discarding the minimum wage as an instrument of incomes policy, and by reforming the social assistance system. The ultimate success of the policy reforms outlined in this report will depend to a great extent on the government's capacity to strengthen the institutional framework in which those policies are conceived, decided upon, and executed. Three priorities have been highlighted: (i) the reform of public expenditure management systems and practices needed to support a growth-oriented fiscal strategy; (ii) the consolidation of the recent decentralization moves as a prerequisite for further devolution, and (iii) a much overdue overhaul of the judiciary system.

Bibliographic Details

Main Author:	World Bank
Language:	English en_US
Published:	Washington, DC 2003-06
Subjects:	TRADE REFORM, FINANCIAL SECTOR REFORM, ENTERPRISE RESTRUCTURING, FISCAL CONSOLIDATION, LABOR MARKET CHARACTERISTICS, GOVERNANCE, MACROECONOMIC FORECASTING, STRUCTURAL REFORMS, EXTERNAL FINANCE, TRADE INTEGRATION, EUROPEAN UNION MEMBERSHIP, SUBSIDIES, RETIREMENT AGE, PAYROLL TAXES, VALUE ADDED TAXES, WINDFALL TAXATION, TAX INCENTIVES, LABOR LEGISLATION, MINIMUM WAGE LAWS, COLLECTIVE BARGAINING AGREEMENTS, PRIVATIZATION OF PUBLIC ENTERPRISES, POWER GENERATION, PENSION FUNDS ADMINISTRATION, SOCIAL ASSISTANCE, PUBLIC HEALTH, HEALTH SERVICE DELIVERY, SECONDARY EDUCATION, TERTIERY EDUCATION, QUALITY OF EDUCATION, STUDENT EVALUATION, ACCREDITATION (EDUCATION), EQUITY IN EDUCATION, FISCAL ADMINISTRATION, HOUSEHOLD SURVEYS, DECENTRALIZATION, JUDICIAL REFORM ACCOUNTABILITY, ACCOUNTABILITY MECHANISMS, ACCOUNTING, AGRICULTURE, AUTHORITY, BALANCE OF PAYMENTS, BANK LENDING, BANKING SECTOR, BANKING SECTOR REFORMS, BANKRUPTCY, BONDS, CAPITAL, CAPITAL MARKETS, CENTRAL GOVERNMENT, CIVIL SERVICE, CONSOLIDATION, CONSUMERS, CORPORATE INCOME TAX, COST SAVINGS, CPI, CROWDING OUT, CURRENT PRICES, DEBT, DEBT SERVICE, DEFICITS, DEMOGRAPHIC ASSUMPTIONS, DEMOGRAPHIC TRANSITION, DEVELOPMENT STRATEGY, DEVOLUTION, ECONOMIC ASSISTANCE, ECONOMIC CONDITIONS, ELECTRICITY, ENTERPRISE OWNERSHIP, ENTERPRISE REFORM, EXCESS DEMAND, EXCHANGE RATE, EXCHANGE RATES, EXECUTION, EXPENDITURES, EXPORTS, EXTRAORDINARY ITEMS, FARMS, FINANCIAL CRISIS, FINANCIAL MARKETS, FINANCIAL SECTOR, FINANCIAL SYSTEM, FISCAL, FISCAL DEFICIT, FISCAL DEFICITS, FISCAL EXPANSION, FISCAL MEASURES, FISCAL SUSTAINABILITY, FOREIGN DIRECT INVESTMENT, FOREIGN INVESTMENT, FOREIGN TRADE, FREE TRADE, GDP, GDP PER CAPITA, GOVERNMENT CONSUMPTION, GROSS DOMESTIC PRODUCT, GROSS FIXED CAPITAL FORMATION, GROWTH RATE, HEALTH SERVICES, HEALTH SPENDING, IMPORT TARIFFS, IMPORTS, INCOME, INCOME DISTRIBUTION, INFLATION, INSURANCE, INTEREST RATES, INTERNATIONAL ACCOUNTING STANDARDS, INTERNATIONAL ENVIRONMENT, INTERNATIONAL TRADE, INVESTMENT, INVESTMENT CLIMATE, JUDICIARY, LABOR FORCE, LABOR MARKET, LABOR MARKET POLICIES, LABOR MARKETS, LICENSES, LOCAL GOVERNMENTS, MINISTRY OF FINANCE, MUNICIPALITIES, NATIONAL BANK OF SLOVAKIA, NATIONAL INCOME, OWNERSHIP STRUCTURE, PENSIONS, PER CAPITA INCOME, PRIVATE CONSUMPTION, PRIVATE SECTOR, PRIVATIZATION, PRODUCTIVITY, PROFIT MARGINS, PROFITABILITY, PUBLIC DEBT, PUBLIC EXPENDITURE, PUBLIC EXPENDITURE MANAGEMENT, PUBLIC FINANCES, PUBLIC PROCUREMENT, PUBLIC PROCUREMENT ACT, PUBLIC SECTOR, PUBLIC SECTOR DEFICIT, PUBLIC SECTOR FINANCE, PUBLIC SERVICE, PUBLIC SPENDING, PURCHASING POWER, RATIONALIZATION, REAL GDP, REDEMPTION, REPUBLICS, RETIREMENT, SAVINGS, SOCIAL INSURANCE, SOCIAL PROTECTION, SOCIAL REFORMS, STATISTICAL DATA, STREAMS, SURCHARGES, TAX, TAX BURDEN, TAX RATE, TAX REVENUES, TERMS OF TRADE, TRANSPORT, UNEMPLOYMENT, UNEMPLOYMENT RATE, UNEMPLOYMENT RATES, URUGUAY ROUND, VALUE ADDED, WAGES, WORLD TRADE ORGANIZATION, WTO,
Online Access:	http://documents.worldbank.org/curated/en/2003/06/2492170/slovak-republic-joining-eu-development-policy-review https://hdl.handle.net/10986/14629
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