Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

SLOVAK REPUBLIC

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of March 31, 2007)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: October 1, 1995.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)On January 27, 2006, the Slovak Republic notified the IMF that in accordance with EU regulations and relevant UN Security Council resolutions, certain restrictions are maintained on the making of payments and transfers for current international transactions with respect to the former Federal Republic of Yugoslavia (Bosnia and Herzegovina, Croatia, the former Republic of Serbia and Montenegro), the Democratic Republic of the Congo, Côte d’Ivoire, Iraq, Liberia, Myanmar, Sudan, and Zimbabwe. The restrictions also apply to transfers with respect to persons, groups, and entities associated with terrorist groups. On March 21, 2007, the Slovak Republic notified the IMF that restrictions related to freezing of funds and economic resources are also maintained with respect to certain person and entities in Belarus, Iraq, Lebanon, and the Syrian Arab Republic.
References to legal instruments and hyperlinksRegulations of the European Council: Nos. 765/2006, 1763/2004, 1183/2005, 560/2005, 1763/2004, 1210/2003, 305/2006, 872/2004, 817/2006, 1184/2005, 305/2006, 881/2002, 2580/2001, 2488/2000, and 314/2004; Council Common Position 2006/380/CFSP of May 29, 2006, on the Application of Specific Measures to Combat Terrorism; Council Common Position 2007/140/CFSP of February 27, 2007, concerning restrictive measures against Iran; Ordinance of the Government of the Slovak Republic No. 397/2005, as amended by subsequent regulations; www.europa.eu.int/comm/external_relations/cfsp/sanctions/measures.htm; www.zbierka.sk.
Exchange Arrangement
CurrencyThe currency of the Slovak Republic is the Slovak koruna.
Exchange rate structureUnitary.
Classification
Pegged exchange rate within horizontal bandsThe Slovak Republic entered into the ERM II, pegging the koruna to the euro at the central rate of Sk 38.4550 per €1. Effective March 19, 2007, the ECB and the National Bank of Slovakia (NBS) established the new central rate of the Slovak koruna at Sk 35.4424 per €1. The standard fluctuation band of ±15% is observed around the central rate of the koruna.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
References to legal instruments and hyperlinkswww.nbs.sk; www.eu.int.
Arrangements for Payments and Receipts
Prescription of currency requirementsNo.
Payments arrangements
Regional arrangementsThe Slovak Republic is a member of the EU.
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 have 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.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
References to legal instruments and hyperlinksForeign Exchange Act No. 202/1995 Coll.; www.nbs.sk.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadYes.
Accounts in domestic currency convertible into foreign currencyYes.
References to legal instruments and hyperlinksForeign Exchange Act No. 202/1995 Coll.; www.nbs.sk.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsNo.
References to legal instruments and hyperlinksForeign Exchange Act No. 202/1995 Coll.; www.nbs.sk.
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 quotasThe EU’s common licensing system applies to imports of textiles originating from five countries; and steel originating from Kazakhstan, the Russian Federation, and Ukraine. The system is reapplied for textiles originating from China and suspended for those originating from the Republic of Serbia.
Other nontariff measuresThe EU’s common system of monitoring imports (the system of double-checking surveillance and the system of single surveillance) applies to (1) textiles originating from two countries and (2) steel originating from third countries. The application of the system is suspended for imports of textiles from Vietnam. Effective January 1, 2007, due to the enlargement of the EU, the applicable textile and steel quantitative limits were amended by Council Regulations Nos. 54/2007, 1870/2006, 1871/2006, and 1872/2006.
Import taxes and/or tariffsEffective January 1, 2006, the EU Common Customs Tariff system, including preferential tariffs, applies. The EU’s GSP applies to imports from 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 and special arrangements for the least developed countries and (2) special incentive arrangements for sustainable development and good governance. Imported goods are subject to a VAT, and there are excise duties on mineral oils, beer, spirits, wine, and tobacco.
State import monopolyNo.
References to legal instruments and hyperlinksCommission Regulations Nos. 931/2005 and 1786/2006; Commission Regulations Nos. 35/2006, 1203/2006, and 1204/2006; Council Regulations Nos. 980/2005 and 1933/2006; Commission Decision 2005/924/EC; Foreign Exchange Act; www.europa.eu.int/eur-lrx/JOIndex.do?ihmlang=en; www.nbs.sk.
Exports and Export Proceeds
Repatriation requirementsNo.
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; (3) all dual-use goods and technologies; (4) military material; and (5) chemical warfare agents.
Export taxesNo.
References to legal instruments and hyperlinksLegal Act. No. 163/2001 Coll.; Regulation (EC) No. 304/2003 of the European Parliament and of the Council concerning the export and import of dangerous chemicals; Legal Act No. 331/2005 Coll.; Order No. 380/2005 Coll.; Regulation (EC) No. 273/2004 of the European Parliament and Council on drug precursors; Council Regulation (EC) No. 111/2005 setting rules for the monitoring of trade between the Community and third countries in drug precursors; Commission Regulation (EC) No. 1277/2005 implementing rules for Regulation (EC) No. 273/2004 and for Council Regulation (EC) No. 111/2005; Legal Act No. 179/1998 Coll. on trading in military material and Amendment No. 455/1991 Coll. on small business (Trade License Law), as amended; Legal Act No. 21/2007 Coll.; Council Regulation (EC) No. 1334/2000; Legal Act. No. 129/1998 Coll.; Foreign Exchange Act No. 202/1995 Coll.; www.economy.gov.sk; www.health.gov.sk; www.europa.eu.int/eur-lrx; www.nbs.sk.
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. The MOF of the Slovak Republic is responsible for determining the rate of allowance in foreign exchange. The rate of allowance changes annually.
References to legal instruments and hyperlinksDecree No. 712 of the Ministry of Finance of the Slovak Republic; www.finance.gov.sk; Order of the Ministry of Finance according to paragraph 13 of Act No. 283/2002 Coll. on travel compensation and on Amendment and Supplement to Some Acts.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksForeign Exchange Act No. 202/1995 Coll.; www.nbs.sk.
Capital Transactions
Controls on capital transactionsYes.
Repatriation requirementsNo.
Controls on capital and money market instrumentsEffective January 1, 2006, the Financial Market Authority merged with the NBS.
On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidentsControls apply to the purchase of shares or other securities of a participating nature that may be affected by regulations on inward direct investment in air transport and gambling. A license for the operation of a gambling establishment by legal persons with foreign participation may be granted or issued only to legal persons with a registered office or permanent residence in a member state of the EU or a member state of the OECD.
Bonds or other debt securities
Sale or issue abroad by residentsn.r.
On collective investment securities
Sale or issue locally by nonresidentsEffective January 1, 2006, nonresidents from EEA member countries selling UCITS-compliant products may perform this activity after notifying the NBS. Nonresidents from non-EEA countries, and nonresidents from EEA countries selling non-UCITS products, may perform this activity through establishment of a branch in the Slovak Republic or on an agreement basis without establishing a branch, provided they receive authorization from the NBS.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentControls apply to (1) the establishment of branches by nonresidents in the energy sector. Business in the energy sector may be conducted only on the basis of a license issued by the Regulatory Office for Network Industries. The regulation does not differentiate between residents and nonresidents. A legal person to whom a license is granted must, among other obligations defined in the regulation, designate a competent representative who is a natural person responsible for the professional conduct of an activity licensed under this regulation; (2) the operation of a gambling establishment, for which an authorization may be granted to legal persons with a registered office or permanent residence in an EU or OECD member state; and (3) the purchase of more than 50% of the equity capital in air transportation companies by nonresidents from non-EU countries.
Controls on liquidation of direct investmentn.r.
Controls on real estate transactions
Purchase locally by nonresidentsControls apply to foreign ownership of rights to land forming part of an agricultural land fund and real estate subject to separate regulations. Nonresidents may not acquire ownership rights to land that forms part of (1) the agricultural land fund located outside the border of the built-up area of a municipality or (2) the forest land fund located outside the border of a built-up area of a municipality. These limitations do not apply to nonresidents who inherit the property or to nonresidents who are citizens of the Slovak Republic and citizens of a member state of the EU and have the right to temporary residence on the basis of registration, in the case of the acquisition of ownership rights to land that forms part of the agricultural land fund and that has been managed by the person for at least three years following the accession of the Slovak Republic to the EU.
Controls on personal capital transactionsNo.
References to legal instruments and hyperlinksAct No. 171/2005 Coll. on Gambling Games and Supplement to Some Acts; Act No. 594/2003 Coll. on Collective Investment; Act No. 656 in the Collection of Laws of October 26, 2004, on Energy and consequential amendments; Foreign Exchange Act No. 202/1995 Coll.; www.nbs.sk; www.finance.gov.sk; www.economy.gov.sk.
Provisions Specific to the Financial Sector
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 a banking license.
Maintenance of accounts abroadMaintenance of accounts abroad is allowed in accordance with a banking or foreign exchange license.
Lending to nonresidents (financial or commercial credits)Lending is allowed with a banking license.
Lending locally in foreign exchangeLending is allowed in accordance with a banking license.
Purchase of locally issued securities denominated in foreign exchangen.r.
Investment regulations
Abroad by banksA foreign exchange permit from the NBS is required when a 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%, and 66%—for investment are defined, for which investors are required to obtain NBS approval.
Open foreign exchange position limitsEffective March 30, 2007, the open foreign exchange positions are regulated in accordance with the Act on Banks and Decree No. 4/2007 issued by the NBS.
Provisions specific to institutional investors
Insurance companiesInsurance companies must conduct their activities in accordance with their insurance license.
Limits (max.) on securities issued by nonresidentsThere are some specific limits for certain assets, including securities issued either by residents or nonresidents covering technical provisions, except unit-linked provisions.
Currency-matching regulations on assets/liabilities compositionCurrency-matching rules apply only for assets covering technical provisions, except unit-linked provisions. Insurance companies are not required to cover their technical provisions, including mathematical provisions, if compliance with the currency rules would result in holding assets in a currency not exceeding 7% of the assets in other currencies, or where commitments are payable in a currency other than the currency of one of the EU member states, if (1) investments in that currency are regulated; (2) the currency is subject to transfer restrictions; or (3) for similar reasons, it is not suitable for covering technical provisions. Insurance companies are authorized not to hold matching assets to cover an amount not exceeding 20% of their commitments in a particular currency. However, total assets in all currencies combined must be at least equal to total commitments in all currencies combined.
Pension funds
Limits (max.) on securities issued by nonresidentsThe value of securities or money market instruments issued by nonresidents and of deposits in banks or foreign banks established abroad may not exceed 70% of the value of assets of the pension fund in a pension asset management company.
Limits (max.) on investment portfolio held abroadThe value of securities or money market instruments issued by nonresidents and of deposits in banks or foreign banks established abroad may not exceed 70% of the value of assets of the pension fund in a pension asset management company.
References to legal instruments and hyperlinksAct on Banks No. 483/2001; Act No. 95/2002 Coll. on Insurance and on Amending, as amended; Act No. 381/2001 Coll. on Compulsory Contractual Insurance against Civil Liability with Respect to the Use of Motor Vehicles, as amended; Decree No. 39/2005 Coll. on Setting the Limits for Assets Covering Technical Provisions in Insurance; Act No. 43/2004 Coll. on Old-Age Pension Savings and on Amendment of Certain Laws, as amended by later regulations; Act No. 650/2004 Coll. on Complementary Pension Savings and on Amendment of Certain Laws, as amended by later regulations; Act No. 594/2003 Coll. on Collective Investment and on Amendment of Certain Laws, as amended; Foreign Exchange Act No. 202/1995 Coll.; www.nbs.sk.
Changes during 2006
Exchange measuresJanuary 27. The authorities notified the IMF that certain restrictions were imposed for national and international security and to protect against financing terrorism.
Imports and import paymentsJanuary 1. The EU Common Customs Tariff system, including preferential tariffs, went into effect. The new GSP of the EU applies to imports from developing countries. The availability of tariff preferences as well as their scope depend on the arrangement enjoyed by the beneficiary country.
Capital transactions
Controls on capital and money market instrumentsJanuary 1. Nonresidents from EEA member countries selling UCITS-compliant products may perform this activity after notifying the NBS. Nonresidents from non-EEA countries, and nonresidents from EEA countries selling non-UCITS products, may perform this activity through establishment of a branch in the Slovak Republic or on an agreement basis without establishing a branch, provided they receive authorization from the NBS.



January 1. The FMA merged with the NBS.
Changes during 2007
Exchange measuresMarch 21. The authorities notified the IMF that certain restrictions related to the freezing of funds and economic resources were imposed against Belarus, Iraq, Lebanon, and the Syrian Arab Republic.
Exchange arrangementMarch 19. The ECB and the NBS established the new central rate of the Slovak koruna at Sk 35.4424 per €1.
Imports and import paymentsJanuary 1. Due to the enlargement of the EU, the applicable textile and steel quantitative limits were amended by Council Regulations Nos. 54/2007, 1870/2006, 1871/2006, and 1872/2006.
Provisions specific to the financial sector
Provisions specific to commercial banks and other credit institutionsMarch 30. The open foreign exchange positions are regulated in accordance with the Act on Banks and Decree No. 4/2007 issued by the NBS.

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