IMF report comments on economic policy of Slovak Republic

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Following the completion of talks with the Slovak Republic on 11 January 2016 the IMF has issued a report on the economic and fiscal position.

Slovakia is one of the stronger economies in Europe and economic growth is projected to be 3% to 3.5% in the medium term. There are external risks to the economy from potential economic shocks that could be transmitted from important trading partners. Among other topics the discussions between the IMF and the Slovak Republic looked at fiscal measures to maintain enough room to fund priority measures.

In the view of the IMF one of the priorities for policy should be to reduce the tax wedge, especially for low wage or part time workers, in addition to enhancing education and training and introducing more effective labor market policies. The tax wedge measures the burden of tax and social security payments on the labor force. This is calculated as the total amount of taxes on employees and employers less the family benefits paid to workers, as a percentage of the total labor costs on the employer.

The IMF also considers that the Slovak government should continue to strengthen revenue collections especially for value added tax (VAT) and corporate income tax. They should also broaden the tax base, and measures should include a property tax based on market values of property.

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