{
  "title": "IMF Executive Board Concludes 2021 Article IV Consultation with Slovak Republic",
  "publication": "IMF News, June 22, 2021",
  "sourceUrl": "https://www.imf.org/en/news/articles/2021/06/21/pr21190-slovak-republic-imf-executive-board-concludes-2021-article-iv-consultation",
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  "summary": "Executive Board concluded the Article IV consultation on June 18, 2021.",
  "publishDate": "2021-06-22",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Executive Board concluded the Article IV consultation on June 18, 2021.\n- Slovak Republic entered the COVID-19 pandemic with: unemployment at record lows, a banking system with strong capital and liquidity buffers, and some fiscal space.\n- Output contraction in 2020: 4.8 percent.\n- Registered unemployment increased by about 3 percentage points during the pandemic.\n- Fiscal deficit in 2020: 6.1 percent of GDP; debt-to-GDP ratio rose above 60 percent."
    },
    {
      "heading": "Economic impact and outlook",
      "content": "- 2020 outcome:\n  - Real GDP: -4.8 (annual percent change, constant prices).\n  - Domestic demand: -5.6.\n  - Gross fixed capital formation: -12.0.\n  - Exports of goods and services: -7.6.\n  - Imports of goods and services: 10.1.\n- 2021–22 projections:\n  - Real GDP: 4.7 in 2021; 4.9 in 2022.\n  - Domestic demand: 3.0 in 2021; 6.8 in 2022.\n  - Gross fixed capital formation: 11.9 in 2021.\n  - Exports of goods and services: 11.5 in 2021; 4.2 in 2022.\n  - Imports of goods and services: 10.1 in 2021; 6.1 in 2022.\n- Medium term:\n  - Growth expected to be boosted by sizable EU-funded investments; some scarring implied with medium-term output remaining below the pre-crisis trend.\n  - Risks are dominated by virus dynamics and the success of the vaccination campaign."
    },
    {
      "heading": "Fiscal and public finance",
      "content": "- 2019–22 headline fiscal indicators (Percent of GDP):\n  - Revenue: 41.3 (2019), 41.6 (2020), 41.8 (2021 projection).\n  - Expenditure: 42.7 (2019), 47.8 (2020), 50.6 (2021), 46.5 (2022).\n  - Overall balance: -1.3 (2019), -6.1 (2020), -8.8 (2021), -4.9 (2022).\n  - Primary balance: -5.1 (2019), -7.9 (2020), -4.0 (2021).\n  - Structural balance (Percent of potential GDP): -1.8 (2019), -4.2 (2020).\n  - General government debt: 48.2 (2019), 60.3 (2020), 63.0 (2021), 65.0 (2022).\n- Executive Directors’ views:\n  - Fiscal support budgeted for 2021 will help secure recovery and provide insurance against downside risks.\n  - Policy support should gradually shift to facilitating reallocation of labor and capital and minimizing scarring.\n  - Need to begin planning a credible medium-term consolidation plan.\n  - Importance of well-designed fiscal rules and pension reform; welcomed envisaged introduction of expenditure ceilings and relinking retirement age to life expectancy as in Slovakia’s Recovery and Resilience Plan.\n  - Welcomed planned reforms in taxation, public finance administration and the fiscal framework to strengthen tax collection, improve spending efficiency and increase buffers."
    },
    {
      "heading": "Monetary, financial sector, and external position",
      "content": "- Banking sector:\n  - Entered crisis with strong capital and liquidity buffers; resilience commended.\n  - Directors encouraged maintaining flow of credit while safeguarding financial stability.\n  - Corporate vulnerabilities and housing market risks require continued vigilance.\n  - Current macroprudential stance assessed as broadly adequate.\n  - Suggested strengthening restructuring mechanisms and the insolvency framework.\n  - Encouraged efforts to continue to upgrade the AML/CFT framework.\n- Balance of payments and external indicators:\n  - Trade balance (goods): -1.0 (2019), -2.7 (2020).\n  - Current account balance: -0.4 (2020), -0.6 (2021 projection).\n  - Gross external debt: 112.4 (2019), 121.2 (2020), 118.1 (2021), 115.0 (2022).\n  - Gross national savings: 20.7 (2019), 18.0 (2020), 17.7 (2021), 19.3 (2022).\n  - Gross capital formation: 23.4 (2019), 18.3 (2020), 21.0 (2021).\n  - Nominal GDP (Millions of euros): 93,900 (2019), 91,555 (2020), 97,037 (2021), 104,080 (2022)."
    },
    {
      "heading": "Structural reforms, EU funds, and labor market",
      "content": "- Recovery and Resilience Plan:\n  - Directors praised ambitious investments and reforms embedded in the Plan.\n  - Encouraged prompt and efficient use of EU funds, including from the Next Generation EU.\n  - Reform agenda focus: accelerating digital and green transformation; strengthening human and physical capital; boosting productivity via greater investments in education and healthcare, research and innovation; more efficient public services; improved governance.\n- Labor market:\n  - Relative strength of the Slovak labor market noted.\n  - Recommendation for more targeted measures to assist workers disproportionately affected by the crisis and prepare them for future demands."
    },
    {
      "heading": "Policy recommendations and priorities",
      "content": "- Short-term:\n  - Maintain necessary fiscal support in 2021 to secure recovery and insurance against downside risks.\n  - Maintain flow of credit and safeguard financial stability.\n- Medium-term:\n  - Gradually shift policy support toward facilitating reallocation of labor and capital and minimizing scarring.\n  - Begin planning for a credible medium-term consolidation plan.\n  - Strengthen tax collection, public spending efficiency, fiscal framework, and buffers.\n  - Implement well-designed fiscal rules and pension reform (including expenditure ceilings and relinking retirement age to life expectancy).\n  - Strengthen restructuring mechanisms and insolvency framework; continue AML/CFT upgrades.\n  - Prompt and efficient absorption and use of EU funds to support digital/green transformation, human capital, and productivity-enhancing reforms.\n- Structural implementation:\n  - Timely and effective execution of investments and implementation of reforms essential to sustain robust and inclusive growth."
    },
    {
      "heading": "Key statistics (selected figures preserved exactly as in source)",
      "content": "- Real GDP: 2.5 (2019), -4.8 (2020), 4.7 (2021), 4.9 (2022).\n- Domestic demand: 3.7 (2019), -5.6 (2020), 3.0 (2021), 6.8 (2022).\n- Inflation (HICP): 2.8 (2019), 2.0 (2020), 1.3 (2021), 1.9 (2022).\n- Unemployment rate (Percent): 5.8 (2019), 6.7 (2020), 7.3 (2021).\n- Nominal wages growth: 7.8 (2019), 4.8 (2020).\n- Output gap: 1.0 (2019), -4.6 (2020), -3.1 (2021), -1.5 (2022).\n\nIMF Executive Board Concludes 2021 Article IV Consultation with Slovak Republic — Press Release No. 21/190 (June 22, 2021).\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Slovak Republic and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/06/21/pr21190-slovak-republic-imf-executive-board-concludes-2021-article-iv-consultation"
    }
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    "Published: June 22, 2021",
    "Executive Board concluded the Article IV consultation on June 18, 2021.",
    "Slovak Republic entered the COVID-19 pandemic with: unemployment at record lows, a banking system with strong capital and liquidity buffers, and some fiscal space.",
    "Output contraction in 2020: 4.8 percent.",
    "Registered unemployment increased by about 3 percentage points during the pandemic.",
    "Fiscal deficit in 2020: 6.1 percent of GDP; debt-to-GDP ratio rose above 60 percent.",
    "2020 outcome:",
    "2021–22 projections:",
    "Medium term:",
    "2019–22 headline fiscal indicators (Percent of GDP):",
    "Executive Directors’ views:",
    "Banking sector:",
    "Balance of payments and external indicators:",
    "Recovery and Resilience Plan:",
    "Labor market:",
    "Short-term:",
    "Medium-term:",
    "Structural implementation:",
    "Real GDP: 2.5 (2019), -4.8 (2020), 4.7 (2021), 4.9 (2022).",
    "Domestic demand: 3.7 (2019), -5.6 (2020), 3.0 (2021), 6.8 (2022).",
    "Inflation (HICP): 2.8 (2019), 2.0 (2020), 1.3 (2021), 1.9 (2022).",
    "Unemployment rate (Percent): 5.8 (2019), 6.7 (2020), 7.3 (2021).",
    "Nominal wages growth: 7.8 (2019), 4.8 (2020).",
    "Output gap: 1.0 (2019), -4.6 (2020), -3.1 (2021), -1.5 (2022).",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Slovak Republic and the IMF](http://www.imf.org/external/country/SVK/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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