Abstract
After slowing in 2013, the Slovak economy is gathering momentum as the euro area and domestic demand recover, the latter complementing the strong export sector that has made Slovakia one of Europe’s more dynamic economies. Reducing still very high unemployment remains a key challenge, as does sustaining fiscal adjustment. Manageable public and private debt as well as a sound banking system limit vulnerabilities, but Slovakia’s fortunes remain closely tied to external developments, especially in the euro area, and there are risks from regional tensions since Russia provides much of Slovakia’s energy and is a reasonably important export market, including for Slovakia’s trading partners.
Fund Relations
(As of June 30, 2014)
Membership Status: Joined 1/1/1993; Article VIII
General Resources Account:
| SDR Million | Percent of Quota | |
|---|---|---|
| Quota | 427.5 | 100 |
| Fund holdings of currency | 267.8 | 62.64 |
| Reserve position | 159.71 | 37.36 |
| Lending to the Fund | 48.43 |
| SDR Million | Percent of Quota | |
|---|---|---|
| Quota | 427.5 | 100 |
| Fund holdings of currency | 267.8 | 62.64 |
| Reserve position | 159.71 | 37.36 |
| Lending to the Fund | 48.43 |
SDR Department:
| SDR Million | Percent of Allocation | |
|---|---|---|
| Net cumulative allocation | 340.48 | 100 |
| Holdings | 322.99 | 94.86 |
| SDR Million | Percent of Allocation | |
|---|---|---|
| Net cumulative allocation | 340.48 | 100 |
| Holdings | 322.99 | 94.86 |
Outstanding Purchases and Loans: None
Financial Arrangements
| Type | Date of Arrangement | Expiration Date | Amount Approved (SDR Million) | Amount Drawn (SDR Million) |
|---|---|---|---|---|
| Stand-by | 7/22/1994 | 3/21/1996 | 115.8 | 32.15 |
| Type | Date of Arrangement | Expiration Date | Amount Approved (SDR Million) | Amount Drawn (SDR Million) |
|---|---|---|---|---|
| Stand-by | 7/22/1994 | 3/21/1996 | 115.8 | 32.15 |
Projected Payments to Fund
(SDR Million; based on existing use of resources and present holdings of SDRs):
| Forthcoming | |||||
|---|---|---|---|---|---|
| 2014 | 2015 | 2016 | 2017 | 2018 | |
| Principal | |||||
| Charges/Interest | 0.01 | 0.02 | 0.02 | 0.02 | 0.02 |
| Total | 0.01 | 0.02 | 0.02 | 0.02 | 0.02 |
| Forthcoming | |||||
|---|---|---|---|---|---|
| 2014 | 2015 | 2016 | 2017 | 2018 | |
| Principal | |||||
| Charges/Interest | 0.01 | 0.02 | 0.02 | 0.02 | 0.02 |
| Total | 0.01 | 0.02 | 0.02 | 0.02 | 0.02 |
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 under the procedures set forth in Executive Board Decision No. 144–(52/51).
Article IV Consultation
The consultation discussions were held in Bratislava during June 4–17, 2014. The mission met with Minister of Finance Kažimír; National Bank of Slovakia (NBS) Governor Makúch; officials from the Ministry of Finance, the NBS, the debt management agency (ARDAL), the National Property Fund, and the Ministries of Labor, Education, Transportation, and Interior; as well as representatives of financial institutions, labor unions, employers’ associations, and enterprises.
The team comprised Messrs. John (head), Giustiniani, and Semmelmann, Mmes. Q. Chen (all EUR) and Zavacka (SEC), and was assisted at headquarters by Mr. Winnekens and Mmes. Moraes Rego and T. Chen and Mr. Moran Arce. Mr. Jakoby (Senior Advisor to the Executive Director) accompanied the mission and Mr. Prader (Executive Director) attended the concluding meeting. The mission’s concluding statement was published on the IMF website on June 17, 2014.
The previous consultation with the Slovak Republic was concluded on August 2, 2013 (IMF Country Report No. 13/262).
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).
Technical Assistance: See the attached table.
Resident Representative Post: None (closed at end-April 2004).
Slovak Republic: Technical Assistance, 2000–13 1/
See Appendix I of IMF Country Report No. 05/71 for technical assistance during 1991–99.
Slovak Republic: Technical Assistance, 2000–13 1/
| Department | Timing | Purpose |
|---|---|---|
| MFD | February 2000 | Mission 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 2001 | Long-term resident expert on banking supervision | |
| May 2002 | Two missions on inflation modeling | |
| FAD | April 2000 | Tax administration |
| February 2001 | Tax administration (follow-up) | |
| April 2001 | Public Finance Management (follow-up) | |
| August 2001 | Tax administration: installation of resident expert to advise on establishment of Large Taxpayer Unit (LTU) | |
| August 2001–August 2002 | Regular visits by FAD consultant on establishment of LTU | |
| December 2001 | Tax administration follow-up, tax investigation/fraud issues | |
| June 2002 | Mission to prepare Report on the Observance of Standards and Codes (ROSC), Fiscal Transparency Module | |
| February 2003 | Tax policy | |
| March 2003 | Tax administration | |
| May 2003 | Expenditure policy | |
| December 2013 | VAT Gap Analysis | |
| STA | February 2000 | National accounts and price statistics |
| March 2001 | Multi sector mission | |
| July 2003 | Government finance statistics | |
| February–March 2004 | Data ROSC mission |
See Appendix I of IMF Country Report No. 05/71 for technical assistance during 1991–99.
Slovak Republic: Technical Assistance, 2000–13 1/
| Department | Timing | Purpose |
|---|---|---|
| MFD | February 2000 | Mission 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 2001 | Long-term resident expert on banking supervision | |
| May 2002 | Two missions on inflation modeling | |
| FAD | April 2000 | Tax administration |
| February 2001 | Tax administration (follow-up) | |
| April 2001 | Public Finance Management (follow-up) | |
| August 2001 | Tax administration: installation of resident expert to advise on establishment of Large Taxpayer Unit (LTU) | |
| August 2001–August 2002 | Regular visits by FAD consultant on establishment of LTU | |
| December 2001 | Tax administration follow-up, tax investigation/fraud issues | |
| June 2002 | Mission to prepare Report on the Observance of Standards and Codes (ROSC), Fiscal Transparency Module | |
| February 2003 | Tax policy | |
| March 2003 | Tax administration | |
| May 2003 | Expenditure policy | |
| December 2013 | VAT Gap Analysis | |
| STA | February 2000 | National accounts and price statistics |
| March 2001 | Multi sector mission | |
| July 2003 | Government finance statistics | |
| February–March 2004 | Data ROSC mission |
See Appendix I of IMF Country Report No. 05/71 for technical assistance during 1991–99.
Statistical Issues
1. 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, 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) a significant statistical discrepancy between the supply and demand sides for GDP; and (ii) weaknesses in the data on prices and volumes of imports and exports. The Slovak Republic has subscribed to the Special Data Dissemination Standard (SDDS) since 1996 and observes or exceeds all related standards.
2. 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 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
3. Despite significant progress made so far, the compilation of the national accounts statistics still suffers some weaknesses. The quarterly and annual national accounts data exhibit some statistical discrepancies 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 statistical authorities are aware of these issues and improvements are ongoing, as part of the transition to the new European System of National and Regional Accounts (ESA2010).
Fiscal Sector
4. The compilation of general government statistics is in transition to the new ESA2010 methodology. The Ministry of Finance has compiled its fiscal accounts according to ESA95 standards and reports general government net lending/borrowing and gross debt on a quarterly 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 system has improved fiscal control and public debt management by allowing the recording of expenditures at the planning and commitment stages. The ESA 2010 methodology will be implemented from September 2014.
External Sector
5. External sector statistics are generally of good quality, and are reported on a timely basis to the Fund. However, errors and omissions in the balance of payments statistics are large and reported financial account flows are subject to large volatility. The statistical authorities are aware of these issues and are working to address them. The statistical authorities will start to submit data to the Fund following the standard of the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6) in September 2014.
Monetary Sector
6. Monetary statistics are of good quality, and are reported on a timely basis to the Fund.
Slovak Republic: Table of Common Indicators Required for Surveillance
(As of July 11, 2014)
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).
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
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.
Slovak Republic: Table of Common Indicators Required for Surveillance
(As of July 11, 2014)
| Date of Latest Observation | Date Received | Frequency of Data 6/ | Frequency of Reporting 6/ | Frequency of Publication 6/ | Memo Items: | ||
|---|---|---|---|---|---|---|---|
| Data Quality – Methodological soundness 8/ | Data Quality – Accuracy and reliability 9/ | ||||||
| Exchange Rates | Current | Current | D | D | D | ||
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities 1/ | July 2014 | July 2014 | D | W | W | ||
| Reserve/Base Money | May 2014 | July 2014 | M | M | M | … | … |
| Broad Money | May 2014 | July 2014 | M | M | M | … | … |
| Central Bank Balance Sheet | May 2014 | July 2014 | M | M | M | … | … |
| Consolidated Balance Sheet of the Banking System | May 2014 | July 2014 | M | M | M | ||
| Interest Rates 2/ | Current | Current | D | D | D | ||
| Consumer Price Index | May 2014 | July 2014 | M | M | M | ||
| Revenue, Expenditure, Balance and Composition of Financing 3/ – General Government 4/ | 2013 | July 2014 | A | A | A | LO, LO, LO, O | O, O, O, O, O, NA |
| Revenue, Expenditure, Balance and Composition of Financing 3/ – Central Government | June 2014 | July 2014 | M | M | M | ||
| Stocks of Central Government and Central Government-Guaranteed Debt 5/ | 2014Q1 | May 2014 | Q | Q | Q | ||
| External Current Account Balance | Apr. 2014 | July 2014 | M | M | M | O, O, LO, O | LO, O, LO, O, LO |
| Exports and Imports of Goods and Services | Apr. 2014 | July 2014 | M | M | M | ||
| GDP/GNP | 2014Q1 | May 2014 | Q | Q | Q | O, O, LO, LO | LO, O, LO, O, LO |
| Gross External Debt | 2014Q1 | Jun. 2014 | Q | Q | Q | ||
| International Investment Position 7/ | 2014Q1 | Jun. 2014 | Q | Q | Q | ||
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).
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
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.
Slovak Republic: Table of Common Indicators Required for Surveillance
(As of July 11, 2014)
| Date of Latest Observation | Date Received | Frequency of Data 6/ | Frequency of Reporting 6/ | Frequency of Publication 6/ | Memo Items: | ||
|---|---|---|---|---|---|---|---|
| Data Quality – Methodological soundness 8/ | Data Quality – Accuracy and reliability 9/ | ||||||
| Exchange Rates | Current | Current | D | D | D | ||
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities 1/ | July 2014 | July 2014 | D | W | W | ||
| Reserve/Base Money | May 2014 | July 2014 | M | M | M | … | … |
| Broad Money | May 2014 | July 2014 | M | M | M | … | … |
| Central Bank Balance Sheet | May 2014 | July 2014 | M | M | M | … | … |
| Consolidated Balance Sheet of the Banking System | May 2014 | July 2014 | M | M | M | ||
| Interest Rates 2/ | Current | Current | D | D | D | ||
| Consumer Price Index | May 2014 | July 2014 | M | M | M | ||
| Revenue, Expenditure, Balance and Composition of Financing 3/ – General Government 4/ | 2013 | July 2014 | A | A | A | LO, LO, LO, O | O, O, O, O, O, NA |
| Revenue, Expenditure, Balance and Composition of Financing 3/ – Central Government | June 2014 | July 2014 | M | M | M | ||
| Stocks of Central Government and Central Government-Guaranteed Debt 5/ | 2014Q1 | May 2014 | Q | Q | Q | ||
| External Current Account Balance | Apr. 2014 | July 2014 | M | M | M | O, O, LO, O | LO, O, LO, O, LO |
| Exports and Imports of Goods and Services | Apr. 2014 | July 2014 | M | M | M | ||
| GDP/GNP | 2014Q1 | May 2014 | Q | Q | Q | O, O, LO, LO | LO, O, LO, O, LO |
| Gross External Debt | 2014Q1 | Jun. 2014 | Q | Q | Q | ||
| International Investment Position 7/ | 2014Q1 | Jun. 2014 | Q | Q | Q | ||
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).
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
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.