Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

SLOVAK REPUBLIC

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2005
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(Position as of January 31, 2005)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: October 1, 1995.
Exchange Arrangement
CurrencyThe currency of the Slovak Republic is the Slovak koruna.
Exchange rate structureUnitary.
Classification
Managed floating with no predetermined path for the exchange rateThe exchange rate of the koruna is set in the foreign exchange market. The National Bank of Slovakia (NBS) does not support the koruna’s exchange rate but intervenes primarily to smooth large fluctuations in the exchange rate and when the exchange rate moves to an unacceptable level.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangements
Regional arrangementsEffective May 1, 2004, the Slovak Republic joined the EU. The Slovak Republic is a member of the CEFTA.
Administration of controlThe foreign exchange authorities are the MOF and the NBS. The MOF exercises jurisdiction in matters relating to other ministries and central bodies of the state administration, budgetary and subsidized state organizations, special-purpose state funds, juridical persons established by separate law who are connected through financial ties to the state budget, and local communities and their budgetary and subsidized organizations. The MOF maintains foreign exchange records and documents pertaining to interstate negotiations on property claims, and implements the results of these negotiations within the country. The NBS exercises jurisdiction over residents other than those specified above and over nonresidents.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeEffective January 1, 2004, controls on trade in gold no longer apply. Previously, trade in gold was conducted exclusively by banks to the extent stipulated in their licenses.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Approval requiredEffective January 1, 2004, no controls apply on these accounts. Previously, a resident was allowed to open an account abroad, or enter into a contract for the safe custody or deposit of funds in foreign or Slovak currency in an account maintained abroad, only after obtaining a foreign exchange permit from the NBS or the MOF. However, a foreign exchange permit was not required (1) when the resident had a banking or foreign exchange license; (2) in connection with a private individual’s stay abroad; (3) if the funds were needed to cover the documented operating costs of the resident’s local representation or agency abroad; (4) for the purpose of depositing the resident’s foreign exchange funds if foreign legislation forbade the transfer of such funds to the country; or (5) if the funds were needed for the payment of fees, taxes, or other documented expenses related to the administration and maintenance of real estate owned by the resident abroad.
Accounts in domestic currency held abroadEffective January 1, 2004, these accounts were fully liberalized. Previously, a foreign exchange permit was required for a resident to open or maintain koruna accounts abroad or to enter into a contract to take custody of a deposit of koruna funds in an account maintained abroad.
Accounts in domestic currency convertible into foreign currencyEffective January 1, 2004, these accounts were fully liberalized. Previously, these accounts were utilized only for current international transactions and for permitted capital account transactions.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsn.r.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measures
Licenses with quotasEffective May 1, 2004, the nonautomatic licensing system for imports of sugar from all countries and diamonds from Sierra Leone no longer applies. Effective January 1, 2005, the EU’s common licensing system applies to imports of textiles originating from 4 countries (previously, effective May 1, 2004, 18 countries); effective May 1, 2004, this system applies to (1) steel originating from Kazakhstan, the Russian Federation, and Ukraine and (2) footwear and ceramics originating from China.
Other nontariff measuresEffective May 1, 2004, the system of variable levies that accompanied import licensing no longer applies. Effective January 1, 2005, the EU’s common system of monitoring imports applies to: (1) textiles originating from 3 countries (previously, effective May 1, 2004, 19 countries), and (2) footwear originating from China. Effective May 1, 2004, this system applied to steel originating from third countries.
Import taxes and/or tariffsEffective May 1, 2004, the EU tariff system including preferential tariffs applies. The EU’s GSP applies to imports from 178 developing countries. The availability of tariff preferences as well as their scope depend on the arrangement enjoyed by the beneficiary country. The following arrangements are available for beneficiary countries under the GSP: (1) general arrangements; (2) special incentive arrangements for the protection of labor rights; (3) special incentive arrangements for the protection of the environment; (4) special arrangements for the least developed countries; and (5) special arrangements to combat drug production and trafficking. Previously, all imports, except those from the Czech Republic, with which there was a customs union, or from countries with which the Slovak Republic had preferential agreements, were subject to an ad valorem tariff. Imports from developing countries were granted preferential treatment under the generalized system of preferences; thus, the 49 least-developed countries and 96 developing countries were granted 100% and 50% reductions, respectively, on duties applicable to selected commodities. Imported goods were subject to a VAT, and there were excise duties on mineral oils, beer, spirits, wine, and tobacco.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsOn January 1, 2004, the repatriation requirements were lifted. Previously, residents were required to transfer all funds acquired abroad in koruny or foreign exchange to the country without delay, net of fees, taxes, and other expenses incurred abroad in connection with the acquisition of such funds, within 30 days from the date of acquisition, from the date of learning of such acquisition, or from the date of becoming a resident in the country. This obligation did not apply to (1) foreign or Slovak currency used by a resident natural person during his or her stay abroad; and (2) reinvestment of earnings from direct investment and from employees’ securities, except in cases where such investment requires a foreign exchange permit.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
Without quotasExport licenses are required for (1) dangerous chemicals, narcotics, poisons, and psychotropic substances and their precursors; (2) firearms and ammunition; and (3) all dual-use goods and technologies.
With quotasEffective May 1, 2004, export licenses are no longer required. Previously, licenses were required for (1) certain agricultural goods; and (2) raw materials, such as scrap or raw skins.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfers
Payments for travel
Quantitative limitsOfficial travel by employees of budgetary and subsidized organizations is subject to allowances, depending on the country of destination.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsOn January 1, 2004, the repatriation requirements were lifted. Previously, residents were required to repatriate all proceeds in koruny or foreign exchange without delay, net of fees, taxes, and other expenses incurred abroad in connection with the acquisition of such funds, within 30 days of the date of acquisition, the date of learning of such acquisition, or the date of becoming a resident of the country.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instruments
On collective investment securities
Sale or issue locally by nonresidentsWith a permit from the Financial Market Authority (FMA), non-UCITS nonresidents may perform this activity through a branch in the Slovak Republic or without establishment of a branch on an agreement basis. UCITS nonresidents may perform these activities under the right of freedom to provide services, subject to notification to the FMA.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsn.r.
Controls on direct investmentEffective January 1, 2004, the requirements of NBS permission and MOF authorization (except when the investment is made in an OECD or EEA member country) no longer apply. Effective May 1, 2004, foreign investment in air transport was fully liberalized.
Controls on liquidation of direct investmentn.r.
Controls on real estate transactions
Purchase abroad by residentsEffective January 1, 2004, controls on purchases of land abroad by residents were lifted. Previously, a foreign exchange permit was required, except for purchases in OECD or EEA member countries.
Purchase locally by nonresidentsEffective May 1, 2004, controls were lifted on foreign ownership of rights to land, except for (1) land forming part of an agricultural land fund or forest land fund; and (2) real estate subject to separate regulations. The exception in item (1) does not apply to (1) a nonresident who is a citizen of the Slovak Republic or a citizen of an EU member state who is a temporary resident and has rights to land that forms part of an agricultural land fund that he or she has been managing for three years after the accession of the Slovak Republic to the EU; and (2) effective January 1, 2005, a nonresident who acquires ownership rights by inheritance. Previously, nonresidents, with the exception of Slovak citizens, could acquire real estate in the country only (1) by inheritance; (2) for the purpose of establishing diplomatic representation of a foreign country under conditions of mutuality; (3) when the real estate acquired was co-owned by a married couple, and when one of the partners is a nonresident, or when a nonresident acquired real estate from a spouse, sibling, parent, or grandparent; (4) when there was an exchange of domestic real estate owned by a nonresident for other domestic fixed assets, the price of which, pursuant to separate regulations, did not exceed the price of the original real estate as determined in accordance with separate regulations; (5) when the nonresident had preemptive purchase rights based on share ownership of the real estate; (6) when the real estate was built by the nonresident on personal land; (7) when expressly permitted under separate legislation; (8) when branches of foreign banks, commercial insurance companies, security traders, or trustees used the real estate in the course of their core business activity; and (9) in the case of nonresidents domiciled in EU or OECD countries who have established a branch in the Slovak Republic and needed the real estate for business purposes.
Controls on personal capital transactionsn.r.
Provisions specific to commercial banks and other credit institutionsBanks must conduct their activities in accordance with their banking license.
Borrowing abroadBorrowing is allowed in accordance with the banking license.
Maintenance of accounts abroadMaintenance of accounts abroad is allowed in accordance with the banking or foreign exchange license.
Lending to nonresidents (financial or commercial credits)Lending is allowed with the banking license.
Lending locally in foreign exchangeLending is allowed in accordance with the banking license.
Investment regulations
Abroad by banksA foreign exchange permit from the NBS is required when the banking license does not include acquisition of real estate abroad or dealing in foreign securities except for foreign direct investment in an OECD or EEA member country. Banks may not invest more than 15% of their cash reserves in a foreign company abroad, nor may the total of all investments in foreign companies abroad exceed 60% of a bank’s own funds.
In banks by nonresidentsThe same regulations apply to both residents and nonresidents. Six categories—5%, 10%, 20%, 33%, 50%, or 66%—for investment are defined, for which investors are required to obtain NBS approval.
Open foreign exchange position limitsOpen foreign exchange positions are monitored in the banks’ own funds regulations.
Provisions specific to institutional investorsNo.
Other controls imposed by securities lawsFive categories—10%, 20%, 33%, 50%, and 66%—are defined with respect to a security trader’s whole equity, and for which a permit from the FMA is required. This regulation applies to both residents and nonresidents.
Changes During 2004
Arrangements for payments and receiptsJanuary 1. Controls on trade in gold were lifted.
May 1. The Slovak Republic joined the EU.
Resident accountsJanuary 1. Controls on resident foreign exchange accounts held abroad were lifted.
January 1. Controls on resident accounts in domestic currency held abroad were lifted.
January 1. Controls on resident accounts in domestic currency convertible in foreign currency were lifted.
Imports and import paymentsMay 1. The nonautomatic licensing system for imports of sugar from all countries and diamonds from Sierra Leone was abolished.
May 1. The EU’s common licensing system was applied to (1) textiles originating from 18 countries; (2) steel originating from Kazakhstan, the Russian Federation, and Ukraine; and (3) footwear and ceramics originating from China.
May 1. The system of variable levies that accompanied import licensing no longer applied.
May 1. The EU’s common system of monitoring imports applied to (1) textiles originating from 19 countries, and (2) steel originating from third countries.
May 1. The EU tariff and preferential tariff system were applied.
Exports and export proceedsJanuary 1. The repatriation requirements were lifted.
May 1. The export licensing requirement was lifted for (1) certain agricultural goods; and (2) raw materials, such as scrap or raw skins.
Proceeds from invisible transactions and current transfersJanuary 1. The repatriation requirements were lifted.
Capital transactions
Controls on direct investmentJanuary 1. Direct investments no longer required MOF authorization or an NBS permit, except when the investment is made in an OECD or EEA member country.
May 1. Foreign investment in air transport was fully liberalized.
Controls on real estate transactionsJanuary 1. Controls on residents’ purchases of land abroad were lifted.
May 1. Controls on foreign ownership of rights to domestic land (except for land forming part of an agricultural land fund or forest land fund and real estate subject to separate regulations) were lifted.
Changes During 2005
Imports and import paymentsJanuary 1. The EU’s common system of monitoring imports applied to (1) textiles originating from 3 (previously, 19) countries; and (2) footwear from China.
January 1. The EU’s Common Licensing system applied to textiles originating from 4 (previously, 18) countries.
Capital transactions
Controls on real estate transactionsJanuary 1. The limitations on a nonresident’s acquisition of ownership rights to domestic land were lifted in the case of acquisition by inheritance.

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