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IMF Country Report No. 16/13
SLOVAK REPUBLIC
2015 ARTICLE IV CONSULTATION—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR SLOVAK REPUBLIC
January 2016
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2015 Article IV consultation with the Slovak Republic, the following documents have been released and are included in this package:
A Press Release summarizing the views of the Executive Board as expressed during its January 11, 2016 consideration of the staff report that concluded the Article IV consultation with the Slovak Republic.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on January 11, 2016, following discussions that ended on November 3, 2015, with the officials of the Slovak Republic on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on December 22, 2015.
An Informational Annex prepared by the IMF staff.
A Staff Statement updating information on recent developments.
A Statement by the Executive Director for the Slovak Republic.
The documents listed below have been or will be separately released.
Selected Issues
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
Copies of this report are available to the public from
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© 2016 International Monetary Fund
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SLOVAK REPUBLIC
STAFF REPORT FOR THE 2015 ARTICLE IV CONSULTATION
December 22, 2015
Key Issues
Context. The shift toward domestic demand-led growth in Slovakia intensified in 2015, with output forecast to expand by more than 3 percent. Stepped-up use of EU funds is supporting investment, while job growth and real wage gains are fueling private consumption. Although Slovakia enjoys substantial buffers, external factors present the greatest risks to the largely positive outlook, especially if shocks were to be transmitted to the important export sector via key trading partners.
Boosting investment and employment. Labor market conditions have been improving, but high unemployment, especially long-term and among youth and women, as well as sharp regional disparities, remain key challenges. Comprehensive actions are needed to build infrastructure in lagging regions, enhance the business climate, improve incentives for working and hiring, and strengthen education and training amid skill shortages.
High-quality fiscal measures. Further fiscal adjustment is needed to ensure room for policy maneuver under domestic debt brakes, while also funding key priorities. Policies should focus on implementing high-quality measures to enhance revenue collection, broaden the tax base, and achieve spending efficiencies.
Guarding against credit growth risks. The banking sector has sound capital and liquidity buffers, and household debt remains limited. Nonetheless, rapid credit growth among households calls for further strengthening of macroprudential measures and a vigilant approach should fast credit expansion continue and broaden.
Approved By
Philip Gerson and Luis Cubeddu
Staff team: The mission took place in Bratislava October 21–November 3, 2015. The team comprised Mr. John (head), Mr. Giustiniani, Ms. Caselli, and Mr. Jobst (all EUR), and was assisted at headquarters by Ms. Chen, Ms. Calixto and Ms. Jung. Mr. Jakoby (Senior Advisor to the Executive Director) accompanied the mission.
Contents
RECENT DEVELOPMENTS AND OUTLOOK
A. Solid Domestic Demand-Driven Growth
B. Outlook and Risks
PROMOTING BROAD-BASED AND JOB-RICH GROWTH
ENSURING HIGH QUALITY FISCAL CONSOLIDATION
SAFEGUARDING FINANCIAL SOUNDNESS AMID HIGH CREDIT GROWTH
STAFF APPRAISAL
BOXES
1. External Assessment
2. Slovakia’s Automotive Sector and Trade Profile
3. Tackling High Youth Unemployment in Slovakia
4. Should The Fiscal Responsibility Act Be Reformed?
FIGURES
1. Main Economic Developments
2. Labor Market Developments
3. Fiscal Developments
4. External Developments
5. Competitiveness Indicators
6. Structural Indicators
7. Monetary and Banking Developments
TABLES
1. Summary of Economic Indicators, 2012–20
2A. Statement of Operations of the General Government, 2012–20
2B. Statement of Operations of the General Government, 2012–20
3. General Government Balance Sheet, 2009–14
4. Medium-term Balance of Payments, 2012–20
5. Financial Soundness Indicators for the Banking Sector, 2010–15
ANNEXES
I. Risk Assessment Matrix
II. Authorities’ Response to Past IMF Policy Recommendations
III. Public Sector Debt Sustainability Analysis (DSA)
IV. External Debt Sustainability Analysis
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SLOVAK REPUBLIC
STAFF REPORT FOR THE 2015 ARTICLE IV CONSULTATION—INFORMATIONAL ANNEX
December 22, 2015
Prepared By
European Department
Contents
FUND RELATIONS
STATISTICAL ISSUES
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Press Release No. 16/08
FOR IMMEDIATE RELEASE
January 14, 2016
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