Slovak Republic: 2022 Article IV Consultation-Press Release; and Staff Report

International Monetary Fund

No 2022/202, IMF Staff Country Reports from International Monetary Fund

Abstract: This 2022 Article IV Consultation discusses that the war in Ukraine has clouded the outlook for the Slovak economy while it was still recovering from the pandemic. The effects of the war are already felt through surging commodity prices, input shortages, subdued confidence, weaker global demand, and heightened energy security risks, given Slovakia’s heavy reliance on Russian energy imports. Fiscal policy needs to be flexible and ready to adjust, while avoiding adding to inflationary pressures. The immediate policy priority is to mitigate the economic fallout of the war and minimize the humanitarian crisis. Rebuilding fiscal buffers should begin once the economy is on a solid growth path, to create room for maneuver and accommodate rising ageing-related spending. Recent reforms to the fiscal framework and the pension system could significantly strengthen public finances. The multiyear spending ceilings should strengthen fiscal discipline, while the link between retirement age and life expectancy will improve fiscal sustainability.

Keywords: money market rate; climate mitigation goal; policy priority; Policy recommendation; liability positions vis-à-vis nonresident; IMF's transparency policy; Inflation; Housing prices; Mortgages; Labor markets; Global; Europe (search for similar items in EconPapers)
Pages: 73
Date: 2022-06-30
New Economics Papers: this item is included in nep-cis
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