BRATISLAVA, May 29, (WEBNOVINY) — Slovakia’s economy should grow at a solid pace this year in comparison with other eurozone countries, says the International Monetary Fund (IMF) whose team has ended its two-week mission here. According to the head of the mission Daria Zakhar, the Slovak economy should grow 2.6 percent while this growth should accelerate further next year to above 3 percent. At a news conference with Slovak Finance Minister Peter Kazimir on Tuesday, Zakhar said that the IMF is satisfied with the performance of the Slovak economy and praised the country’s stable banking sector and still relatively low debt.
The International Monetary Fund supports the government’s effort to squeeze the general government deficit below three percent of GDP, which is its target for 2013. It agrees with the government’s opinion as well that available measures on the spending side of the budget have been already partially exhausted. The IMF however does not welcome all measures on which the government of Robert Fico is working. It, for instance, has objections toward a special bank levy. On the other hand, Zakhar admits that also measures on the revenue side of the budget are limited while first of all consolidation has to be the government’s priority.
The IMF warns Slovakia that consolidation should not hamper economic growth while the step that might decelerate it is, for instance a higher income tax for corporate entitles. The organization thus recommends that if the measure is implemented, its effect has to be offset by consequent improvements of the business environment. She also finds it necessary to fight high jobless rate and to bridge regional differences.
The IMF mission head also says that the prepared reduction of transfers to the second pension pillar will mean higher government costs for future pensions. Zakhar insists that this step has to be implemented concurrently within reform of the pay-as-you go pension pillar in order to secure stability of the pension system in the future. Minister Kazimir agrees with this opinion, suggesting that just the current reform of the first pillar was a request of members of the Solidarity and Development Council on which they conditioned reduction of payments to the second pillar.
SITA