RESTRICTED
WORLD TRADE WT/BOP/12/Rev.1
18July1996
ORGANIZATION(96-2819)
Original: English Committee onBalance-of-Payments Restrictions
1996 CONSULTATION UNDER ARTICLE XIIOFTHE GATT 1994
Basic Document Supplied bytheSlovak Republic
Revision
Introduction
Since theSlovak Republic submitted comprehensive documentation during itsTrade Policy
Review, heldinDecember 1995, andsupported bydetailed information supplied bytheSecretariat,
thefollowing report isfocused ontherecent development ofrelevant macroeconomic indicators.
General
1. TheGovernment oftheSlovak Republic hasintroduced inMarch 1994, pursuant to
Article XII:4(a) oftheGATT 1994, animport surcharge forabroad range ofconsumer products and
foodstuff. Theratehasbeenfixed at10percent.
2. Since theintroduction oftheimport surcharge twoconsultations havebeenheld. Conclusions
from theconsultations arecontained inDocuments BOP/R/218 andWT/BOP/R/4.
3. Coverage, except forthetemporary exclusion ofpassenger carsupto1500ccm,hasnotbeen
changed during theapplication oftheimport surcharge, itisapplied onanon-discriminatory manner
toallimports irrespective ofthesource ofsupply.
Import regime
4. Slovakia hasanopenimport regime based onadvalorem duties, withverylowweighted average
tariff reaching 4.9percentforallimports including agriculture products with100percentbinding.
Theliberal regime issupported byGSPscheme. Inaddition, Slovakia isnotapplying anysafeguard
oranti-dumping measures. Non-tariff measures areapplied onlyonafewproducts particularly for
environmental reasons. Further liberalisation steps areundertaken within theframework ofUruguay
Round commitments.
Macroeconomic andTrade Developments
5. GDPincurrent prices reached SKK518 billion in1995which expressed inconstant prices meant
7.4percentgrowth. Thestrong GDPgrowth hasbeensupported mainly byforeign trade.Thisgrowth
inthesecond consecutive yearshould be,however, taken inthebroader context, where GDPgeneration
reached only89percentof1989 level.WT/BOP/12/Rev.1
Page2
6. From thepoint ofviewofsupply, GDP development (atconstant prices) wasinfluenced by:
formation ofvalue added inmarket services, substantial increase invalue added inindustry andrenewal
ofitsincrease inconstruction. Share ofselected indirect taxes, customs duties, imputed output ofbank
services andprofits from reserves possession invalue added formation increased andshare ofvalue
added formatted innon-market services decreased.
7. Onthesideofdemand, growth recourses extended from thefieldofexport alsotodomestic
demand. Within itsframework, accumulation growth andfinalhousehold consumption accelerated.
Alsofinalgovernment consumption washigher thanintheprevious year.
8. Continuing foreign demand reflected itself inapositive balance ofgoods andservices export
andimport ofvalue SKK12.7 billion. IthasbeenbySKK7.8 billion lower thanintheprevious year.
Compared with1994, growth inexport decreased by10.9points to3.2percentandgrowth inimport
accelerated by10.2points to6.7percent. Under theinfluence ofdomestic demand growth, export
performance oftheeconomy(calculated from theshare ofthegoods andservices exports inGDP)
decreased from 67percentto64.4percent.
9. Stabilisation offavourable development inproduction wasreflected inemployment increase.
Ontheaverage there wasby2.2percentemployees more intheSlovak economy in1995 thaninthe
previous year. Atthesame timethere wasavisible move towards intensification becoming evident
intheincrease inlabour productivity from gross domestic product incurrent prices by14.lpercent
(atconstant prices by4.4percent). Increase inlabour productivity wasby0.2pointslower thanincrease
innominal monthly wages (labour productivity atconstant prices wasgrowing asfastasarealwages).
10. Industrial production atconstant prices increased in1995 by8.4percent, while theoverall
agriculture output further declined byapproximately 5percent.
Trade Balance
11. While modestly favourable results intrade balance wererecorded in1995, thepattern ofthe
tradeshows negative development inthefirstfourmonths ofthisyear. Inrealterms thetrade balance
in1995reached surplus SKK1.8 billion (US$0.06 billion). Inthefourmonths of1996thetradebalance
declined sharply anddeficit amounting US$713.6 million hasbeenrecorded. Thelevel ofexports
inthefirstfourmonths stagnated andincreased only0.3percentincomparison withthesame period
oftheprevious year,while theimports increased rapidly -by30.9percent.Thisnegative tradebalance
consequently influenced thedevelopment ofthecurrent account.
Inflation
12. Annual inflation ratebased onconsumer price index decreased in1995 tounder 10percent
andduring firstquarter of1996 onmonthly basis further decreased to6.2percent.
Balance ofPayments
13. Incontrast withthepositive result ofthecurrent account in1995, when thesurplus reached
US$646 million, current account inthefirstquarter ofthe1996 reached deficit US$419.6 million,
having beennegatively influenced bydeteriorated situation intrade balance.
14. Active balance ofpayments in1995 amounting US$1.58 billion (exchange ratedifferences
notincluded) waspositively influenced bybalance intrade andservices. Thistrend hasbeenslowed
down inthe1996 byreversed development intrade balance.WT/BOP/12/Rev.1
Page3
15. Overall external debtreached US$5.7 billion infirstfourmonths of1996 which means that
theexternal debthasslightly decreased.
Exchange regulations
16. Slovakia hasintroduced convertibility ofSlovak Koruna (SKK) onthecurrent account under
Article VIIIoftheIMFAgreements on1October 1995. TheClearing Payment Agreement withthe
Czech Republic hadbeenabolished ontheverysame date.
Foreign Exchange Reserves
17. Stabilisation trend withgrowth offoreign reserves hasbeenrecorded inprevious years. Recent
preliminary figures covering period offourmonths ofthisyearshow thatforeign exchange reserves
ofNBSreached US$3.3 billion andreserves ofcommercial banks recorded amount US$1.4 billion.
Overall foreign exchange reserves ofthebanking sector amounted US$4.7 billion bytheendof
April 1996, alower figure incomparison withresults oflastyear.
State Budget
18. State Budget results haveimproved in1995 anddeficit amounted toSKK8.3 billion, equal
toUS$0.28 billion (including clearing settlement ),hasbeenlower by60percentincomparison with
annual budget oftheprevious year. Itsshare ingross domestic product decreased by3.6points to
l.6point ascompared with1994. Statebudget deficit intheperiod fromJanuary toApril 1996reached
SKK4.4 billion (US$0,15 billion).
Unemployment
19. Average rateofregistered unemployment decreased to13.1percentin1995 incomparison
with1994 andincreased inJanuary 1996 upto13.7percent.
Import Surcharge
20. Thedelegation oftheSlovak Republic hasreferred tothefrailty ofpositive macroeconomic
results reached in1994 and1995, inparticular inkeyitems ofbalance-of-payments, trade balance
andforeign exchange reserves intheframework ofprevious consultations, considering unprecedented
transformationprocessofoveralleconomicsystemandbroadstructuralchangesinproduction,ownership
aswellasinlegislation.
21. Thetopicalresults,reachedinfirstquarterof1996,confirmeddeclaredfrailtyofmacroeconomic
development andsome specific reversed trends were deepened. Especially, thesituation incurrent
account ofbalance-of-payments isshowing negative development byrecording adeficit sincebeginning
oftheyear1996.
22. Thisdeficit wascaused particularly bythelossofexport dynamism andbyparallel vigorous
import growth .Inthissituation theGovernment oftheSlovak Republic wasnotinaposition tofulfil
therecommendation oftheCommittee onBalance-of-Payments Restrictions leading toelimination of
theimport surcharge. Nevertheless, inspiteofthenegative trade balance, consequently balance-of-
paymentsdevelopmentandcertaindecreaseofforeignexchangereserves,theSlovakGovernmentdecided
toreduce therateoftheimport surcharge from 1July1996 to7.5percent. According tothefuture
development ofbalance-of-payments andforeign exchange reserves theGovernment ofSlovakia will
re-evaluate theimport surcharge leveluntil1January 1997.WT/BOP/12/Rev.1
Page4
Table 1
Slovak Republic: Balance ofpayments
1995 First Quarter 1996
SKK million US$million SKK million US$million
Trade balance
Exports, f.o.b.
Imports, f.o.b.717.0
254,099.0
253,382.024.1
8,545.5
8,521.3-15,440.0
61,190.0
76,630.0-514.8
2,040.0
2,554.8
Services balance
Receipts
Shipment andother
Travel
Other
Expenditures
Shipment andother
Travel
Other16,242.0
70,656.0
18,296.0
18,505.0
33,855.0
54,414.0
8,930.0
9,526.0
35,958.0546.2
2,376.2
615.3
622.3
1,138.6
1,830.0
300.3
320.4
1,209.31,587.0
13,888.0
4,516.0
4,814.0
4,558.0
12,301.0
2,363.0
2,474.0
7,464.052.9
463.0
150.6
160.5
152.0
410.1
78.8
82.5
248.8
Income balance
Interest
Income
Payments
Investment
Income
Payments
Compensations ofemployees
Income
Payments-408.0
-894.0
6,322.0
7,216.0
-204.0
315.0
519.0
690.0
766.0
76.0-13.7
-30.1
212.6
242.7
-6.9
10.6
17.5
23.2
25.8
2.6674.0
627.0
2,263.0
1,636.0
18.0
69.0
51.0
29.0
79.0
50.022.5
20.9
75.4
54.5
0.6
2.3
1.7
1.0
2.6
1.7
Current transfers
Official
Private2,742.0
497.0
2,245.092.2
16.7
75.5594.0
36.0
558.019.8
1.2
18.6
Current account 19,293.0 648.8 -12,585.0 -419.6
Capital transfers
NetMLT financial account
Direct foreign investment
Portfolio investment
MLT Credits received
Disbursements
Repayments
MLT Credits extended
Disbursements
Repayments
Netshort-term financial account1,360.0
22,977.0
3,984.0
7,317.0
9,633.0
2,043.0
2,715.045.7
773.9
134.0
246.1
325.1
68.7
91.3909.0
5,854.3
855.0
1,630.0
-2,872.3
8,141.6
3,525.030.3
200.7
28.5
54.3
-87.0
204.8
115.8
Clearing balance (-,surplus) -28,158.0 951.0
Payments ofoverfl. ofmarg. credit 30,501.0 1,034.0
Total capital andfinancial account 29,395.5 993.9 10,388.3 346.9
Errors andomissions 1,741.5 -63.8 5,776.9 191.0
Overall Balance 46,947.0 1,579.0 3,580.2 118.3
Change inreserves (-,increase)
Gold
Holding ofSDR
Foreign exchange assets
Valuation changes-46,947.0
-58.0
950.0
-47,839.0-1,579.0
-2.0
33.0
-1,610.0-3,580.2
-10.2
1,299.0
-4,869.0-118.3
-0.3
44.0
-162.0
Note: Exchange rateUS$/SKK29.735WT/BOP/12/Rev.1
Page5
Table 2
Slovak Republic: Capital account
1995 First Quarter 1996
SKK million US$million SKK million US$million
Capital transfers 1,360.0 45.7 909.0 30.3
Direct investment 3,984.0 134.0 855.0 28.5
SRabroad -234.0 -7.9 14.0 0.5
InSR 4,218.0 141.9 841.0 28.0
Portfolio investment 7,317.0 246.1 1,830.0 54.3
SRabroad 5,105.0 171.1 1,489.0 49.6
InSR 2,212.0 74.4 141.0 4.7
Other long-term financial account 11,676.0 393.8 3,469.3 117.9
Assets 2,043.0 68.7 6,141.6 204.8
Government 1,685.0 56.7 6,145.0 204.9
disbursements 1,685.0 56.7
repayments 126.0 4.2 6,145.0 204.9
Commercial banks -14.4 -0.4
disbursements
repayments
Enterprise 232.0 7.8 11.0 0.4
disbursements -2,404.0 80.8 -9.0 -0.3
repayments 2,636.0 88.6 20.0 0.7
Liabilities 9,633.0 325.1 -2,672.3 -87.0
Government -9,850.0 -330.1 -3,657.0 -121.9
Disbursements 3,031.0 103.1 42.3 1.4
IMF
WB 17.0 0.5
EXIMBANK 2,166.0 84.1
G24
EC
EIB 548.0 18.5 42.3 1.4
Other
repayments -12,881.0 -433.2 -3,689.3 -123.3
Commercial banks 7,822.0 263.1 -711.3 -21.6
disbursements
repayments
Enterprises 11,661.0 392.2 1,696.0 56.5
disbursements 20,376.0 685.3 2,923.0 97.4
repayments -8,715.0 -293.1 -1,227.0 -40.9
Short-term financial account 2,715.0 91.3 3,515.0 115.8
banking assets -8,358.0 -281.1 6,022.0 200.5
banking liabilities 6,843.0 230.1 1,484.0 47.4
enterprise assets -164.0 5.5 -1,892.0 -63.1
enterprise liabilities 4,394.0 147.8 -2,069.0 -69.0
other assets
other liabilities
Clearing balance -28,158.0 -951.0
Payments foroverfl. ofmarg. credit 30,501.5 1,034.0
Total capital andfinancial account 29,395.5 993.9 10,388.3 346.9
Note: Exchange rateofUS$/SKK29.735Table 3WT/BOP/12/Rev.1
Page6Slovak Republic: Foreign Trade 1993-1996
TERRITORY 1993 1994 1995 Index Import Index Export
US$million US$million US$million
Import Export Balance Import Export Balance Import Export Balance 94/93 95/94 94/93 95/94
TOTAL 6334.3 5447.4 -886.9 6611.0 6691.1 80.0 8485.3 8545.5 60.1 108.6 119.1 127.8 118.5
CEFTA: 2488.6 2716.4 227.8 2249.0 3059.2 810.2 2790.0 3785.4 995.4 94.0 115.1 117.2 114.8
Czech
Republic 2274.6 2310.0 35.4 1957.9 2501.7 543.9 2333.3 3011.5 678.2 89.6 110.6 112.7 111.7
Hungary 84.5 247.3 162.8 110.8 365.7 255.0 189.1 390.4 201.3 136.3 158.4 153.9 99.1
Poland 123.2 158.9 35.7 157.5 189.3 31.8 235.2 377.5 142.2 133.1 138.6 124.0 185.1
OECD 2094.2 1771.5 -322.7 2621.5 2609.8 -11.7 3505.8 3472.8 -33.0 130.3 124.1 153.0 123.5
from which:
EU 1769.0 1609.2 -159.8 2210.5 233.6 129.1 2946.6 3195.5 248.8 130.0 123.7 151.3 126.8
EFTA: 95.8 40.1 -55.7 104.1 56.4 -47.7 162.5 84.5 -78.0 113.1 144.8 146.6 138.9
Switzerl. 78.7 34.1 -44.6 95.1 46.2 -48.8 141.9 65.4 -76.5 125.6 138.6 141.1 131.2
Iceland 0.1 0.3 0.3 0.1 0.8 0.8 0.3 0.9 0.6 99.8 372.6 264.2 101.3
Lichtens. 3.1 2.3 -0.8 2.2 3.4 1.2 3.1 4.6 1.5 73.7 130.6 153.9 127.1
Norway 13.8 3.4 -10.5 6.8 6.0 -0.8 17.2 13.5 -3.6 50.9 235.1 185.4 210.0
Other
OECD:
Australia 9.9 3.1 -6.7 11.0 3.5 -7.5 15.0 4.5 -10.5 116.3 126.4 115.7 119.1
Canada 17.9 8.7 -9.2 11.6 37.3 25.7 19.9 20.1 0.2 67.4 159.3 446.3 50.0
Japan 73.2 7.7 -65.5 81.6 6.2 -75.3 123.4 17.7 -105.7 116.0 140.4 83.7 263.6
Mexico 1.1 1.0 -0.1 2.6 29.1 26.4 5.8 2.9 -2.8 236.5 204.2 3000.4 9.4
NewZeal. 0.7 0.2 -0.5 0.6 0.3 -0.4 0.4 1.6 -0.3 95.1 54.5 142.7 19.3
U.S.A. 111.7 60.2 -51.5 187.7 108.2 -79.5 206.1 106.9 -99.2 174.9 101.9 187.1 91.7
Developing
Countries:
ASIA: 126.6 223.5 96.9 133.7 252.1 118.4 213.2 242.8 26.6 105.6 159.5 112.8 96.3
Indonesia 3.6 15.4 11.8 8.6 12.4 3.8 11.6 10.9 -0.7 238.9 134.9 80.5 87.9
India 9.4 14.5 5.1 17.8 61.2 43.4 31.0 67.0 36.0 189.4 174.2 422.1 109.5
Malaysia 6.3 2 -4.3 8.4 20.4 12.0 16.9 19.8 2.9 133.3 201.2 1,020.0 97.1
Thailand 4.5 79.3 74.8 7.8 53.0 45.2 12.8 19.0 6.2 173.3 164.1 66.8 35.8
Africa: 13.5 41 27.5 17.7 51.0 33.3 27.9 69.7 41.8 131.1 157.6 124.4 136.7
Egypt 1.7 18.8 17.1 2.2 18.8 16.6 4.1 21.3 17.2 129.4 186.4 100.1 113.3
America: 54.3 18.7 -35.6 69.5 34.8 -34.7 80.9 57.4 -23.5 128.0 116.4 186.1 164.9
Argentina 11.9 3.1 -8.8 6.4 10.7 4.3 5.9 11.6 5.7 53.8 92.2 345.2 108.4
Brazil 8.6 2.2 -6.4 15.6 3.4 -12.2 15.2 8.9 -6.3 181.4 97.4 154.5 261.8
South Africa 6.2 2.9 -3.3 16.6 3.9 -12.7 30.9 8.4 -22.5 267.7 186.1 164.5 215.4
Israel 4.1 8.3 4.2 7.6 17.8 10.2 11.2 14.8 3.6 185.4 147.4 214.5 83.1TERRITORY (I.-IV.)1995 (I.-IV.)1996 Index Export Index Import
US$million US$million
Import Export Balance Import Export Balance (I.-IV.) 96/95 (I.-IV.) 96/95
Total 2612.1 2693.7 81.6 3410.3 2696.6 -713.7 100.1 130.6
CEFTA: 893.6 1194.9 301.3 1042.1 1119.5 77.4 93.7 116.6
Czech
Republic 750.8 945.4 194.6 870.6 866.5 -4.1 91.7 116.0
Hungary 52.2 128.0 75.8 61.7 105.3 43.6 82.3 118.2
Poland 69.1 97.6 28.5 83.3 117.2 33.9 120.1 120.5
Slovenia 14.2 23.7 9.4 17.6 24.6 7.0 103.8 123.9
OECD 1781.7 2064.7 283.0 2247.8 2070.2 -177.6 100.3 126.2
from which:
EU 865.1 1010.7 145.6 1166.3 1133.8 -32.5 112.2 134.8
EFTA: 48.2 26.6 -21.6 54.5 26.9 -27.6 101.1 113.1
Switzerl. 43.3 18.5 -24.8 48.6 21.7 -26.9 117.3 112.2
Iceland 0.0 0.2 0.2 0.2 0.2 0.0 100.0 0.0
Lichtens. 1.2 3.2 2.0 0.2 0.6 0.4 18.8 16.7
Norway 3.8 4.6 0.8 5.5 4.4 -1.1 95.7 144.7
Other
OECD:
Australia 6.2 0.8 -5.4 3.9 1.4 -2.5 175.0 62.9
Canada 4.5 8.1 3.6 7.7 2.8 -4.9 34.6 171.1
Japan 36.0 7.8 -28.2 44.9 6.6 -38.3 84.6 124.7
Mexico 1.6 2.6 1.0 2.4 0.2 -2.2 7.7 150.0
NewZeal. 0.1 0.0 -0.1 0.1 0.1 0.0 0.0 100.0
Developing
Countries:
ASIA: 35.9 82.7 46.8 71.1 57.1 -14 198.1
162.2
46.7
8.6
72.2
44.1
160.9
62.3
76.1
76.5
135.3
19.6198.1
137.5
83.8
218.5
131.3
120.6
76.5
117.8
115.4
130.8
85.4
102.4Indonesia 3.2 4.5 1.3 4.4 7.3 2.9
India 9.9 27.0 17.1 8.3 12.6 4.3
Malaysia 5.4 5.8 0.4 11.8 0.5 -11.3
Thailand 3.2 9.0 5.8 4.2 6.5 2.3
Africa: 18.9 34.7 15.8 22.8 15.3 -7.5
Egypt 1.7 4.6 2.9 1.3 7.4 6.1
America: 26.4 24.4 -2.0 31.1 15.2 -15.9
Argentina 1.3 6.7 5.4 1.5 5.1 3.6
Brazil 3.9 3.4 -0.5 5.1 2.6 -2.5
South Africa 9.6 1.7 -7.9 8.2 2.3 -5.9
Israel 4.1 9.2 5.1 4.2 1.8 -2.4WT/BOP/12/Rev.1
Page7
Source: Czech authorities.WT/BOP/12/Rev.1
Page8
CHART 1