{
  "title": "IMF Executive Board Concludes 2023 Article IV Consultation with Slovak Republic",
  "publication": "IMF News, March 13, 2024",
  "sourceUrl": "https://www.imf.org/en/news/articles/2024/03/12/pr2485-slovak-republic-imf-exec-board-concludes-2023-art-iv-consult",
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  "summary": "The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the Slovak Republic on March 6, 2024.",
  "publishDate": "2024-03-13",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Executive Board concluded the Article IV consultation with the Slovak Republic on March 6, 2024.\n- 2023 slowdown: drawdown of pandemic-era savings and negative real wage growth weighed on consumption.\n- Partial offsets in 2023: strong fiscal stimulus (increased social spending and measures to offset higher energy prices) and record-high EU-funded public investments.\n- Inflation: declined from record-highs in early 2023 but remains among the highest in the euro area.\n- Risks: tilted firmly to the downside — weaker external demand, commodity price shocks, delays in fiscal consolidation, slow implementation of structural reforms, and failure to absorb EU grants effectively.\n- Structural challenge: unfavorable demographics will weigh on medium-term growth."
    },
    {
      "heading": "Outlook and Projections",
      "content": "- Growth forecasts:\n  - 2024: 2.1 percent\n  - 2025: 2.6 percent\n- Inflation path: projected to continue moderating and return to target by end-2026.\n- Growth drivers: rebound in consumption from a pick-up in real wage growth, recovery in exports as supply conditions improve, offsetting deceleration in EU-funded public investment."
    },
    {
      "heading": "Executive Board Assessment — Major Messages",
      "content": "- Directors welcomed the resilience of the Slovak economy and looked forward to envisaged stronger growth in 2024.\n- Outlook is broadly favorable but clouded by high inflation and significant downside risks, including a global slowdown, intensifying geopolitical tensions, and longstanding structural and demographic challenges.\n- Priority areas: fiscal sustainability and structural reforms to foster economic diversification, inclusive growth, and green transition."
    },
    {
      "heading": "Fiscal Policy and Public Finance — Recommendations",
      "content": "- Sustain commitment to fiscal consolidation to put debt on a downward trajectory, rebuild buffers, and prepare for increases in aging‑related spending.\n- Recommendation for more ambitious fiscal consolidation in 2024, with clearly identified revenue and expenditure measures in subsequent years.\n- Specific revenue and tax measures encouraged:\n  - Consider raising the basic VAT rate.\n  - Consider raising property and environmental taxes.\n- Expenditure-side recommendations:\n  - Better targeted social spending.\n  - Reduction in subsidies.\n- Governance and framework:\n  - Reform the fiscal framework to strengthen fiscal transparency and credibility and boost the longer‑term outlook for public finances."
    },
    {
      "heading": "Financial Sector and Macroprudential Policy",
      "content": "- Directors welcomed the resilience of the financial sector and considered the current macroprudential stance appropriate.\n- Monitoring needs: vulnerable segments of the credit portfolio, including the commercial real estate sector and low‑income households.\n- Possible actions:\n  - Consider adding macroprudential measures targeted at the commercial real estate sector.\n  - Authorities should stand ready to release the countercyclical capital buffer if downside macro‑financial risks materialize.\n- Other priorities: address remaining deficiencies in the AML/CFT framework and strengthen resilience to cyber‑attacks."
    },
    {
      "heading": "Structural Reforms, RRP, and Labor Market",
      "content": "- Urged continued implementation of the national Recovery and Resilience Plan to raise inclusive and climate‑friendly growth.\n- Labor market policies needed to raise labor force participation of women and seniors.\n- Investment and inclusion measures:\n  - Increased infrastructure investments and better absorption of EU funds.\n  - Maintain good governance and a favorable investment climate.\n  - Educational reforms to lift growth potential, reduce regional inequality, and foster inclusion of minorities.\n- Environmental progress: commended significant progress in reducing greenhouse gas emissions and welcomed implementation of the 2023 National Energy and Climate Plan."
    },
    {
      "heading": "Key Economic Indicators (selected, as reported)",
      "content": "- Real GDP (annual percent change):\n  - 2019: 2.5\n  - 2020: -3.3\n  - 2021: 4.8\n  - 2022: 1.8\n  - 2023: 1.1\n  - 2024 (proj.): 2.1\n  - 2025 (proj.): 2.6\n  - 2026 (proj.): 2.8\n  - 2027 (proj.): 2.7\n- Domestic demand (annual percent change):\n  - 2019: 3.8\n  - 2020: -5.1\n  - 2021: 5.6\n  - 2022: 2.9\n  - 2023: -4.7\n  - 2024 (proj.): 5.3\n  - 2025 (proj.): 2.2\n  - 2026 (proj.): 2.4\n- Inflation (HICP, end of period):\n  - 2023: 15.0\n  - 2024 (proj.): 6.6\n  - (Staff projects return to target by end-2026)\n- Core inflation (end of period):\n  - 2023: 13.7\n  - 2024 (proj.): 6.8\n- Public finance (percent of GDP):\n  - Revenue 2023: 41.5\n  - Revenue 2024 (proj.): 41.0\n  - Revenue 2025 (proj.): 40.0\n  - Expenditure 2023: 47.9\n  - Expenditure 2024 (proj.): 47.0\n  - Expenditure 2025 (proj.): 46.2\n  - Overall balance 2023: -5.6\n  - Overall balance 2024 (proj.): -5.7\n  - Primary balance 2023: -4.4\n  - Structural balance (percent of potential GDP) 2023: -5.3\n  - General government debt (percent of GDP):\n    - 2019: 48.0\n    - 2020: 58.9\n    - 2021: 61.1\n    - 2022: 57.8\n    - 2023: 57.9\n    - 2024 (proj.): 59.3\n    - 2025 (proj.): 60.3\n    - 2026 (proj.): 63.5\n    - 2027 (proj.): 66.7\n    - 2028 (proj.): 69.8\n    - 2029 (proj.): 72.5\n- Gross external debt (percent of GDP):\n  - 2019: 112.3\n  - 2020: 119.6\n  - 2021: 134.2\n  - 2022: 103.1\n  - 2023: 99.5\n  - 2024 (proj.): 100.7\n  - 2025 (proj.): 101.2\n  - 2026 (proj.): 102.5\n  - 2027 (proj.): 103.8\n  - 2028 (proj.): 104.6\n  - 2029 (proj.): 105.1\n- Gross national savings (percent of GDP):\n  - 2019: 20.5\n  - 2020: 20.0\n  - 2021: 19.7\n  - 2022: 15.2\n  - 2023: 15.3\n  - 2024 (proj.): 16.3\n  - 2025 (proj.): 17.6\n  - 2026 (proj.): 18.7\n  - 2027 (proj.): 19.3\n  - 2028 (proj.): 20.6\n- Nominal GDP (Millions of euros):\n  - 2019: 94,430\n  - 2020: 93,444\n  - 2021: 100,256\n  - 2022: 109,645\n  - 2023: 122,114\n  - 2024 (proj.): 130,572\n  - 2025 (proj.): 139,175\n  - 2026 (proj.): 146,498\n  - 2027 (proj.): 153,399\n  - 2028 (proj.): 160,613\n  - 2029 (proj.): 168,203\n\nSource: IMF Press Release No. 24/85 — IMF Executive Board Concludes 2023 Article IV Consultation with Slovak Republic (March 13, 2024).\n\n---\n\n\n References\n\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/2024/03/12/pr2485-slovak-republic-imf-exec-board-concludes-2023-art-iv-consult"
    }
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    "Published: March 13, 2024",
    "Executive Board concluded the Article IV consultation with the Slovak Republic on March 6, 2024.",
    "2023 slowdown: drawdown of pandemic-era savings and negative real wage growth weighed on consumption.",
    "Partial offsets in 2023: strong fiscal stimulus (increased social spending and measures to offset higher energy prices) and record-high EU-funded public investments.",
    "Inflation: declined from record-highs in early 2023 but remains among the highest in the euro area.",
    "Risks: tilted firmly to the downside — weaker external demand, commodity price shocks, delays in fiscal consolidation, slow implementation of structural reforms, and failure to absorb EU grants effectively.",
    "Structural challenge: unfavorable demographics will weigh on medium-term growth.",
    "Growth forecasts:",
    "Inflation path: projected to continue moderating and return to target by end-2026.",
    "Growth drivers: rebound in consumption from a pick-up in real wage growth, recovery in exports as supply conditions improve, offsetting deceleration in EU-funded public investment.",
    "Directors welcomed the resilience of the Slovak economy and looked forward to envisaged stronger growth in 2024.",
    "Outlook is broadly favorable but clouded by high inflation and significant downside risks, including a global slowdown, intensifying geopolitical tensions, and longstanding structural and demographic challenges.",
    "Priority areas: fiscal sustainability and structural reforms to foster economic diversification, inclusive growth, and green transition.",
    "Sustain commitment to fiscal consolidation to put debt on a downward trajectory, rebuild buffers, and prepare for increases in aging‑related spending.",
    "Recommendation for more ambitious fiscal consolidation in 2024, with clearly identified revenue and expenditure measures in subsequent years.",
    "Specific revenue and tax measures encouraged:",
    "Expenditure-side recommendations:",
    "Governance and framework:",
    "Directors welcomed the resilience of the financial sector and considered the current macroprudential stance appropriate.",
    "Monitoring needs: vulnerable segments of the credit portfolio, including the commercial real estate sector and low‑income households.",
    "Possible actions:",
    "Other priorities: address remaining deficiencies in the AML/CFT framework and strengthen resilience to cyber‑attacks.",
    "Urged continued implementation of the national Recovery and Resilience Plan to raise inclusive and climate‑friendly growth.",
    "Labor market policies needed to raise labor force participation of women and seniors.",
    "Investment and inclusion measures:",
    "Environmental progress: commended significant progress in reducing greenhouse gas emissions and welcomed implementation of the 2023 National Energy and Climate Plan.",
    "Real GDP (annual percent change):",
    "Domestic demand (annual percent change):",
    "Inflation (HICP, end of period):",
    "Core inflation (end of period):",
    "Public finance (percent of GDP):",
    "Gross external debt (percent of GDP):",
    "Gross national savings (percent of GDP):",
    "Nominal GDP (Millions of euros):",
    "[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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