Europe > Eastern Europe > Slovakia > Slovakia Finance Profile 2012

slovakia: Slovakia Finance Profile 2012

2012/04/04

          更多  

 

 

 

Slovakia Finance Profile 2012

Market-based competition Ideologically and rhetorically, the main ruling party, the Smer-SD, clearly favors state regulation over market-based competition. However, owing to the previous institutional and structural reforms as well as EU-membership restrictions, the government has very little room to reintroduce price regulations, subsidies and restrictions on entrepreneurship. Adaptation to EU laws has increased free and efficient market competition. Despite making economic regulation more competition-friendly, substantial impediments to competition remain, particularly in network industries and in terms of self-employment in creative fields. Further changes are needed so as to facilitate the entry of new market participants. Reform of the public sector is also required in order to reduce the administrative burden on corporations as well as to support and accelerate the enforcement of legal contracts in court. All these barriers tend to limit growth in productivity.

At the beginning of 2009, the OECD urged Slovakia to step up its reform program, as it still lags far behind the best-performing members in terms of per capita GDP. Since this can partially be attributed to low levels of labor utilization and productivity, the OECD has recommended that reform efforts continue in as areas including the labor market, education and competition.

Anti-monopoly policy The Antimonopoly Office of the Slovak Republic was established as a central state administrative body in 1990. Its role is to intervene against competition restriction by entrepreneurs, agreements restricting competition and abuse of a dominant position as well as to take preventive control over market structures through the assessment of ownership concentrations. The office may also sanction the conduct of other state authorities or municipality bodies when they distort the conditions of competition.

Like all other EU member states, Slovakia is subject to EU antitrust and competition laws. However, as is the case in many EU countries, the efficient implementation of these laws has had its limits. Moreover, there are legal loopholes. For example, foreign companies often complain about the time-consuming procedure for concentration clearance. Since the definition of size thresholds for notifying mergers is very low, some businesses have chosen to ignore notification requirements. In December 2008, the European Commission opened infringement proceedings against Slovakia for failing to reopen competition in parts of its postal sector. Slovenská Pošta, the state postal company, appealed the ruling the same day. However, under the close monitoring of the European Commission, similar attempts to limit free competition have usually died away.

Liberalization of foreign trade Slovakia’s market has been liberalized and integrated into the European Union’s common market, and foreign trade and domestic prices are fully liberalized. The Slovak Republic has one of the most open economies in the world.

The current government tries to keep internal prices under control. For example, in July 2008, the Regulatory Office for Network Industries (ÚRSO) gained more power to control energy prices. This move should prevent low-income households from spending a higher share of their income on energy. In public speeches, Prime Minister Fico often speaks critically of foreign owners of public utilities, private health-care insurance companies and private retirement funds and threatens to change their legal powers and property rights.
 

The banking system in Slovakia is healthy. The large majority of banks are owned by foreign investors. Because they are subject to the strict rules of the central bank, none of the banks suffered serious damage during the current financial crisis. In fact, they have continued to enjoy high liquidity and reported solid profits for 2008. The National Bank of Slovakia (NBS) intensified its monitoring of the risk-management practices of banks and aims for unified supervision of the financial sector. At the same time, though, start-ups and medium-sized companies still have problems in securing loans. Problems can still be found in the fact that start-up and medium-sized enterprises still have restricted access to loans. According to data from the NBS, Slovakia’s banking sector closed 2008 with a post-tax profit.

 

The Slovak economy is quickly recovering from a deep recession caused by the global economic downturn. After contracting sharply in the first quarter of 2009, real gross domestic product (GDP) has grown robustly over the past five quarters, along with the recovery in external demand. It is estimated that real GDP growth will exceed 4 % in 2010—among the highest in the European Union. Inflation has fallen significantly below the euro area average.

Solid fundamentals and appropriate policies curbed the impact of the external shock. A relatively strong fiscal position with low public debt and modest deficits prior to the downturn, low debt ratios of households and companies, and a sound financial sector with internal market focus limited domestic second-round effects following the substantial external shock. Furthermore, automatic stabilizers and a discretionary fiscal stimulus provided appropriate demand support. Euro area membership helped maintain confidence and facilitated low interest rates.

Nevertheless, the unemployment rate has increased to about 15%. Although the continued economic recovery will help bring down conjunctural unemployment, the downturn has worsened long term structural unemployment among low skill workers, particularly in economically-lagging regions.

The general government deficit widened to 7.3 % of GDP in 2009, and developments in the first half of 2010 indicate a further deterioration. While expenditure continued to grow at pre-crisis rates, revenue declined in tandem with output, and the structural deficit is projected to reach about 7 % of GDP in 2010. Nevertheless, market confidence has remained broadly intact even during the recent turmoil in peripheral euro area countries, reflecting the still relatively low public debt and expectations that the new government will tackle fiscal deterioration through a credible consolidation

Commercial Banking Report Q1 2011