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Slovak Republic: Staff Report for the 2011 Article IV Consultation—Informational Annex

Author(s):
International Monetary Fund
Published Date:
June 2011
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FUND RELATIONS

Slovak Republic: Financial Position in the Fund as of March 31, 2011

I. Membership Status: Joined: 01/01/1993; Article VIII

II. General Resources Account:

SDR MillionPercent of Quota
Quota427.5100
Fund Holdings of Currency308.572.16
Reserve Position119.0127.84
Lending to the Fund38.33

III. SDR Department:

SDR MillionPercent of Allocation
Net cumulative allocation340.48100
Holdings324.3795.27

IV. Outstanding Purchases and Loans: None

V. Financial Arrangements:

TypeDate of

Arrangement
Expiration DateAmount Approved

(SDR Million)
Amount Drawn

(SDR Million)
Stand-by7/22/19943/21/1996115.832.15

VI. Projected Payments to Fund

(SDR Million; based on existing use of resources and present holdings of SDRs):

Forthcoming
20112012201320142015
Principal
Charges/Interest0.050.080.080.080.08
Total0.050.080.080.080.08

VII. Exchange Rate Arrangement:

The currency of the Slovak Republic is the euro, which was adopted on January 1, 2009.

The Slovak Republic has accepted the obligations of Article VIII and maintains an exchange system that is free of restrictions on the making of payments and transfers for current international transactions. The Slovak Republic maintains exchange restrictions for security reasons, based on UN Security Council Resolutions and Council of the European Union Regulations, that have been notified to the Fund for approval under the procedures set forth in Executive Board Decision No. 144–(52/51).

VIII. Article IV Consultation:

The consultation discussions were held in Bratislava during March 30 through April 12, 2011. The mission met with Minister of Finance Mikloš, National Bank of Slovakia (NBS) Governor Makúch, Minister of Labor, Social Affairs and Family Mihál, other senior government and NBS officials, and representatives of financial institutions, think tanks, trade unions and employers’ associations.

The mission comprised Messrs. De Broeck (FIN, head), Mehrez, Abdel-Kader, and Sandri (all EUR). The mission’s concluding statement was published on the IMF website on April 12, 2011. [The authorities have agreed to the publication of the staff report.]

The previous consultation with the Slovak Republic was concluded on September 3, 2010 (IMF Country Report No. 09/221).

IX. FSAP Participation and ROSCs:

An FSAP was concluded with the completion of the 2002 Article IV consultation on August 7, 2002 on the basis of missions that took place in February 2002 and April 2002. The FSSA report was published (IMF Country Report No. 02/198). An FSAP update mission was held in December 2006. The FSSA update report was circulated to the Executive Board together with the staff report for the 2007 Article IV Consultation and published on the IMF website on July 17, 2007.

The report on the Fiscal ROSC was issued in August 2002 (IMF Country Report No. 02/189), and updates were issued in August 2003 (IMF Country Report No. 03/236) and in March 2005 (IMF Country Report No. 05/73). The report on the Data ROSC was issued in May 2005 (IMF Country Report No. 05/161).

X. Technical Assistance: See the attached table.

XI. Resident Representative Post: None (closed at end-April 2004).

Slovakia: Technical Assistance, 2000–11 1/
DepartmentTimingPurpose
MFDFebruary 2000Mission on pros and cons, and modalities of moving to an inflation targeting framework, operational issues (money markets and policy instruments), and dealing with potential problems posed by capital inflows for monetary operations
December 2001Long-term resident expert on banking supervision
May 2002Two missions on inflation modeling
FADApril 2000Tax administration
February 2001Tax administration (follow-up)
April 2001Public Finance Management (follow-up)
August 2001Tax administration: installation of resident expert to advise on establishment of Large Taxpayer Unit (LTU)
August 2001–August 2002Regular visits by FAD consultant on establishment of LTU
December 2001Tax administration follow-up, tax investigation/fraud issues
June 2002Mission to prepare Report on the Observance of Standards and Codes (ROSC), Fiscal Transparency Module
February 2003Tax policy
March 2003Tax administration
May 2003Expenditure policy
STAFebruary 2000National accounts and price statistics
March 2001Multisector mission
July 2003Government finance statistics
February–March 2004Data ROSC Mission

See Appendix I of IMF Country Report No . 05/71 for technical assistance during 1991–99.

See Appendix I of IMF Country Report No . 05/71 for technical assistance during 1991–99.

STATISTICAL ISSUES

Coverage, periodicity, and timeliness of data provided to the Fund are adequate for surveillance purposes. From the point of view of macroeconomic analysis and policy making, significant data improvements have been made in recent years, particularly in the national accounts. A data ROSC mission during February–March 2004 found that the integrity, methodological soundness, and reliability of the data were satisfactory, despite some shortcomings in the data revision policy. The main issues remaining are: (i) weaknesses in the data on prices and volumes of imports and exports; (ii) a lack of timely data on the general government operations; and (iii) slow compilation cycle of the annual national accounts and lack of proper benchmarking of quarterly data. The Slovak Republic subscribes to the Special Data Dissemination Standard (SDDS) since 1996 and observes or exceeds all related standards.

With regard to timeliness and public access, the authorities in general follow a free and open data publication policy. Data are promptly released to news services, and are also published regularly in various monthly and quarterly statistical publications, and on the Internet 1 according to a pre-announced schedule. Data on core surveillance variables are provided regularly to the Fund, and with minimal lags: a week or less for foreign exchange reserves; a day for monthly state budget implementation data; 10 days to a month for consumer prices, reserve money, broad money, and interest rates; two months for foreign trade data; and about three months for other fiscal, balance of payments, and national accounts data.

Real Sector and Prices

Significant progress has been made in the compilation of the national accounts statistics. However, the quarterly national accounts data on expenditures exhibit weaknesses and there is a significant statistical discrepancy between the supply side and the demand side. An important outstanding issue is the compilation of reliable price deflators for imports and exports that would enable better decomposition into volume and price changes. The unit value trade price indices—on which the national accounts trade price deflators are based—are published with long delays and are not appropriately adjusted for quality changes. The statistical authorities are aware of these issues and improvements are pending.

Following the fast development of chain stores, which are not fully captured in surveys, the authorities consider that retail sales and the level of consumption might be biased (especially if compared to VAT receipts), and wage statistics also might be biased.

In the enterprise sector, it would be very useful if the line ministries produced systematic accounts of the financial positions of the public enterprises under their purview.

Fiscal Sector

General government statistics are compiled annually in accordance with the methodology of the ESA95, and disseminated on the Ministry of Finance (MOF) website. In accordance with the EU acquis communautaire, the authorities report semi-annually on general government net lending/borrowing on ESA95 basis. Monthly reconciliation of government operations above and below-the-line is restricted to state budget transactions on a cash basis. A modern treasury system has been operating since January 2004. The new system has improved fiscal control and public debt management by allowing the recording of expenditures at the planning and commitment stages.

The MOF has converted its fiscal accounts to ESA95 standards. The MOF compiles Government Finance Statistics according to the Government Finance Statistics Manual 2001 (GFSM 2001) analytical framework; data are available and disseminated on a cash basis for 1996–2005, and on an accrual basis for 2003–09.

External Sector

External sector statistics are of good quality, and are reported on a timely basis to the Fund.

Monetary Sector

Monetary statistics are of good quality, and are reported on a timely basis to the Fund.

Slovakia: Table of Common Indicators Required for Surveillance(as of April 29, 2011)
Date of latest

Observation
Date

received
Frequency of

Data6
Frequency of

Reporting6
Frequency of

Publication6
Memorandum Items:
Data Quality–Methodologi cal soundness7Data Quality–Accuracy and reliability8
Exchange Rates4/29/20114/29/2011DDD
International Reserve Assets and Reserve Liabilities of the Monetary Authorities14/27/20114/29/2011WWW
Reserve/Base Money2/28/20112/28/2011MMMLO, LO, O, LOO, O, O, O, O
Broad Money2/28/20112/28/2011MMM
Central Bank Balance Sheet2/28/20112/28/2011MMM
Consolidated Balance Sheet of the Banking System2/28/20112/28/2011MMM
Interest Rates22/28/20112/28/2011MMM
Consumer Price Index3/31/20114/13/2011MMMO, O, O, OLO, O, LO, O, O
Revenue, Expenditure, Balance and Composition of Financing3–General Government420104/25/2011AAAO, O, O, OO, O, O, O, NA
Revenue, Expenditure, Balance and Composition of Financing3–Central Government3/31/20114/1/2011MMM
Stocks of Central Government and Central Government-Guaranteed Debt512/31/20103/3/2011QQQ
External Current Account Balance2/28/20114/26/2011MMMO, O, LO, LOO, O, O, O, O
Exports and Imports of Goods and Services1/31/20114/8/2011MMM
GDP/GNP2010Q43/3/2011QQQO, O, LO, LOLO, O, LO, O, LO
Gross External Debt2010Q43/31/2011MMM
International Investment Positiont92010Q33/31/2011QQQ

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I); Not Available (NA).

Reflects the assessment provided in the data ROSC (published on May 17, 2005, and based on the findings of the mission that took place during February 18–March 3, 2004) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O), largely observed (LO), largely not observed (LNO), or not observed (NO).

Same as footnote 7, except referring to international standards concerning source data, statistical techniques, assessment and validation of source data, assessment and validation of intermediate data and statistical outputs, and revision studies.

Includes external gross financial asset and liability positions vis a vis nonresidents.

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A), Irregular (I); Not Available (NA).

Reflects the assessment provided in the data ROSC (published on May 17, 2005, and based on the findings of the mission that took place during February 18–March 3, 2004) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O), largely observed (LO), largely not observed (LNO), or not observed (NO).

Same as footnote 7, except referring to international standards concerning source data, statistical techniques, assessment and validation of source data, assessment and validation of intermediate data and statistical outputs, and revision studies.

Includes external gross financial asset and liability positions vis a vis nonresidents.

Data are available on the website of the Slovak Statistics Office (www.statistics.sk), the National Bank of Slovakia (NBS) (www.nbs.sk), and the ministry of finance (MoF) (www.finance.gov.sk).

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