Slovak Republic : Development Policy Review, Volume 1. Summary Report
Although the unsustainably high external current account, and fiscal deficits may be financed with the country's capital account surplus (twenty percent of GDP), such situation is not likely to last. The country's policy impact on the rea...
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| Language: | English en_US |
| Published: |
Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2002/11/2093626/slovak-republic-development-policy-review-vol-1-2-summary-report http://hdl.handle.net/10986/15322 |
| Summary: | Although the unsustainably high external
current account, and fiscal deficits may be financed with
the country's capital account surplus (twenty percent
of GDP), such situation is not likely to last. The
country's policy impact on the real exchange rate,
undermines the employability of large segments of the
population, which will ultimately hamper growth. The study
proposes an agenda on key issues, such as curtailing
enterprise subsidies, and other guarantee payments,
redirecting, rather than expanding, existing expenditure
programs to meet the eligibility criteria for structural
funds financing. In addition, further increasing the
retirement age, would put public pensions on a sustainable
footing, and avoid the massive fiscal deficits the
demographic transition is bringing, and, postponing the
revenue reduction (from 38 percent of GDP in 2000 to a
projected 35 percent in 2002, to a target of 33 percent of
GDP in 2004) until such time as the expected cutback in
expenditure has actually materialized, should be part of the
development agenda. The tax burden should be balanced away
from payroll taxes, e.g., streamlining Value Added Tax (VAT)
refunds, or trimming tax incentives for investment to
European Union-compatible levels. Moreover, the planned
increases in electricity, and natural gas tariffs should be
brought forward, and, the internal trade border within the
Czech-Slovak customs union should be brought down ahead of
EU accession. Longer term reform efforts should focus on
social protection, health care, and education, based on a
governance approach built on transforming budget frameworks,
consolidating decentralization efforts, and launching a
major judicial reform. |
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