COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 17.12.1998 
COM(1998) 703 final 
REGULAR REPORT 
FROM THE COMMISSION 
ON 
SLOVAKIA'S 
PROGRESS TOWARDS ACCESSION COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 17.12.1998 
COM(1998) 703 final 
REGULAR REPORT 
FROM THE COMMISSION 
ON 
SLOVAKIA'S 
PROGRESS TOWARDS ACCESSION 

Table of contents 
A. Introduction 
a) Preface 
The Context of the Progress Report 
b) Relations between the European Union and Slovakia 
The enhanced Pre-Accession Strategy 
Recent developments in bilateral relations 
B. Criteria for Membership 
1. Political criteria 
1.1 Democracy and the Rule of Law 
Parliament 
The Executive 
The judicial system 
Anti-Corruption measures 
1.2 Human Rights and the Protection of Minorities 
Civil and Political Rights 
Economic, Social and Cultural Rights 
Minority Rights and the Protection of Minorities 
1.3 General evaluation 
2. Economic criteria 
2.1 Introduction 
2.2 Economic developments since the Commission published its Opinion 
Macroeconomic developments 
Structural reforms 
2.3 Assessment in terms of the Copenhagen criteria 
The existence of a functioning market economy 
The capacity to cope with competitive pressure and market forces 
2.4 General evaluation 
3. Ability to assume the obligations of Membership 
3.1 Internal Market without frontiers 
General framework 
The Four Freedoms 
Competition 
3.2 Innovation 
Information Society 
Education, Training and Youth 
Research and Technological Development 
Telecommunications 
Audio-visual 
3.3 Economie and Fiscal Affairs 
Economie and Monetary Union 
Taxation 
Statistics 
3.4 Sectoral Policies 
Industry 
Agriculture 
Fisheries 
Energy 
Transport 
Small and Medium-Sized Enterprises 
3.5 Economic and Social Cohesion 
Employment and Social Affairs 
Regional Policy and Cohesion 
3.6 Quality of Life and Environment 
Environment 
Consumer Protection 
3.7 Justice and Home Affairs 
3.8 External Policies 
Trade and International Economic Relations 
Development 
Customs 
Common Foreign and Security Policy 
3.9 Financial Questions 
Financial Control 
3.10 General evaluation 
4. Administrative capacity to apply the Acquis 
C. Conclusion 
D. Accession Partnership and National Programme for the 
Adoption of the Acquis : Global Assessment of 
Implementation 
1. Accession Partnership 
2. National programme for the adoption of the Acquis 
Annex 
Statistical Data 
A. Introduction 
a) Preface 
In Agenda 2000 the Commission said it would report regularly to the European Council on 
progress made by each of the candidate countries of Central and Eastern Europe in 
preparations for membership and that it would submit its first report at the end of 1998. The 
European Council in Luxembourg decided that 
"From the end of 1998, the Commission will make regular reports to the Council, together 
with any necessary recommendations for opening bilateral intergovernmental conferences, 
reviewing the progress of each Central and East European applicant State towards accession 
in the light of the Copenhagen criteria, in particular the rate at which it is adopting the Union 
acquis. Prior to those reports, implementation of the accession partnerships and progress in 
adopting the acquis will be examined with each applicant State in the Europe Agreement 
bodies. The Commission's reports will serve as a basis for taking, in the Council context, the 
necessary decisions on the conduct of the accession negotiations or their extension to other 
applicants. In that context, the Commission will continue to follow the method adopted by 
Agenda 2000 in evaluating applicant States' ability to meet the economic criteria and fulfil the 
obligations deriving from accession. 
A dynamic approach should be maintained in assessing the progress made by applicant States 
in the regular reports which the Commission will submit to the Council." 
The European Council in Cardiff supported those conclusions, stating that "The Union's 
priority is to maintain the enlargement process for the countries covered in the Luxembourg 
European Council conclusions, within which they can actively pursue their candidatures and 
make progress towards taking on the obligations of membership, including the Copenhagen 
criteria. Each of these candidate countries will be judged on the basis of the same criteria and 
will proceed in its candidature at its own rate, depending on its degree of preparedness. Much 
will depend on the efforts made by the candidate countries themselves to meet the criteria. 
All will benefit from strengthened relations with the EU including through political dialogue 
and tailored strategies to help them prepared for accession." 
In accordance with the guidance provided by these Council Conclusions, the progress report 
on Slovakia follows the same structure as the Opinion. It 
- describes the relations between Slovakia and the Union, particularly in the framework of the 
Europe Agreement; 
- analyses the situation in respect of the political conditions set by the European Council 
(democracy, rule of law, human rights, protection of minorities) 
- assesses Slovakia's situation and prospects in respect of the economic conditions mentioned 
by the European Council (functioning market economy, capacity to cope with competitive 
pressures and market forces within the Union) 
- addresses the question of Slovakia's capacity to adopt the obligations of membership, that 
is, the acquis of the Union as expressed in the Treaty, the secondary legislation and the 
policies of the Union 
It also covers judicial and administrative capacity as requested by the Madrid European 
Council which underlined the necessity for the candidate countries to adapt their 
administrative structures so as to guarantee the harmonious implementation of Community 
policies after membership. 
This approach ensures equal treatment for all the candidate countries. The report takes into 
consideration progress since the Opinion. It looks at whether intended reforms referred to in 
the Opinion have been carried out and examines new initiatives, including those directly 
related to addressing Accession Partnership priorities. The report contains a separate section 
which examines the extent to which Slovakia has addressed the short term priorities set out in 
the Accession Partnerships. 
While the assessment of progress in meeting the political and acquis criteria focuses on that 
which has been accomplished since the Opinion, the economic assessment is based on a 
longer term evaluation of Slovakia's economic performance. The assessment of progress 
made in adopting the acquis has been made on the basis of adopted legislation rather than 
legislation which is in various stages of either preparation or Parliamentary approval. Only in 
this manner was it possible to objectively measure and compare concrete progress in 
preparation for accession. 
The report draws on numerous sources of information. The candidate countries were invited 
to provide information on progress made in preparations for membership since the publication 
of the Opinion. Their presentations at the meetings held under the auspices of the Europe 
Agreement, their National Programmes for the Adoption of the Acquis and the information 
provided in the context of the analytical examination of the acquis provided were additional 
sources of information. Council deliberations on the Opinion and the reports and resolutions 
of the European Parliament on the Commission Opinions1 and in particular the report on the 
application of Slovakia for accession to the EU prepared by Mr. Wiersma were taken into 
account in the preparation of the reports. The Commission also used assessments made by the 
Member States, particularly with respect to the political criteria for membership and the work 
of various international organisations, and in particular the contributions of the Council of 
Europe, the OSCE and the IFIs as well as that of non-governmental organisations in 
preparation of the regular reports. 
European Parliament Doc. 224.339 'Report on the Communication from the Commission 
Agenda 2000' (Rapporteurs : A. Oostlander and E. Baron Crespo; Co-rapporteurs: M. 
Aelvoet, J. Dormer, O. Von Habsburg, E. Caccavale, F. Kristoffersen, M. Hoff, C. Carnero 
Gonzales, P. Bernard-Raymond, R. Spéciale, J. Wiersma, J.W. Bertens) 
b) Relations between the European Union and Slovakia 
The enhanced Pre-Accession Strategy 
On 30 March 1998 the accession process was formally launched by a meeting of the Ministers 
for Foreign Affairs of the fifteen EU Member States, the ten Central and East European 
applicant states and Cyprus. In advance of this meeting country specific Accession 
Partnerships were adopted to support the applicant countries in their preparations for 
membership. These documents set out the priorities for further work and the supporting 
financial assistance available from the EU. In March Slovakia presented the first version of a 
National Programme for the Adoption of the Acquis (NPAA) which describes in more detail 
the actions needed to reach the objectives set out in the Accession Partnership. An analytical 
examination of the acquis ("screening") started on 3 April. Pre-accession aid will be 
increased substantially. Alongside the Phare programme, it will, as from the year 2000, 
comprise aid for agriculture and a structural instrument which will give priority to measures 
similar to those of the Cohesion Fund in environment and transport. The Phare programme 
will concentrate on institution building and investment in other areas. 
Recent developments in bilateral relations 
Slovakia has made progress in the implementation of the Europe Agreement which is being 
implemented on schedule. While the number of trade issues with Slovakia is limited, their 
management has not demonstrated a clear understanding of and respect for the obligations 
under the Europe Agreement on the part of the Slovak authorities. Safeguard measures and 
export restrictions have been introduced in breach of the obligations and procedural 
requirements of the Europe Agreement. 
The Association Council met in April 1998 following the Association Committee meeting 
held in September 1997. The system of subcommittees continues to function as a forum for 
technical discussions. 
Since the issuing of the Opinion the Joint Parliamentary Committee comprising 
representatives of the Slovak and European Parliaments met twice in November 1997 and 
May 1998. 
Slovak trade with the EU has continued to grow and to increase its share of total trade. 
During the first five months of 1998 Slovak experts to the EU accounted for 53.8% of 
Slovak's total exports (Germany 27.3%, Austria 7.5%, Italy 7.3%). 
Imports from the EU amounted to 48% of Slovakia's total imports (Germany 23.4%, Italy 
6.2% and Austria 4.7%). Slovakia's trade deficit with the EU in 1997 amounted to 828 
MECU, while in the first four months of 1998 it amounted to 121 MECU. 
Under the Europe Agreement an adaptation protocol, covering in particular agricultural and 
processed agricultural products, has been signed to take into account the results of the 
Uruguay Round and the accession of Austria, Finland and Sweden to the EU. 
Several trade issues have been resolved. For example, the Slovak Government reintroduced 
in July 1997 an import surcharge of 7% covering 80% of imported goods. This was gradually 
reduced and phased out ahead of schedule on 1 October 1998. Compulsory certification has 
developed into a non-tariff barrier to trade but since July 1998 the number of products covered 
by mandatory certification requirements has been decreased. 
The 1998 Phare programme consists of a national allocation (45.9 MECU), based on the 
Accession Partnership priorities, to support in particular Justice and Home Affairs, the 
strengthening of democracy, economic reforms and regional policy, as well as the 
participation in Community programmes and Tempus. An additional 5 MECU have been 
allocated for a cross-border co-operation programme. 
In addition, funding will be provided under the Catch-up Facility2, for projects in the amount 
of 7.5 MECU. 
Under a new facility for large scale infrastructure projects, cofinanced by the European 
Investment Bank and the International Financial Institutions, 15 MECU will be provided. 
Slovakia also participates in and benefits from Phare funded multi-country and horizontal 
programmes such as customs, nuclear safety, environment, small and medium sized 
enterprises, statistics, public administration reform and TAIEX. 
B. Criteria for membership 
1. Political criteria 
Introduction 
In its 1997 Opinion on Slovakia's application for EU membership, the Commission concluded 
that : 
"Slovakia does not fulfil in a satisfying manner the political conditions set out by the 
European Council in Copenhagen, because of the instability of Slovakia's institutions, their 
lack of rootedness in political life and the shortcomings in the functioning of its democracy". 
In the Accession Partnership on Slovakia "free and fair Presidential, national and local 
elections, effective opposition participation in parliamentary oversight committees and 
supervisory boards, and the adoption of legislative provisions on minority language use and 
related implementing measures", were mentioned as short-term political priorities. 
Special EU financial assistance given to Latvia, Lithuania, Slovakia, Bulgaria and Romania 
for projects aimed at accelerating EU accession preparations in certain areas. 
Recent developments 
Parliamentary elections took place in September 1998. Despite concerns about the possible 
implications of amendments to the election law adopted in May 1998, the elections were 
conducted in a free and fair manner. The high level of participation (84.2%) in the elections 
showed a clear commitment of the Slovak electorate to the democratic process. 
The new parliament met on 29 October and appointed the Speaker and parliamentary 
committees. On 30 October a new four-party coalition government was formed. The leaders 
of the four coalition parties have undertaken in a joint letter to the Commission to speed-up 
integration to the EU, fulfil the Copenhagen criteria as soon as possible and focus on the 
short-term political priorities as defined in the Accession Partnership. 
In a declaration by the Presidency on 30 September 1998 the Union reacted favourably to the 
electoral process, recalled its long-standing commitment to the process of integration of the 
Slovak Republic into European structures, indicated that the manner in which the elections 
were conducted constitutes a positive step in that direction and encouraged the future 
government and parliament to rapidly address those shortcomings that have so far hampered 
the Slovak Republic's accession process. 
1.1. Democracy and the Rule of Law 
The Parliament 
Concerning the September 1998 elections, the preliminary assessment of the OSCE 
observation mission was that, although an atmosphere of political polarisation led to lack of 
confidence in the overall process by many Slovak citizens, the elections as such took place in 
correct and acceptable manner. However, the OSCE mentioned that the State Television 
failed to fulfil its obligation to give a balanced picture of the campaign and largely favoured 
the incumbent government. 
The situation regarding the upcoming municipal elections is less clear. On 1 July 1998 the 
Parliament approved an Amendment to the Municipal Election Law and Municipal 
Establishment Act which institutionalises ethnic differentiation in the electoral system under 
the supposed aim of protecting minorities. The advantage of this somewhat unique and 
cumbersome approach via-à-vis other well tested systems for minority representation is 
unclear. The OSCE High Commissioner on National Minorities had indicated that the draft 
law violated a number of international principles and standards on free elections and 
individual human rights. He subsequently regretted that, contrary to the usual practice, his 
objections were not taken into account and that the Law had been adopted without the 
amendments required to ensure that it would conform to the international standards. On 7 
August 1998 number of opposition deputies challenged the law at the Constitutional Court 
which, on 15 October, declared unconstitutional the most important contested provisions. The 
impact of this verdict on the conduct of the municipal elections is unclear. 
Concerning other aspects of the functioning of parliament, the weaknesses identified in the 
Opinion have not been fully addressed. The committees of inquiry mentioned in the Opinion 
were abolished following a judgement of the Constitutional Court and progress could be noted 
in the establishment of the new parliamentary committees responsible for monitoring the 
secret services (SIS) and the military intelligence services (VS). However, opposition 
representation on the SIS was not completed due to the absence of agreement by the 
parliamentary majority. A representative of the opposition was nominated to the Supervisory 
Board of the National Property Fund (NPF), but resigned on 14 September 1998. The 
functioning of these committees and boards was not fully satisfactory. For instance, the SIS 
did not present its 1997 report to the Committee and the NPF restricted the activities of the 
opposition representative and disregarded board resolutions taken at his initiative. This 
situation is reflected in the conclusions of the Joint EU - Slovak Republic Parliamentary 
Committees: while the 5th Committee in November 1997 had expressed satisfaction at 
progress reached, the 6th Committee, held in May 1998, expresse disappointment at the lack 
of further progress. 
Finally, the Slovak Parliament chose not to follow the ruling of the Constitutional Court on 
the re-instatement of the mandate of two members of parliament. This weakens the respect 
for parliamentary mandates normally guaranteed in a fully functioning parliamentary 
democracy. 
The Executive 
A tendency towards further concentration of power in the hands of the incumbent Government 
continued. 
As a consequence of the completion of the previous President's term of office on 2 March 
1998, repeated rounds of votes took place in Parliament without reaching the necessary three 
fifths majority to elect a new President. In accordance with the provisions of the Constitution, 
while the post has been kept vacant, most presidential powers have been transferred to the 
Government, which immediately passed them on to the ex-Prime Minister. He used them 
controversially. 
On March 3, the day in which the ex-Prime Minister was entrusted with such powers, three 
rather radical decisions were taken: i) the referendum on NATO entry and direct presidential 
elections, which had been re-launched by the President on 20 February, was cancelled, ii) 28 
Slovak Ambassadors (out of a total of 42 in post abroad) were recalled, and iii) an amnesty 
was granted to all those who could possibly have responsibilities derived from the failed 1997 
referendum as well as the unresolved case of the kidnapping of the former President's son in 
1996. The EU Presidency reacted with a statement on behalf of the Union: "The decision by 
the Prime Minister to exercise the presidential powers to grant amnesties in these cases brings 
into question his commitment to commonly accepted principles of good governance and the 
rule of law. These actions do not make a positive contribution to Slovakia's efforts to prepare 
for EU membership". The statement was rejected by the Government. 
The Slovak Constitution did not allow for the resignation or appointment of a new 
Government in the absence of a President. The risk of an institutional impasse was averted 
with the unanimous adoption of an amendment to the Constitution on 14 July 1998. This 
allows, in the case of vacancy in the Presidency, for the transfer of a number of presidential 
powers, previously untransferable, to the Speaker of the Parliament, including that of 
appointing a Government after the elections. It should be noted that the Speaker of the 
Parliament made as well controversial use of these powers when, on August 20, he appointed 
13 generals. 
Although the office of President remains vacant, it is expected that once a new government is 
formed and the Slovak parliament resumes its sessions, a new President will be elected. 
No progress has been made beyond the preparation of a draft Civil Service Law. The absence 
of such a law leaves the civil service insufficiently protected from political interference. 
The Judiciary 
There have been no major changes in this area since the opinion3. The number of judges 
decreased from 1198 to 1136. 
The Constitutional Court continued to play the important role of balancing and preserving 
the powers of the different organs as defined in the Constitution. However the rulings of the 
court have not been followed in a number of important cases, and in particular in the follow 
up to the case, reported in the Opinion, of a Member of Parliament whose mandate was 
removed in December 1996 and of another, belonging to the SNS party, who was deprived of 
the seat to which he was entitled following the death of a Member of Parliament and in the 
case on the decision of the Ministry of the Interior not to include the question on the direct 
election of the President of the Republic on the ballot paper in the May 1997 referendum. 
Anti-corruption measures 
In its Opinion on Slovakia the Commission stated that the fight against corruption needed to 
be made more effective. In spite of some efforts undertaken there has been no major 
improvement. The following measures were taken: 
• In August 1997 the Ministry of the Interior adopted, in agreement with the Ministry of 
Finance, a decree to prevent money laundering and suspicious banking operations. 
• On 16 December 1997 Parliament adopted legislation amending the Criminal Code and 
defining bank and tax secrecy more precisely. 
• The Ministry of Justice is currently preparing the ratification and implementation of the 
OECD Agreement on fighting corruption of foreign public officials in international business 
The bill establishing the organisation of the prosecutor's office and the status of its 
members was passed in October 1996, contrary to what was indicated in the Opinion. 
10 
transactions. In addition, the Phare catch-up facility4 includes approximately 1 MECU to 
fight corruption through the strengthening of the Supreme Audit Office. 
However, these measures can only be considered partial and do not provide a sufficient solution 
to the problem. 
1.2. Human Rights and the Protection of Minorities 
Slovakia has already acceded to most of the international human rights instruments. On 22 
June 1998 Slovakia ratified the European Social Charter. 
Civil and Political Rights 
Basic civil and political rights continue to be respected in Slovakia. The Slovak authorities 
made efforts in the area of treatment of persons held in police custody, in line with the 
recommendations of the European Committee for the Prevention of Torture as well as in the 
treatment of refugees. 
The NGO sector has continued to thrive in Slovakia, in spite of tensions with Government and 
the Phare Programme has featured amongst the main sources of support in this area. The Law 
on Non-profit Organisations (that was being examined at the time of the Opinion) and the 
Law on Non-investment Funds were adopted in 1997. 
The Government exercised a high degree of control over the public radio and television 
networks as has been confirmed during the recent election campaign. Some disturbing cases 
of intimidation of journalists and media have been reported. 
Economic, Social and Cultural Rights 
There have been tensions in the social dialogue: The Wage Regulation Act on 2 September 
1997 led to the interruption of the social dialogue and the Wage Agreement for 1998 was not 
signed. The situation worsened when the Government approved on January 1998 the creation 
of the Economic-Social Board, which unites Labour Unions not members of the 
Confederation of the Trade Unions, Government employers and several civic alliances. This 
has been considered by the main Confederation as a parallel Government-supported structure 
designed to challenge the Confederation. 
Special EU financial assistance given to Latvia, Lithuania, Slovakia, Bulgaria and Romania 
for projects aimed at accelerating EU accession preparation in certain areas. 
11 
Minority Rights and the Protection of Minorities 
There has been no progress on the adoption of minority language legislation and no 
significant change in the protection of minorities. 
In spite of the commitments made to the EU and the OSCE High Commissioner for National 
Minorities and in spite of the Constitutional Court ruling of August 19975, which states that 
the non-existence of a law regulating the use of minorities languages is at variance with the 
Slovak Constitution, no significant progress has been made on this matter. 
The Slovak Government issued in November 1997 a Memorandum on the issue and invited 
the OSCE, the Council of Europe and the European Commission to participate in expert 
discussions. These took place in March and May 1998. No tangible results have emerged 
from these discussions. 
The legal vacuum on the use of minority languages, combined with the implementation of the 
State Language Law, has given rise to the following problems: In June 1997, the traditional 
bilingual graduation certificates were replaced by Slovak only certificates. In connection with 
the issue several teachers were harassed and two headmasters of grammar schools with 
Hungarian language instruction were dismissed on 15 March 1998. The Ministry of Education 
stated on 20 January 1998 that bilingual certificates will be issued when requested from parents 
of national minority children but such certificates will not have official validity and will have to 
be paid for. 
It should be positively noted however that on 2 July 1998 the Parliament rejected the 
controversial Educational Act Amendment, which could have discriminated against ethnic 
minorities by prohibiting the teaching of subjects such as geography and history in languages 
other than Slovak. 
Concerning the Hungarian minority, no progress has been made in the implementation of the 
Basic Treaty with Hungary because the two parties could not agree on the composition of the 
committee dealing with minority rights. The inclusion of representatives of the Hungarian 
minority in the new Slovak Government would give a positive signal to the Hungarian 
minority regarding their status in Slovakia. 
The Roma minority continued to suffer discrimination and lack of protection by the police as 
mentioned in the Opinion. The Bureau of Legal Protection for Ethnic Minorities in Slovakia, 
reported continuing abuse of the Roma by the police and discrimination by officials in the 
areas of Moldava nad Bodvou. Harassment and lack of protection were the reasons given by 
the UK authorities for granting political asylum to some Slovak Roma. 
On the positive side, several initiatives were taken by the Slovak Government in support of 
less favoured families (elimination of nursery school fees, special courses, etc.) which 
benefited the Roma. In November 1997, the Government approved a Plan for Solving 
The Constitutional Court ruled in August 1997 that article 3 section 5 of the Language 
Law, stating that written communications intended for public-legal administration matters 
must be in the State Language, is contrary to the Slovak Constitution. 
12 
Romany Problems. The programme outlines tasks for the state administration in the fields of 
education, employment, and housing with SKK 1,7 bn (ECU 42.1 mn) to be spent by 2002. 
The programme needs further development. It has met with mixed reactions from the Roma 
and minority rights groups who point out that funds are not committed on the budget and that 
most of the main initiatives are postponed until after 1999. 
1.3. General evaluation 
During the period July 1997 to end September 1998 there has been is a lack of stability in the 
institutions guaranteeing democracy, the rule of law and protection of human rights, as 
reflected by the inability to elect a President, the controversial use of the transferred 
presidential powers, the unsatisfactory functioning of the parliamentary committees and the 
disregard for the Constitutional Court rulings. There have been problems in the treatment of 
minorities and a lack of progress concerning the adoption of legislation on minority 
languages. 
Against this background, parliamentary elections took place in Slovakia in September 1998, 
which, in spite of concerns about the newly adopted electoral law and the behaviour of the 
state television, were evaluated by the OSCE as free, fair and efficiently conducted. 
Moreover, the high level of participation of the electorate reflected a high degree of 
democratic maturity amongst the population. 
The acceptance of the results by all parties and the constructive attitude of the former 
opposition parties in preparing to form a new government indicate that a different political 
climate is emerging and that a window of opportunity exists for a new government majority to 
address the above mentioned shortcomings.-
A new government is in place. As soon as it has had sufficient time to put its programme into 
practice the Commission will be able to assess its ability to overcome the weaknesses 
identified in the Opinion. The new Government now has an opportunity to demonstrate 
Slovakia's commitment to democratic principles, respect for human rights and the rule of law. 
2. Economic criteria 
2.1. Introduction 
In its 1997 Opinion on Slovakia's application for EU membership, the Commission concluded 
that: 
"Slovakia has introduced most of the reforms necessary to establish a market economy"; it 
"should be able to cope with competitive pressure and market forces within the Union in the 
medium term, but this would require more transparent and market-based policies". 
In examining the economic developments in Slovakia since the Opinion, the Commission's 
approach was guided by the conclusions of the European Council in Copenhagen in June 1993 
13 
which stated that membership of the Union requires: 
• the existence of a functioning market economy; 
• the capacity to cope with competitive pressure and market forces within the Union. 
In the analysis below, the Commission has followed the methodology applied in the Opinion. 
2.2. Economic developments since the Commission published its Opinion 
Although economic growth remained among the highest in the region and the external trade 
deficit was lowered from its very high 1996 level, the overall macroeconomic situation 
worsened in 19976. The government deficit deteriorated significantly, external deficits 
remained unsustainable high, and both inflation and unemployment increased, reversing some 
of the progress that was made in previous years. The country continues to be confronted with 
very similar economic difficulties in 1998... The core economic policy problems are that 
monetary and fiscal policies are not sufficiently co-ordinated, and that economic restructuring 
is proceeding too slowly. 
Macroeconomic developments 
In 1997, Slovakia recorded its fourth consecutive year of strong economic growth. After 
having been close to 7% for two years, real GDP growth slowed down only marginally in 1997 
to 6.5%. It continued to expand by 6.1% in the first half of 1998. Overall economic 
developments are still driven by domestic demand, although its growth rate declined notably. 
This decline was mainly the result of a deceleration of the growth of government consumption 
and investment. Nevertheless, investment was still growing fast, further raising its already 
high share in GDP. Starting in the fourth quarter of 1997, private consumption growth 
weakened as a result of lower wage increases, after the introduction of new wage regulations 
for enterprises. The direct effects of the Russian crisis are expected to remain limited, given 
the small proportion of exports that goes to Russia (2.4%) and the confined exposure of 
Slovak banks. 
While domestic demand growth slowed down, the contribution of external trade to economic 
growth improved as a result of the economic recovery in the European Union. The growth of 
real exports of goods and services accelerated to 16% in the first half of 1998, compared to 
In 1998, the Slovak Statistical Office has changed its methodology for recording external 
trade to apply international standards. However, as the revised figures for 1997 have not 
yet been published, a full comparison of trade figures between different years is not 
possible. The present report has used the currently available data. It is expected that the 
revised 1997 data will most probably contain a significant upward revision of the trade 
deficit. This revision might also lower GDP growth in 1997. Therefore, it seems likely that 
the revision will support the view that macroeconomic developments in 1997 were less 
favourable than in 1996. 
14 
6% in 1997 and to a negative real growth rate in 1996. Demand for imports has been restricted 
by the introduction of a new 7% import surcharge in July 1997 and of checks at border 
crossings of the certification of imported goods in September 1997. Nevertheless, real imports 
grew rapidly in the first half of 1998. Consequently, the current account deficit increased to 
almost 11% of GDP in the first half of 1998. In compliance with the announced schedule, the 
import surcharge was lowered to 5% on 1 January 1998, to 3% on 1 April 1998, and 
eliminated on 1 October 1998. 
Although inflation remains relatively low compared to other countries in the region, its 
gradual decline has been arrested since the end of 1996. This can mainly be explained by high 
domestic demand, some adjustment of administered prices, indirect tax increases and the 
introduction of the import surcharge. The average inflation rate in the first eight months of 
1998 was 7.1%, compared to 6.2% in the same period of the previous year. 
Slovakia: Main economic trends 
RealGDP growth rate percent 
Inflation rate 
annual average percent 
D ecem ber-on-D ecem ber percent 
U nem ploym ent rate, end-year 
ILO definition percent 
registered1 percent 
General government budget balance percent of G DP 
Current account balance per cent of G DP 
billion ECU 
Foreign debt 
debt/export ratio2 per cent 
gross foreign debt billion ECU 
Foreign direct investment inflow 
net inflow according to EBRD per cent of G D P 
balanceofpaymentsdata m /Won ECU 
Source: Com m ission services, national sources, EBRD 
1 From Decern ber 19 97 the National Labour 0 ffice has c 
The unemploym ent rate based on the old definition iva 
2 G ross hard currency debt as a precentage of exports c 
3 EBRD Projection for 199 8 1994 
4.9 
13.4 
1 1 .6 
13.7 
14.6 
NA 
4.8 
0.6 
48 
3.6 
1 .7 
198 
hanged its 
s 13,4% in L 
if goods an ' 1995 
6.9 
9.9 
7.2 
13.2 
13.1 
N A 
2.3 
0.3 
53 
4-4 
1 .1 
148 
unem ploym 
December 1 
d services 1996 
6.6 
5.8 
5.4 
1 1 .1 
12.8 
N A 
-1 1 .2 
-1 .7 
72 
6.1 
1 .1 
157 
ent definitio 
997. 1997 
6.5 
6.1 
6.4 
1 1 .6 
1 2.5 
N A 
-6.9 
-1 .2 
90 
8.7 
0.3 
45 
n. 1998 
6.1 
6.9 
5.9 
12.1 
13.8 
-10.9 
-1 .0 
96 
10.3 
202 3 latest 
Jan-Jun 
Ja n-S ep 
S ep-on--S ep 
Jan-Mar 
Aug 
Jan-Jun 
Jan-Jun 
Ju n 
Ju n 
In 1997 and 1998 the number of registered unemployed has been constantly higher than in the 
corresponding period of the previous year. In August 1998, the number of unemployed stood 
at a four-years high. This reversed the earlier trend by which fast economic growth had a 
beneficial impact on unemployment and the unemployment rate had declined from a peak of 
15.2% in January 1995 to 12.0% in October 1996. The official registered unemployment rate 
probably overestimates actual unemployment: the internationally comparable ILO 
unemployment rate was 11.6% in 1997 and 12.1% at the end of the first quarter of 1998. 
As a result of disappointing corporate profit tax revenues, and of higher expenditures for 
highway construction, public sector wages, interest payments, and social security benefits, the 
general government deficit is estimated to have surged from 1.3% of GDP in 1996 to about 5% 
in 19977. Members of the opposition at the time questions the accuracy of the statistics 
7 The general government deficit includes the deficits of the central government, the social security system and local 
governments, and extra-budgetary investment in infrastructure and housing. 
15 
claiming that the deficit was higher than reported; The 1998 budget foresees a central 
government deficit of only 0.7% of GDP, compared to 1.8% in 1997. Because the Ministry of 
Finance changed the way it reports the state budget execution - principal payments on the 
state debt are now excluded in line with international practices - comparisons between 1997 
and 1998 are not possible. Nevertheless, the results for the central government budget from 
the first eight months* of 1998 indicate that the 1998 budget deficit will be significantly higher 
than targeted. Moreover, a large deficit has been emerging in health care. 
The government is facing increasing difficulties in financing its deficit. Interest rates on 
domestic financial markets are very high because market liquidity is squeezed by the ongoing 
restrictive monetary policy, which was itself necessary to counter excess domestic demand. 
The government's high financing needs crowd out credit to the private sector. Moreover, 
international financial markets became more reluctant to finance transition economies with 
weak banking sectors after the financial crisis in south-east Asia and Russia. The worsening of 
Slovakia's credit ratings reduced its access to international financial markets. Nevertheless,, in 
the first half of 1998, the government issued eurobonds in dollar, yen and mark for a total 
amount of nearly ECU 900 million. The issue had been postponed several times and its 
coupon rate was finally significantly higher than for previous Slovak issues. The ratio of gross 
external debt to exports, which used to be low in Slovakia, has almost doubled since 1995, 
and is now close to 100%. The structure of foreign debt is increasingly short term, which 
could cause problems if the observed reluctance to invest in emerging markets after the 
Russian crisis continues. 
Until 1 October 1998, Slovakia had a fixed exchange rate against a basket of 60% DEM and 
40% USD, with a fluctuation margin of plus/minus 7%. On that day, the National Bank of 
Slovakia decided to let the koruna float, because it was no longer able to defend the currency 
against mounting domestic devaluation pressures. 
Structural reforms 
Privatisation has continued through direct sales, often at preferential rates, with the possibility 
of spreading the payments to the National Property Fund over a period of up to 10 years. A 
large majority of enterprises is now in private hands, and the share of GDP generated by the 
private sector has increased to more than 80%. An important number of privatisations have 
lacked transparency and fairness. Additional examples of unannounced sales of shares of 
listed enterprises at sharply reduced prices, often to unknown buyers, have been recorded 
since the publication of the Opinion. 
Despite the advanced state of privatisation, the government still exerts considerable influence 
over the economy. A group of "essential" enterprises has been excluded from privatisation. 
Besides the usual state owned enterprises, such as public utilities, post and railways, this 
group also comprises enterprises in the armaments and machinery sectors, the financial sector, 
telecommunications, pharmaceuticals, and agro-industry. The majority of these would benefit 
from privatisation and independent management for their further development. The 
controversial Enterprise Revitalisation Act, which was approved after the publication of the 
Opinion, is another illustration of the outgoing government's practice to intervene in the 
enterprise restructuring process. Under this Act, debts to the budget and banks can be 
16 
rescheduled or cancelled through a secretive and untransparent procedure, with important 
political involvement. 
Two thirds of Slovakia's biggest enterprises posted lower profits in 1997 than in 1996. At the 
same time, most foreign enterprises were able to increase their profits. Enterprises do not face 
sufficient financial discipline in the form of "hard budget constraints" - there is still an 
expectation by enterprise managers that the government or the banks will bail them out when 
they incur losses. The other reasons for the lack of restructuring in domestic enterprises are 
the continued involvement of the state, a weak banking sector, and insufficient foreign direct 
investment. 
Slovakia had no effective bankruptcy legislation before 1998. The 1993 law included 
conciliation procedures and exemptions that obstructed a quick and just procedure. In 
February 1998, the Bankruptcy Law was amended to make it mr e effective. 
So far, Slovakia has not been able to attract significant amounts of foreign direct investment 
(FDI). The few important enterprises with foreign ownership tend to do better than 
domestically owned enterprises. In order to increase FDI inflows the Government has 
introduced new tax reductions for foreign investors and a contact point for multinational 
firms. 
Slovakia: Main Indicators of economic structure 
(all data for 1997 unless otherw ise indicated) 
Population million 5.4 
GDP per head PPS-ECU 8900 
as % of EU-15 average percent 47 
Share of agriculture in: 
gross value added p e r ce nt (1 99 5) 6.0 
employment percent 18.6 
In vestm en t-to-G D P ratio percent 39 
Gross fo re ig n deb t/G DP percent 5 1 
Exports ofgoods & services/GDP percent 56 
S tock of fore ign directinvestment1 billion ECU 0.9 
ECU per head 168 
s ource : c om m ission se rvices, nation a I sou rce s, t B R D \ 
' F D I stock converted at end-1 997 exchange rate of 1 EC U =$1.10 421 
The high and volatile real interest rates, which resulted from the restrictive monetary policy 
and pressures on the exchange rate, created additional difficulties for the weaker banks, 
especially for those institutions that depend on the interbank market for their financing. IRB, 
the third largest bank, encountered serious liquidity problems, and had to be put under forced 
administration by the National Bank of Slovakia in December 1997. Because the main private 
shareholder (vsz Steel group) refused to increase the capital, the bank was recapitalised in 
June 1998 by the state-owned Slovak Insurance Company, which became the majority 
shareholder. 
After a significant reduction in 1996, the proportion of bad loans in the three biggest banks, 
which are fully or partly state-owned, increased again in 1997 and the first quarter of 1998, to 
reach 39% of total loans. At the end of the first quarter of 1998, five banks did not fulfil the 
capital adequacy requirements. < 
17 
Capital markets remain fragmented and illiquid, and the legislative framework needs to be 
developed further. The unequal treatment of minority shareholders in listed companies in the 
privatisation process also reduced the attractiveness of the stock exchange, especially for 
foreign investors. As a result, the official share index (SAX) has declined from an all time high 
of 405 in February 1994 to less than 100 in October 1998. Because of the lack of foreign 
involvement, the stock exchange was largely unaffected by the Russian crisis. 
2.3. Assessment in terms of the Copenhagen criteria 
The existence of a functioning market economy 
The existence of a functioning market economy requires that prices, as well as trade, are 
liberalised and that an enforceable legal system, including property rights, is in place. 
Macroeconomic stability and consensus about economic policy enhance the performance of a 
market economy. A well-developed financial sector and the absence of any significant barriers 
to market entry and exit improve the efficiency of the economy. 
The price system and trade and foreign exchange regimes have been mostly liberalised, and 
allocation decisions are largely decentralised since the privatisation process is almost 
completed. An independent judicial system is in place, which has proved on several occasions 
that it is able to protect property rights. In general, there are no significant legal barriers to 
market entry. 
However, on various occasions, the Slovak authorities have been favouring non-market-based 
mechanisms for price formation and resource allocation. Examples of this are the continued 
use of non-competitive and secretive sales in the privatisation process, the refusal to sell a 
number of state-owned enterprises that would benefit from privatisation for their further 
development, and political involvement in the enterprise restructuring process through the 
Enterprise Revitalisation Act. The authorities also made repeated use of protective 
administrative measures to reduce imports, instead of making the necessary macroeconomic 
adjustments. 
About one fifth of prices - mainly energy, some public services and rents - are still 
administered and kept below market prices, which distorts relative prices. The continued 
subsidies on household energy consumption have negative effects on energy efficiency, and 
lead to higher demand and to unnecessarily high imports of energy. The curbs on rents, in 
their turn, increase the concentration of economic activity in certain regions, and reduce 
private investment in residential construction. Moreover, the more restrictive Price Law that 
was introduced in 1996 can be used to apply controls on normal or seasonal price fluctuations, 
thus distorting the role of market price signals. 
The continued lack of transparency and fairness in the privatisation process remains 
problematic. The treatment of various economic agents is unequal and distorts the level 
playing field on domestic and foreign markets. The possibility for new owners to reduce their 
payments to the National Property Fund through investment has distorted investment 
decisions and has led to excessive and inefficient capital expenditures in these enterprises. 
18 
Although the inflation rate is still among the lowest in the region and economic growth among 
the strongest, the underlying macroeconomic situation worsened since July 1997. The 
continuation of high external deficits, in combination with a rapid deterioration of public 
finances, has significantly reduced the degree of macroeconomic stability^ High and volatile 
interest rates, which were needed to counter the expansionary fiscal policy, have significantly 
reduced and distorted the planning horizon of economic agents. 
Before 1998, there was no effective bankruptcy legislation. In February 1998, the Bankruptcy 
Law was amended to address this. Although the changes are appropriate, it is still too early to 
judge if the relevant institutions will be able to implement the law effectively. 
The Slovak financial sector still has considerable restructuring problems to resolve. Banks 
have a high proportion of non-performing loans and the sector is dominated by a limited 
number of state-owned banks. Consequently, banks are not able to play their mediation role to 
the full extent. Because of the precarious situation of the government budget, the state will not 
be able to cure the solvency problems of the state-owned banks. Therefore, there is a need to 
prepare a rapid sale of the banks to strategic, most probably foreign, investors. Selling to 
domestic industrial groups, as happened with the initial privatisation of IRB, does not 
fundamentally improve the financial sector's capacity to restructure. Capital markets remain 
illiquid and fragmented, and progress is still needed in their regulation. 
Overall, a sufficiently convincing track record of consistent economic reform is missing. No 
significant progress has been made on the establishment of a medium-term economic policy 
framework. 
Although Slovakia has implemented most of the reforms necessary to establish a market 
economy, the outgoing government continued to intervene in price formation and resource 
allocation, using intransparent or non-market-based mechanisms. Macroeconomic stability 
has deteriorated while the problems in the financial sector are damaging overall economic 
efficiency. The introduction of bankruptcy legislation was a positive development, but will 
need to be confirmed by sustained implementation. Therefore the functioning of the Slovak 
market economy still needs to be improved. 
The Capacity to Cope with Competitive Pressure and Market Forces within 
the Union 
Slovakia's ability to fulfil this criterion depends on the existence of a market economy and a 
stable macroeconomic framework, allowing economic agents to make decisions in a climate 
of predictability. It also requires a sufficient amount of human and physical capital, including 
infrastructure. State enterprises need to be restructured and all enterprises need to invest to 
improve their efficiency. In addition, the more access enterprises have to outside finance and 
the more successful they are at restructuring and innovating, the greater will be their capacity 
to adapt. Overall, an economy will be better able to take on the obligations of membership the 
higher the degree of economic integration it achieves with the Union prior to accession. Both 
the volume and the range of products traded with EU Member States provide evidence of this. 
19 
The existence of important fiscal and external deficits has diminished macroeconomic 
stability in Slovakia. High and volatile interest rates have reduced the stability and 
predictability of the macroeconomic environment in which economic agents have to make 
their production, consumption and investment decisions. Uncertainty is further increased by 
the lack of a medium-term framework to assure the consistency of macroeconomic and 
structural policies. The lack of consistency of economic policies is one of the most important 
causes of continued and worsening macroeconomic and structural problems in Slovakia. 
Nevertheless, the Slovak economy has a number of important assets to be able to face 
competitive pressure and market forces in the single market. Despite rapid increases in wages 
in past years, wage costs remain relatively low and the labour force is highly qualified. 
Slovakia is upgrading its infrastructure to exploit its location at the crossroads of important 
North-South and West-East trans-European network (TEN) corridors. Investment in the energy 
sector is also high. The high investment in infrastructure is contributing to the high overall 
investment ratio, which was almost 39% of GDP in 1997, the highest in the region. Although 
these investments in infrastructure are necessary, the timing of their implementation needs to 
be adjusted to avoid excessive government budget deficits. 
Progress on enterprise restructuring has been limited. There are indications that profits have 
been declining in 1997. The speed of enterprise restructuring is hampered by the continued 
involvement of the state, a weak banking sector, and insufficient foreign direct investment. 
Although measures have been introduced to promote FDI, it will only increase significantly 
when the authorities refrain from untransparent or inequitable intervention in the economy. 
In a number of important industrial sectors (steel, petrochemicals) there is little domestic 
competition, with the bulk of production often concentrated in one enterprise. The 
concentration of production and exports in a few enterprises makes the Slovak economy 
vulnerable to conditions in these enterprises and to the difficulties they may face in competing 
in the single market. In some cases this risk is mitigated as these enterprises are technically 
advanced and are capable of supplying quality basic products, at competitive prices. 
Nevertheless, efforts will have to be made to diversify towards lighter assembly industries and 
services, which are more in line with Slovakia's natural endowments. However, the present 
capacity of Slovakia to innovate and diversify production is hampered by limited expenditure 
on research and development. Imports of skills and technology from abroad remain limited 
because of insufficient foreign direct investment. 
The diversification and restructuring effort is hampered by a lack of investment capital. So 
far, Slovakia has not been able to attract significant amounts of foreign direct investment, 
while the financing capacity of the domestic financial sector remains limited by the bad-debt 
problem and high interest rates. Most new owners of privatised enterprises typically lack the 
financial means that are needed for restructuring, since they already had to invest to acquire 
the control of the company. Consequently, investment for restructuring has to be financed 
exclusively from retained earnings of the enterprises, which is only possible for firms that are 
already profitable. Only the biggest of these profitable enterprises might be able to finance 
their restructuring efforts on the international capital markets. However, as a result of the 
decreased credit ratings that Slovakia received in 1998, the cost of foreign financing has 
increased. 
Slovakia has re-oriented its exports towards west European markets, after the loss of its 
20 
traditional export markets resulting from the break-up of the Soviet trade bloc and the 
dissolution of the federation with the Czech Republic. In 1998, Germany became its most 
important trade partner, replacing the Czech Republic. The high growth rates of trade with the 
Union in recent years are not only an indication that at least a number of Slovak enterprises 
are sufficiently competitive to export to the EU, but also that they are able to produce goods 
that comply with the rules and regulations of the single market. 
Progress in improving Slovakia's competitiveness has been mixed. The reduced degree of 
macroeconomic stability and the lack of a consistent medium-term economic policy 
framework are distorting the planning horizon of economic agents. The pace of structural 
reforms remained slow and the situation in the banking sector worsened. Sustained 
implementation of two recent initiatives - the amendment of the inefficient bankruptcy 
legislation and opening to foreign direct investment - are needed to accelerate enterprise 
restructuring. Provided that the macroeconomic difficulties and the remaining structural 
problems are tackled swiftly and in a transparent and market-based way, Slovakia should be 
able to cope with competitive pressure and market forces within the Union in the medium 
term 
2.4. General Evaluation 
Slovakia has implemented most of the reforms necessary to establish a functioning market 
economy, but that there is still a lack of transparency due to government interference. 
Nevertheless, Slovakia should be able to cope with competitive pressure and market forces 
within the Union in the medium term, provided that the market economy is allowed to 
function. 
Between publication of the Opinion and the recent elections, Slovakia made very little 
progress on the problems identified in the Opinion. Internal and external macroeconomic 
imbalances were not sufficiently tackled to sustain macroeconomic stability. The pace of 
structural reforms continues to be slow and the situation in the banking sector deteriorated. 
The continued lack of transparency in the privatisation process and the lack of foreign direct 
investment have negatively affected enterprise restructuring. Two recent initiatives - the 
amendment of the inefficient bankruptcy legislation and a more positive attitude towards 
foreign direct investment - could accelerate enterprise restructuring in the future. However, no 
progress was made on the establishment of a medium-term economic policy framework. 
Slovakia should decisively commit itself to take on the remaining macroeconomic and 
structural problems in ways compatible with the transparent functioning of a market economy. 
In particular, priority should be given to tackling imbalances in the government budget and 
the current account, solving the problems in the banking sector, and creating the necessary 
environment to generate market-induced enterprise restructuring. To guarantee the 
consistency of macroeconomic and structural policies, Slovakia needs to establish its medium-
term economic policy priorities. 
21 
3. Ability to assume the obligations of membership 
This section aims at up-dating the Commission's Opinion of 1997 as concerns Slovakia's 
ability to assume the obligations of membership - that is, the legal and institutional 
framework, known as the acquis, by means of which the Union puts into effect its objectives. 
In the 1997 Commission's Opinion on Slovakia's application for EU-membership, the 
Commission concluded that 
"Slovakia is firmly committed to take on the acquis, particularly concerning the internal 
market, even if further progress is still required to ensure the effective application of the 
acquis" 
The presentation below of the different subject matters follows the same structure as the 1997 
Opinion, but the general descriptions of each sector have been omitted. Instead, the report 
focuses on the progress made since July 1997. Under each heading legislative decisions and 
the progress in implementing and enforcing the legislation are reported. 
3.1. Internal Market without frontiers 
As explained in the Opinion, the Union's internal market is defined in Article 7a of the Treaty 
as an area without internal frontiers in which the free movements of goods, persons, services 
and capital is ensured. This internal market, central to the integration process, is based on an 
open-market economy in which competition and economic and social cohesion must play a 
full part. 
Effective implementation and enforcement of these four freedoms requires not only 
compliance with such important principles as, for example, non-discrimination or mutual 
recognition of national legislations but also the effective application of common rules, such as 
those designed for safety, environmental or consumer protection, and effective means of 
redress. The same principles apply to certain common rules, for example in the areas of public 
procurement, intellectual property and data protection, which are important in shaping the 
general framework within which the economies operate. 
General Framework 
The current Slovak law on public procurement does not contain all of the fundamental 
principles of the EC public procurement system. It is not being correctly implemented as is 
reflected by the excessive recourse to direct purchasing. 
Slovakia has made substantial effort to adopt and comply with the acquis in the area of 
intellectual property rights: in November and December 1997, Slovakia adopted the Act on 
Collective administration of the Rights, and the Copyright Act, both effective 1 January 1998, 
which are in line with the acquis. 
22 
In the field of industrial property rights, the existing Patent law needs to be amended in order 
to implement certain aspects of the Munich convention to which Slovakia iAas applied for 
membership. On 13.9.97 Slovakia acceded to the Protocol of the Madrid Convention. 
Although the Industrial Property Office has achieved good results in its administrative 
procedures, enforcement remains a concern. 
In the area of Company Law there has been no further progress since 1997. 
A new Act on the Protection of Personal Data in Information Systems entered into force on 1 
March 1998. This law corresponds broadly to the acquis. However, further alignment is 
necessary. 
The four freedoms 
Free Movement of Goods 
The current practices in the area of standards and certification are unsatisfactory and remain 
a major obstacle to the free flow of goods. Standards are still binding and used as a 
regulatory instrument. Adoption of harmonised standards has already started in limited 
areas. 
Despite important preparatory work, the draft law on technical requirements and on 
conformity assessment which implements the basic principles of the Community 'New 
Approach' legislation, has not been adopted. There is a lack of a functional separation 
between legislation, standardisation, certification and accreditation functions is one of the 
main obstacles for the correct implementation of the principles of the New Approach. 
The slow progress on the adoption of the appropriate framework legislation prevents the 
effective implementation of specific sectoral directives in the areas covered by the New 
Approach. Nonetheless some progress has been made in some of these sectors. Since 1997 
the construction products directive and the directives on medical devices have been partially 
transposed into Slovak law by two separate framework laws. There has been no progress in 
the sectors relating to legal metrology, gas appliances, pressure equipment and the ATEX 
directives. 
Since 1997 steady progress has been made in the transposition of a number of directives in 
the motor vehicle area. A detailed framework law on chemicals has equally been adopted. 
There has been no progress in aligning the 1996 basic framework law on foodstuffs, with 
the acquis. A new law on medicines and medical devices has been approved and entered into 
force on 1 June 1998. This law covers most of the Community directives on marketing, 
manufacturing and distribution authorisations and on labelling and advertising of 
pharmaceuticals. Legislation partially implementing the acquis on cosmetics entered into 
force in 1998. 
23 
Free Movement of Capital 
Since the Opinion an amendment to the Foreign Exchange Act of 5 February 1998 (effective 
from April 1998) introduced further relaxation of the rules for the admission of securities to 
the Slovak capital markets, for investment by residents in foreign securities and for foreign 
currency operations.' 
The amendment also abolished the foreign currency surrender requirement for residents. The 
elimination of barriers in trading foreign securities on the domestic market, including their 
purchase and sale by local entities, only applies to securities issued in Member States of the 
OECD. The relaxation allowing foreign banks to own their buildings does not extend to the 
land on which they stand. 
Free Movement of Services 
On the broader reform of the financial sector several measures have been adopted including 
the introduction of annual and consolidated accounts for banks, measures to combat money 
laundering and, increased capital requirements for insurance companies. In addition, 
supervision is being progressively strengthened. 
In the banking sector an amendment to the banking act which entered into force in February 
1998 aims at removing the two-level licensing procedure and the discrimination of non­
residents in the area of acquisition of bank equity capital. 
In the field of payment systems, efforts have been made but should be continued in view of 
the implementation of the real-time gross settlement system. 
Since mid-1997 no progress has been made in approximating Slovak legislation to that of the 
securities market and insurance acquis. 
Free Movement of Persons 
a) Free movement of persons, freedom of establishment and mutual recognition of 
diplomas and qualifications 
Since mid-1997 there were no major developments in the field of mutual recognition of 
professional qualifications. 
b) Abolition of checks on persons at internal frontiers 
No progress can be reported in this area. On visas, see 3.7 
Competition 
As regards anti-trust, the current legislation is largely aligned with the acquis. However, 
improvements and fine-tuning are still needed for block exemptions and certain procedural 
issues. 
24 
Concerning state aid, despite some minor developments, state aid policy remains an 
outstanding problem. Several draft laws have been prepared, but not adopted. 
The Enterprise Revitalisation Act, which the Commission regards as potentially distorting 
and non-transparent, is still in force and proceedings have been initiated for 34 projects. 
A major flaw in the state aid system of the Slovak Republic is the lack of transparency. This 
could be resolved by improving the inventory and annual reporting. The Slovak Republic has 
made progress in the collection of complete regional statistical data. 
Conclusion 
Progress has been made towards meeting the relevant short-term priorities of the Accession 
Partnership in the field of intellectual property rights. On the other hand, no significant 
progress took place in the areas of public procurement and financial services. 
Correct implementation of the new data protection provisions will have to be ensured. 
Implementation and enforcement in all internal market areas needs to be improved. 
Enforcement (including Border Enforcement) in the field of intellectual and industrial 
property rights remains a major concern. 
In the sectors covered by the acquis on industrial goods, the short-term Accession 
Partnership priorities have not been fulfilled. More specifically regarding the 'New 
Approach' legislation, although there has been progress in a number of specific sectors since 
last year, overall progress has been hampered by the failure to adopt framework legislation 
and to establish the corresponding institutional infrastructure. 
In the field of financial services, some legislative progress has been achieved in the banking 
sector. There is a continued need to establish a supervisory authority in the securities field 
and to strengthen existing supervisory authorities in the banking and insurance sectors, as well 
as to ensure their independence. 
Slovakia has made little progress in meeting the short-term priority of the Accession 
Partnership in the state aids field. Considerable effort needs to be made to adopt state aid 
legislation and further progress is needed in the antitrust field. 
3.2. Innovation 
Information Society 
The Strategy for the Implementation of the Information Society Policy, as well as a Report 
on the Implementation Global Information Networks were considered by the government in 
April 1998. The general accessibility of computer and Internet information services in 
Slovakia continued to increase. By 31 December 1997 the number of Internet host servers 
increased to 14520 compared with 7938 in 1996. 
25 
Slovakia participates in the joint high-level committee on information society and supports 
the development of the information society. 
Education, Training and Youth 
Some developments concerning the use of minority languages in the educational system over 
the period of observation have been problematic (1.2). 
The Community Programmes Socrates, Leonardo and Youth for Europe III have been 
opened for Slovakia's participation in March 1998. In the field of mutual recognition of 
diplomas no major progress can be reported. 
Research and Technological Development 
Slovakia has officially requested the start of negotiations for full association to the 5th 
Framework Programme in June 1998. Two rounds of exploratory talks aimed at preparing the 
negotiations were held. 
Research is mentioned as a priority in the Slovak National Programme for the Adoption of the 
Acquis. 
Telecommunications 
Since 1 January 1998 all telecommunications services with the exception of voice services 
have been liberalised. Similarly, the use of alternative infrastructure for the provision of non-
reserved services has been liberalised. These steps represent a significant alignment with 
community regulations with regard to liberalisation. However, liberalisation of 
telecommunications services also requires enforcement of a full set of conditions to safeguard 
competition, such as regulatory independence, tariff rebalancing and the prevention of market 
distortion by dominant suppliers. The exclusive rights of Slovak Telecom for providing public 
telecommunications infrastructure and supplying public voice service expire on December 31, 
2002. 
Mobile telephony has been competitively provided since January 1997 by two GSM 
operators. The subject of interconnection is not addressed in the current law and should be 
the subject of future legislation. 
One of the important outstanding issues which is delaying the process of adopting the new 
telecommunications laws relates to the organisation and scope of the National Regulatory 
Authority. 
There have been no decisions on the privatisation of Slovak Telecom. Slovakia has taken 
steps to align with the acquis concerning liberalisation. The conditions to safeguard 
competition, however, are not ensured. 
26 
Audio-Visual 
An amendment to the Act on Audio-visuals entered into force in May 1998. It recommends a 
minimum, percentage of European Union and Slovak audio-visual works in broadcasting 
programmes. 
Conclusion 
The Slovak Government has given attention to policy development in the areas of the 
information society and research and technological development. Progress had been made in 
aligning telecommunications legislation as far as liberalisation aspects are concerned but 
further efforts are needed in regard to ensuring competition in the sector. Further efforts are 
required in the alignment of audio-visual legislation. 
3.3. Economic and Financial Affairs 
Economic and Monetary Union 
Slovakia has made little additional progress in its preparation for participation in the 
Economic and Monetary Union. 
Restructuring of the banking sector has been limited, partially as a result of political reticence 
to proceed with it in a transparent manner. Unrecoverable loans stand at the high level of 
about a third of total loans. 
Central bank legislation, is still not fully compatible with Community rules. The former 
government tried unsuccessfully to reduce the independence of the Central Bank. 
In October 1998, the National Bank of Slovakia dropped the fixed exchange rate system and 
decided to let the koruna float. Mounting devaluation pressures had generated losses of 
international reserves. 
Taxation 
Since 1997 the Slovak Republic has continued the process of aligning its value added tax 
(VAT) legislation to that of the Community acquis specifically in response to the scope of the 
reduced rate for VAT. 
The Opinion noted significant discrepancies between the Slovak excise system and 
Community requirements, particularly concerning the lack of a warehousing system. Apart 
from a change in the rates as regards hydrocarbon fuel and lubricators rates, no further 
alignment has taken place. 
27 
Conclusion 
Substantial efforts are still required to align Slovakia's VAT legislation to that of the 
Community. The Slovak excise scheme differs in a number of important respects from 
Community requirements. Further efforts are needed in legislative alignment and a timetable 
for future compliance should be established. 
Statistics 
Since 1997 progress has been made in harmonising the Slovak statistical system with EU 
requirements: 
In March 1998, the Law on Personal Data Protection in Information Systems, which 
guarantees the protection of data collected on individuals, came into effect in the Slovak 
Republic. 
The administrative structures to implement and enforce the acquis in this area are largely in 
place. Co-operation between the Statistical Office of the Slovak Republic and other 
institutions needs to be strengthened. 
Special attention needs to be paid to the upgrading of the quality and coverage of the business 
register, the harmonisation of economic accounts and the compilation of Government Finance 
statistics, the improvement of agricultural statistics and the harmonisation of external trade. 
3.4. Sectoral Policies 
Industry 
For the period 1998 - 2003 the main objectives of Slovakia's industrial policy are speeding up 
industry's adjustment to structural change, support for a favourable business environment, 
improvement of the use of new technologies and equitable regional development. Agencies 
have been created to implement the country's industrial policy, such as the National Agency 
for the Promotion of the Development of SMEs, the Post-Privatisation Fund, the Slovak 
National Agency for Foreign Investment and the Export-Import Bank. 
The Slovak Republic bases its industrial policy on the strategy paper 'The Industrial Policy of 
the Slovak Republic', which was updated for the period 1998 - 2003. 
The main objectives of Slovakia's industrial policy as set out in the policy documents are in 
line with the EU's approach to industrial policy. However, a number of issues have arisen 
since the Opinion, which raise questions concerning the implementation of these policies. 
Slovakia has introduced an act on the revitalisation of national industry which foresees 
government support for companies in difficulty. The criteria for awarding this support could 
be in breach of the EU's competition rules and opens options for discretionary government 
intervention in individual cases. 
28 
Privatisation has been conducted in a way that has left many of the newly privatised 
companies badly undercapitalised and without the necessary know-how to develop new 
products and markets. These problems have become more acute in the course of the last year. 
There has also been a problem with the lack of transparency in some of the privatisation deals. 
The low level of foreign direct investment has deprived Slovak industry of new capital and 
know-how. Over the last year Slovakia has made some efforts to improve the country's 
attractiveness for foreign direct investors, for example by introducing tax incentives. 
However, these measures are probably not sufficient to increase foreign direct investment. 
The domestic banking system is not able to play its role in the provision of finance for 
industry. Banks, as already mentioned, are burdened with bad debt and have neither the 
capital nor the expertise to effectively play their role as a source of finance for industry. 
Conclusion 
Overall, progress has been made in defining an industrial policy but implementation will 
require close monitoring. Significant efforts are need to better integrate competition aspects 
into industrial and enterprise restructuring policies, to conduct remaining privatisation in a 
transparent manner and to promote foreign direct investment. 
Agriculture 
Agricultural situation 
The share of agriculture in GDP (4,4% in 1997) as well as that of employment in agriculture 
(5,8% in 1997) have been on a downward trend since the Opinion. 
Agricultural policy 
The structural transformation process continued in 1997 although co-operative farms 
remained dominant. The privatisation of the food industry was almost complete at the end of 
1997. 
Slovakia has introduced some non tariff barriers in response to an increasing agri-food trade 
deficit. 
As in previous years, 1997 budget subsidies were allocated mostly in the form of direct 
payments. In 1997, market interventions, guarantee prices and export refunds increased. 
In the area of veterinary and phytosanitary legislation, several implementing regulations were 
adopted. Certain changes in the subsidy policy, such as support for investment in 
technological renovation and modernisation, aimed at improving the competitiveness of 
Slovak agriculture were introduced. The agricultural act was adopted, as well as the act on 
storage deposit certificates and the act on goods deposit certificates. 
29 
Conclusion 
There was progress in meeting the short-term priorities of the Accession Partnership 
concerning the alignment of legislation in the veterinary and phytosanitary area. The structural 
transformation process continued, albeit at a slow pace. The government has a tendency to 
resort to trade restrictions in the face of sectoral difficulties. Further steps should be taken in 
order to create the administrative structure needed to implement the future agricultural pre-
accession instrument and to ensure the necessary capacity to implement CAP. 
Fisheries 
There were no significant changes in fisheries. 
Energy 
Slovakia has continued to adapt its energy sector to EU competition rules and to the 
requirements of the internal energy market. In Autumn 1997 the Government updated the 
energy policy to 2005. However, this strategy does not include a clear policy on energy 
pricing, nor reference to adjustment of the currently non-cost based and cross-subsidised 
energy prices (particularly for households). The Energy Law, which entered into force in July 
1998 was an important step towards approximation with the electricity directive. However, 
important decisions on matters such as market opening have been postponed. Slovakia 
continues to prepare its networks for the internal energy market. Concerning gas, a fifth 
transit line for imports from Russia as well as a link to Austria is being built. 
Concerning nuclear power, the National Programme for the Adoption of the Acquis does not 
fully cover the nuclear energy sector and is not coherent with the Accession Partnership's 
medium term priority stipulating that the Slovak government should focus on the 
implementation of a realistic programme for the closure of the Bohunice plant. The Bohunice 
Nuclear Power Plant units 1 and 2 are expected to be licensed for long term operation in 1999 
after a major upgrading programme. This plan is neither in line with the Accession 
Partnership nor with a Slovak Government Decree from 1994, which provides for the 
shutdown of the units 1 and 2 as soon as Mochovce comes into commercial operation. An 
extensive upgrading programme of the units 3 and 4 is expected to be launched and 
implemented between 2000 and 2006. The Mochovce power plant unit 1 has entered its 
critical phase in June 1998 according to schedule. Mochovce-unit 2 is expected to be on-line 
in March 1999. 
1.0% of the price of electricity goes to the State Decommissioning and Radioactive Waste 
Fund. There is enough storage capacity on the Bohunice site to temporarily store all the spent 
fuel generated during the operation and up to the end of the design lifetime of the reactors. 
However, longer term solutions have to be found. Only the Al reactor fuel is expected to be 
shipped back to Russia. A radioactive waste treatment plant is under construction at the 
Bohunice site. A new Law on peaceful use of nuclear energy has entered into force. 
30 
Conclusion 
Slovakia needs to work further on preparing for the internal energy market, including the 
adjustment of monopolies, access to networks and energy pricing; emergency preparedness 
including the building up of mandatory oil stocks; state interventions in the solid fuels sector; 
and the development of energy efficiency and fuel quality standards. 
Nuclear safety continues to require particular attention. In this respect the upgrading 
programme of the units 3 and 4 of Bohunice needs to be actively pursued and a realistic 
programme for a rapid closure of units 1 and 2 implemented. Slovakia has to ensure the 
proper operation of the Safety Authority, focusing particularly on its independence. Longer 
term solutions for nuclear waste need attention. 
Transport 
In May 1997 the Ministry of Transport adopted regulations on vehicle traffic. Further efforts 
are needed with regard to access to the market in domestic road haulage, particularly in light 
of the financial capacity of national carriers. In the future, work will also be needed to 
achieve satisfactory levels of road safety. 
The new law on Civil Aviation, which integrates the basic Community rules, entered into 
force in July 1998. Additional implementing legislation is required with regard to air transport 
safety and slot allocation. 
At the beginning of October 1997 the Government approved a long-term programme of 
railway development. In consideration of the critical financial situation of the state-run Slovak 
Railways (SR), planned investments will be reduced and carried out over a longer period up 
until 2010 instead of 2005. This will affect in particular the upgrading of the Bratislava -
Cadca and Kuty - Sturovo international corridors. No plans have been made for restructuring 
(SR) or for the preparation of legislation which will implement Council Directive 91/440. 
As regards transport infrastructure, one of the main priorities of Slovakia is the development of 
the 4 Pan-European corridors which cross its territory. Budgetary constraints led the Slovak 
Government in August 1997 to approve a new way of financing highway construction through 
bank loans with Government guarantee. Slovakia is actively participating in the Transport 
Infrastructure Needs Assessment (TINA). 
Conclusion 
Further legislative harmonisation is necessary on rail, air, road transport, land transport safety 
and combined transport. 
Small and Medium-Sized Enterprises 
Only limited progress has been made in this area. A medium-term policy for the support to 
the SME sector, which was approved by the Government at the end of March 1998. It 
31 
highlighted the scarcity of capital including an oversubscription of the government 
programmes of soft loans and the complexity of the current support system.. 
An Act on the establishment of the Slovak Chamber of Crafts is a positive development. The 
Slovak Republic aims at participation in the Third Multiannual Programme for SMEs of the 
European Union as of 1998. 
3.5. Economic and Social Cohesion 
Employment and Social Affairs 
Unemployment has increased over the period from 11.2% at the end of the second quarter of 
1997 to 12.1% at the end of the first quarter of 1998 (ILO definition). 
An Act on Work Safety and Health was adopted in 1997. The enforcement of the legislation is 
inadequate. 
Regarding equal opportunities, an amendment to the Labour Code relating to equal access to 
work entered into force in July 1998. Equal pay is regulated by an amendment to the Labour 
Code which entered into force in April 1998. The Government adopted a national action plan 
for women in 1997 and a gender centre was set up to undertake research and disseminate 
information. 
The former government did not show sufficient respect for the autonomous character of the 
social partners, hampering social dialogue (1.2).. 
Whilst the Slovak Republic is well advanced in some areas of labour law, substantive progress 
remains to be made to ensure alignment with EU standards. Efforts to implement the legislation, 
already underway in the context of the draft Labour Inspection Act, need to be continued. 
Neither current labour law provisions nor draft amendments to the Labour Code are in line 
with the parental leave directive. 
Conclusion 
Since 1997 there has been some progress in the alignment of the Labour Law (particularly in 
the field of equal opportunities) and in the area of Safety and Health at the workplace. No 
progress can be observed, however, in respect to the enforcement of this legislation. Social 
Dialogue has been hampered. 
Regional Policy and Cohesion 
The Opinion concluded that the Slovak Republic did not have the capacity to participate in 
EU structural policy and that significant reforms were still necessary in this field. These 
32 
notably concerned the strengthening of the institutional structure, budgetary procedures The 
Slovak Republic has made little progress in addressing these issues. 
The "Plan on State Regional Policy" was approved in November 1997. This plan sets out 
several general principles for the Slovak Republic's regional policy and foresees the adoption 
of a strategy, a regional development law, a national regional development agency and a fund. 
In April 1998 the Slovak government approved the establishment of the National Agency for 
Regional Development, as well as a net of regional development agencies. These are however 
not operational yet. 
Conclusion 
While the government recognised the need to adopt legislation in the regional development 
field, concrete progress in adopting the legislation and setting up appropriate structures has 
been limited, despite the fact that this constituted one of the short term objectives under the 
Accession Partnership. 
3.6. Quality of Life and Environment 
Environment 
The following pieces of legislation have been adopted: the act on the state fund for the 
environment, the act on the earth's ozone layer, the act on access *to information about the 
environment and nuclear safety act covering emergency planning. Substantial additional 
efforts will have to be made for approximation with other EU radiation protection 
requirements. 
The Slovak authorities state that all environment legislation under preparation will be adopted 
by the year 2000. On the basis of progress so far this would appear unrealistic. Moreover the 
legislative programme lacks essential parts of the acquis. Unclear competencies, overlapping 
responsibilities between different bodies and the absence of a co-ordinated approach towards 
approximation within the administration are reasons for the slow progress. 
Slovakia has not undertaken major investments to reduce S02 emissions in the last five years 
and the country's basic water infrastructure falls short of what is required by the acquis. 
In the field of nuclear safety, there is a need to reinforce technical capabilities of the Safety 
Authority, with a view to ensuring its continued functioning as an independent body. 
Substantial investments are needed in the environment field. Slovakia should work in close 
cooperation with the International Financial Institutions in that regard. 
Conclusion 
Only modest progress in legislative alignment has been achieved. All sectors require 
considerable reinforcement of activities both on the level of transposition and implementation. 
33 
The implementing bodies have not been considerably strengthened since the Opinion, and the 
Accession Partnership short-term priority has not been adequately addressed.. 
Taking into account past progress, full transposition and compliance with the acquis may take 
longer than foreseen in the Opinion, A coordinated approach towards environmental 
approximation and the necessary investments is lacking. 
Consumer Protection 
Slovakia amended the Act on Consumer Protection on 1 April 1998. The amendment specifies 
the rights of the consumer when making complaints and extends the obligation to provide 
information from retailers to producers, suppliers and importers. The legal basis of consumer 
complaints has been extended. One further amendment to the Act on Consumer Protection 
creates the basic prerequisites for the transposition of thé Directive concerning Price 
indication. There is no legislation regulating Comparative Advertising. Legislation on 
Doorstep Sales, Timeshare, Distance Selling and Consumer Credit still has to be 
implemented. 
Slovak legislation concerning general Product Safety is not in compliance with Community 
legislation and there is no legislation, which directly regulates Dangerous Imitations. 
In view of the fact that consumer protection is a medium term priority in the Accession 
Partnership and that there has been only limited transposition. Slovakia will need to make a 
substantial effort to align legislation and reinforce the institutional structures strengthen 
consumer organisations. 
3.7. Justice and Home Affairs 
In its July 1997 Opinion, the Commission had stressed that Slovakia had to prove its 
commitment to carrying out the reforms needed, particularly with regard to visa arrangements, 
border controls, controlling immigration and combating organised crime and corruption. In 
addition, some laws (like those on asylum) would have to be more elaborated in order to 
conform to the acquis. 
Immigration / Border control 
Though there has been no general revision of the laws regarding foreign nationals, there have 
been isolated examples of progress, such as the new passport law, which entered into force on 
1 January 1998 and gives every citizen the right to a passport. With regard to visa policy, 
progress remains very limited. A working party has been set up to prepare the necessary 
changes, but these have not materialised, despite the urgency of the matter. 
The effectiveness of border controls, considered one of the medium-term priorities of the 
Accession Partnerships, does seem to be improving in quantity terms: arrests for illegal entry 
rose from 2182 in 1997 to 3408 for the first half of 1998 alone. 
34 
Asylum 
Asylum legislation needs to be more detailed, particularly with regard to access to the 
procedure, because Slovakia has moved from being mostly a transit country to being a country 
of destination as well. Between 1993 and the end of 1997, 406 of the 1742 asylum seekers 
with a request pending were granted refugee status. 
Police 
The decree applying the money-laundering law voted through in 1995 was published almost 
two years late, on 1 July 1997. In addition, the government's May 1998 decision to request no 
identity or origin details for funds used to purchase treasury bills goes against every effective 
policy to combat money-laundering. 
The government itself recognises the alarming rise in organised crime evident in the 120% 
increase in offences of this kind being investigated. Although some decisions to set up new 
legal facilities (such as witness protection) have been made, there does not seem to be enough 
political will to wage a determined battle against organised crime. In this connection, Slovakia 
must acquire enough (and suitably trained) staff. 
Drugs 
On 1 June 1998, legislation on narcotics and psychotropic substances was adopted. It 
constituted the framework for the legal growing and selling of these products. On the 
operational front, a joint police/customs anti-drug unit has been set up. 
Judicial cooperation 
With regard to the civil law, in June 1998 the minister of justice put forward a bill regarding 
accession to the Convention on the Civil Aspects of International Child Abduction (the 
Hague, 25 October 1980). 
With regard to the criminal law, the government approved the draft ratification of the OECD 
Convention on Combating Bribery of Foreign Public Officials in International Business 
Transactions (17 December 1997). 
Conclusion 
Despite the progress made with legislation, a number of adjustments are still needed. Actual 
implementation of legislation has moreover seen very limited progress. Although no short-
term priorities were set out in the Accession Partnerships, an effort in combating organised 
crime would have been timely. It matters all the more that a genuine effort should be made 
with the medium-term priorities, particularly border controls and the implementation of 
asylum and migration legislation (including bringing visa policy closer to that of the 
Community). The battle against organised crime, particularly money laundering, and the 
improvement of police services need to be intensified. 
Slovakia now has to demonstrate clear political will to carry through a genuine 
35 
implementation of the acquis in justice and home affairs because any delay would be 
damaging in a domain which is so vital to the implementation of the rule of law. 
3.8. External Policies 
Trade and International Economic Relations 
In order to align its foreign trade relations with the external relations of the EU, Slovakia 
signed a Free Trade Agreement with Turkey which entered into force in September 1998. 
The Slovak Turkish inter-governmental mixed commission, which aims at promoting trade 
and economic relations between the two countries, had its first meeting in June 1998. 
Together with the Czech Republic, Slovakia conducted the initial round of consultations 
about a free trade agreement with Morocco. 
While not pursuing an FTA with Russia, Slovakia has maintained close relations with this 
country. In particular, Russia and Slovakia have signed bilateral agreements on economic 
co-operation, tourism, a space exchange programme, scientific-technological co-operation in 
the field of agriculture and educational co-operation and exchange. 
Slovakia has supported the expansion of the Central European Free Trade Area (CEFTA), 
has been enlarged by an accession agreement with Bulgaria signed in July 1998, which will 
enter into force on 1 January 1999. 
Development 
In 1998 Slovakia extended preferential customs rates to the least developed countries within 
its generalised scheme of preferences. 
Customs 
Since 1997 the Slovak Republic has concentrated its efforts in the area of customs on 
legislative alignment. The Slovak customs administration is currently working, with the help 
of experts from the member states, on improving the accessibility and compatibility of the 
customs code. So far seven of the implementing provisions of the 1996 customs code have 
entered into force. A law on the exemption of goods designed for educational, scientific and 
cultural purposes from import duties entered into force on the 1 January 1998. Slovak customs 
now applies its own integrated tariff. 
With a view to strengthening the administrative capacities an Act on State Service of Customs 
Officers entered into force on 1 July 1998. 
Conclusion 
Sloyakia has made generally satisfactory progress in customs legislation. Although the full 
legislation framework is not yet in place, positive developments include the efforts to 
36 
modernise the operational approach, such as the use of risk analysis and on-site control of 
companies. 
Further attention has to be paid to the compatibility functioning of the customs regimes 
economic impact, including customs warehouses, inward and outward processing and the 
setting up of simplified procedures and of an integrated customs information system. 
Common Foreign and Security Policy 
The Slovak Republic continues to align itself with the CFSP acquis Slovakia has continued 
to participate actively in the multilateral dialogue between the EU and the associated 
countries. It participates in the regular meetings of the political directors, European and 
associate European correspondents in the CFSP working group. . Slovakia joined several 
declarations and joint positions of the EU. 
Slovakia is continuing its preparation for membership of NATO. Within the Partnership for 
Peace Programme the Slovak Republic and NATO planned 226 activities in 1997-1998. The 
Slovak Republic is an Associated Partner of the WEU and support of the strengthening of 
the organisation. It provides financial support for the WEU operation in Albania. The Slovak 
Republic participates in a number of UN peace operations. The joint army unit of Slovakia 
and Austria is planned to fulfil a peace mission on the Golan Heights. 
There continues to be some outstanding bilateral issues with Hungary concerning the 
implementation of the Basic Treaty and the Gabcikovo dam. 
3.9. Financial Questions 
Financial Control 
With regard to external financial control, the Parliament approved, in May 1998, a report of 
the Supreme Audit Office, which revealed many violations of laws related to the use of 
Government expenditure and in doing so the need to improve public financial control. 
With regard to internal financial control, there is no central authority to ensure harmonisation 
of procedures and to check quality of internal financial control carried out by the various 
budget spending ministries and other agencies. A new state treasury system is needed and the 
control systems need to be improved. A plan has been adopted for the gradual improvement of 
the audit system in the state administration. 
Conclusion 
The Slovak Republic will have to undertake a major reform of the control system, in 
particular with a view to the management of pre-accession funds and Structural Funds in the 
future. 
37 
3.10. General Evaluation 
The overall pace of Slovak approximation has slowed, progress in strengthening 
implementation and enforcement structures is limited and there is a noticeable lack of 
momentum in certain sectors where a concerted effort needs to be maintained (e.g. the internal 
market, environment). 
Apart from the adoption of intellectual and industrial property legislation, the short term 
priorities of the Accession Partnership in the internal market, administrative capacity and 
environment areas did not receive sufficient attention. 
Attention needs to be paid to putting the legislative framework and administrative capacities 
in place in the area of justice and home affairs. 
4. Administrative capacity to apply the acquis 
This chapter updates the information given in the Opinion. The European Council in Madrid 
in December 1995 referred to the need to create the conditions for the gradual, harmonious 
integration of the candidates, particularly through the adjustment of their administrative 
structures. Taking up this theme Agenda 2000 underlined the importance of incorporating 
Community legislation into national legislation effectively, but the even greater importance of 
implementing it properly in the field, via the appropriate administrative and judicial 
structures. This is an essential pre-condition for creating the mutual trust indispensable for 
future membership. 
In this year's report the Commission has worked with the candidate countries to identify an 
illustrative list of enforcement bodies in key areas of the acquis. Wherever possible 
information is provided on whether these bodies have sufficient legal powers to implement 
the acquis, on staffing levels and on staff qualifications and on budget availability. In some 
cases it is already possible to give information on the quality of decisions being taken. The 
Commission intends to further develop this aspect in future reports. 
In its Opinion the Commission concluded that further progress is still required to ensure the 
effective application of the acquis. 
4.1. Administrative structures 
The situation of the Slovak public service has not improved since the Opinion. The long 
awaited civil service law has not been adopted. Low civil service remuneration has 
contributed to a high turnover of staff. In addition instead of a sound human resources 
development policy, there has been substantial political interference in nominations and 
promotions. In 1998 the total number of staff in the public state administration amounts to 
31.396 of which 11.396 at the central level, 2.790 at regional level and 17.210 at district level. 
In addition 15.349 persons were employed at local administrations. 
38 
The number of EU integration and accession related structures in the Slovak administration 
has multiplied since the Opinion. There are 23 working groups for the implementation of the 
internal market legislation, 29 sectoral negotiation working groups, 15 European Integration 
Departments and legal departments in the ministries as well as ministerial Phare-units. Some 
rationalisation is necessary. The European Integration Department at the Office of the 
Government employs 11 staff, whereas 200 persons are working at European Integration 
Departments at the line ministries and other state bodies. The Institute for Approximation of 
Law has 21 staff members. These figures show an increase in the number of public officials 
involved in approximation issues. Furthermore the National Phare Co-ordinator's Office has 
11 employees and another 155 persons are working in Phare units in ministries and agencies, 
supported by 73 local and 29 foreign experts. 
Administrative weaknesses and lack of co-ordination can be noticed on all three levels 
involved with the approximation process: 
At the first level of legislative departments and European Integration Units within the 
Ministries and other Central Governmental bodies there is a lack of interministerial co­
ordination. Furthermore some line ministries have not been able to prepare and develop a 
policy base for their sector in the field of legal approximation. 
The Institute for Approximation of Law, the second level in the approximation process, is 
responsible for screening legislation for compatibility with the acquis and subsequently 
submitting it to the Legislative Council of the Government. Management and co-ordination 
within the Institute are weak. The Institute is not able to provide clear and transparent 
information on progress made in the different fields of the approximation of legislation. 
Furthermore it does not seem to have sufficient expertise and know-how to make full use of 
the different assistance projects (approximation and training) and other tools (TAIEX etc.) at 
its disposal. It is questionable whether the Institute has sufficient resources in terms of 
numbers and qualifications of staff. 
The National Council (Parliament) is the third level in the approximation process. Officials of 
the division of approximation of law at the Chancellery check the contents of the EU 
compatibility clause provided by the Institute for Approximation of Laws. Each bill is then 
discussed at the Committee on Constitutional and Legal Matters of the National Council, and 
is also assessed for compliance with EU legislation. The Parliament and its supporting 
services do not appear to have the capacity to discharge this function effectively. 
4.2. Administrative and judicial capacity : key areas for the 
implementation of the acquis 
Uniform application of EC Law : The number of judges has slightly decreased from 1198 to 
1136. Progress has been made regarding the training of judges by the Ministry of Justice and 
the Slovak Association of Judges in European Community Law since the Opinion. In June 
1998 the first two year training course in Community Law for 50 judges in office was 
completed. A second course started in September. It will take time for the judges to be trained 
given scarce training resources. Community Law is included in the initial training for future 
judges on an ad hoc basis. It needs to be integrated as a compulsory component in the 
39 
curriculum. In addition the Judiciary needs modernisation and to expand its use of information 
technologies and related training. Awareness of these needs has risen substantially since the 
Opinion and has resulted in efforts to systematically improve and extend training activities in 
general. Special attention has been paid in recent months to training in bankruptcy legislation 
following the adoption of substantial changes in this field. Modernisation of the Courts and 
improvements in training of judges are subjects addressed in the twinning projects with the 
Ministry of Justice. 
Single Market: Despite substantial progress in legislative alignment in the area of intellectual 
and industrial property rights, the administrative capacity to enforce the legislation has not 
improved. The various aspects of public procurement policy in Slovakia are still managed by 
the Ministry of Construction and. Public Works together with other ministries and 
governmental agencies. There is a tendency for these bodies to use direct purchase rather than 
open tendering. No independent authority has been created. 
In the field of free movement of goods, the implementing authority is the Slovak Office of 
Standards, Metrology and Testing which employs 56 staff. As pointed out above, the lack of a 
functional separation between legislation, standardisation, certification and accreditation 
functions hamper the correct implementation of the principles of the New Approach. No 
substantial progress to adapt the administrative capacity to Community principles in this field 
has been made. Concerning banking supervision the Supervisory Department in the Slovak 
National Bank needs to be strengthened in fields such as the methodology for the evaluation 
and validation of the bank's internal control systems, the use of the reporting systems on 
credits (cross-validation of non-performing loans situations, registry for defaulting borrowers, 
rating systems in combination with the obligation to file financial reports) and the creation of 
refinancing facilities for specific credits. An independent securities commission has not been 
created. The ability of the Insurance Supervisory Authority has not improved. The issues of 
supervision of the banking and insurance sector as well as the stock exchange are addressed in 
a Institution Building/Twinning project due to start at the beginning of 1999. 
Recent legislation foresees that State supervision over the protection of personal data in 
information systems shall be performed by a Commissioner appointed by the Government on 
a proposal by the President of the Statistical Office. No progress has been made in regard to 
this office. 
Competition / State Aids: The Antimonopoly Office of the Slovak Republic has the 
competence to investigate and prosecute competition-related violations, to issue decisions, to 
demand corrective measures and to impose sanctions. The regular number of staff in the 
Antimonopoly Office is 72, but currently only 65 persons are employed. There is a shortage of 
qualified lawyers. In 1997 the office dealt with 18 cases related to agreements restricting 
competition, 27 cases related to the abuse of a dominant position and 68 concentration cases. 
In less than half of the cases a decision was issued in 1997. Some were solved outside the 
administrative proceedings. 
State Aids (Art. 92 and 93 of the Treaty) are not dealt with by the Antimonopoly Office, but 
fall under the competence of the Ministry of Finance. The Ministry has not yet established an 
independent body responsible for ex ante control and ex post monitoring of state aid. 
40 
Agriculture: With a view to eventual adoption of CAP, a market information centre (ATIS) is 
being established, as is a network to collect and process agricultural information compatible 
with FADN (Farm Accountancy Data,Network). 
The control of the application of legislation in the veterinary and phytosanitary sectors is 
carried out by several institutions. Veterinary and phytosanitary inspection, including border 
inspection, needs to be strengthened. 
In the field of rural development policy, only very initial steps for the establishment of an 
institutional base for programming, planning and implementing the structural programmes, 
within the framework of pre-accession assistance, have been taken. Much more effort is 
needed in order for Slovakia to be ready to fully benefit from EU assistance in this field. 
Environment: Progress in implementation and enforcement is moderate. A broad approach 
towards approximation including implementation issues and financial planning is still 
missing, mainly because so far no staff has been allocated to the European Integration Unit 
within the Slovak Ministry of Environment. On the other hand, the technical infrastructure for 
implementing environmental legislation as far as data collection and monitoring are 
concerned, is quite well developed. The number of staff at the Ministry remained unchanged 
since the Opinion (291). 
The recently adopted Act on the revolving state fund for the environment could be seen as a 
first step in integrating the legal, institutional and financial aspects of the approximation 
exercise. As the act only entered into force in April 1998, it is too early to assess it impact. 
Slovakia should also work towards the strengthening of environmental authorities on regional 
and local level. In the field of nuclear safety, there is need to reinforce the capacities of the 
Safety Authority. 
Employment and social policy: The enforcement mechanisms for the acquis m the field of 
safety and health at the work place are weak. In some cases the labour inspectors are 
inadequately trained to identify breaches of legal requirements or irregularities, to combat 
non-compliance by employers and to enforce sanctions. They also lack, particularly in SMEs, 
the help of workers' representatives in identifying problems, since in many cases relevant 
structures do not exist within the enterprise. In total 514 staff are employed at the Office of 
Labour Protection dealing with occupational safety, of which 179 are labour inspectors in 8 
regional inspectorates, 70 technical inspectors in 3 regional workplaces and 45 inspectors 
working in the area of science and research. 
Telecommunications: The Slovak Telecommunications Office regulates those components of 
the system of telecommunications which are not under the direct control of the Ministry. Its 
functions include granting approvals for telecommunications equipment and determining their 
conditions of operation. In 1997 in accordance with a new organisation of the territorial 
administration of the Slovak Republic, a Regional Telecommunications Office was 
established in every regional capital. 
Indirect taxation: The trend described in the Opinion of staff leaving to the private sector has 
increased and has resulted in the weakening of the administrative capacity of the tax 
41 
administration. This can be illustrated by the fact that only about 70% of VAT is actually 
collected by the tax authorities. There are 60 employees at the tax department of the Ministry 
of Finance and 5.400 staff at the Central Tax Directorate and various tax offices. 
Transport: 301 staff are employed in the ministry of Transport, Post and 
Telecommunications. The lack of language skills and the high turnover of staff limit the 
administrative capacity with respect to the acquis. 
Regional policy cohesion: Little progress was made to create an appropriate institutional, 
administrative and budgetary framework to carry out regional policy activities. Although an 
important decision to create a National Agency for Regional Development was taken in April 
1998, this new structure is far from being operational. 
Consumer protection: The institutional structures to ensure the application of legislation are 
still not effective enough. The consumer organisations need further strengthening. 
Justice and Home Affairs: While training of judges has improved in quantity and quality, 
the police are still incapable of effectively combating organised crime due to deficiencies in 
guidance, training and equipment. The infrastructure at the border points, particularly at the 
eastern border, is far from being in compliance with standards in EU Member States. The 
staff figures for the Border Protection Services (Border Police: 1.100; Border Guards: 1.600) 
seem sufficient, but more training and modern equipment are needed. Migration services are 
only beginning to improve their capacity to deal with refugees and asylum seekers. Most of 
the related Institution Building needs are addressed by six twinning projects with Member 
States under preparation. The Ministry of Interior and the connected services employ 3.293 
persons, whereas the Ministry of Justice has 297 staff members. There are 1136 judges in 
office. 
Customs: Progress in computerisation of the customs authorities has been very limited. The 
upgrading of infrastructure at the border points is progressing slowly. The available 
assistance programmes have not been fully utilised. 
Financial control: There are 69 employees working in the financial control area at the 
Ministry of Finance. The Supreme Audit office has 146 staff and another 150 persons are 
employed at the Financial Police. The relevant administrative structures for an effective 
financial control are not yet in place. Detailed plans for the creation of proper control systems 
and upgrading staff quality have not been prepared. The 1998 National Programme for the 
Adoption of the Acquis does not address these issues. 
4.3. Twinning 
In order to help candidate countries meet the challenge of strengthening their administrative 
capacity and adapting their administrations to implement the acquis the Commission and the 
Member States are developing a process of twinning under the Phare programme. In the EU 
the acquis is implemented in the Member States by national administrations (at central, 
regional and local level) and by agencies, professional bodies and the private sector. This vast 
body of administrative and technical expertise is now being made available to the candidate 
42 
countries. Initially twinning will cover four sectors - agriculture, environment, finance and 
justice and home affairs but will gradually be extended to the whole of the acquis. 
Slovakia is participating actively in twinning. 
4.4. General Evaluation 
Slovakia has made little progress in developing the necessary administrative and judicial 
capacity to effectively implement the acquis. Civil service legislation has been delayed, 
progress in judicial reform has been limited and recommendations in the Opinion to reform, 
strengthen and establish new institutions in the internal market area have not been followed 
up. 
43 
C. Conclusion 
The recent elections offer an important opportunity for Slovakia to address the political 
weaknesses outlined in the Opinion and to take steps to ensure that it will in future meet the 
Copenhagen political criteria. 
Slovakia has implemented most of the reforms necessary to establish a functioning market 
economy, but there has been a lack of transparency due to government interference. 
Nevertheless, Slovakia should be able to cope with competitive pressure and market forces 
within the Union in the medium term, provided that the market economy is allowed to 
function. 
Slovakia needs to accelerate the pace of approximation particularly in the area of internal 
market, environment and justice and home affairs. A concerted effort is needed to set up and 
strengthen the corresponding institutional and administrative capacity. 
D. Accession Partnership and National Programme for the 
Adoption of the Acquis - global assessment of implementation 
The purpose of the Accession Partnership is to set out in a single framework the priority areas 
for further work identified in the Commission's Opinions; the financial means available to 
help the candidate countries implement these priorities and the conditions which will apply to 
that assistance. Each candidate country was invited to adopt a National Programme for the 
Adoption of the Acquis setting out how it would deal with the Accession partnership, the 
timetable for implementing its priorities and outlining human and financial resources 
implications. Both the Accession Partnerships and the National Programme for the Adoption 
of the Acquis will be revised regularly to take account of progress made and to allow for new 
priorities to be set. 
1. Accession Partnership Assessment 
The short term priorities for 1998 included in the Accession Partnership8 (AP) are: 
Political criteria : free and fair Presidential, national and local elections in 1998; ensuring 
effective opposition participation in parliamentary oversight committees and supervisory 
boards; the adoption of legislative provisions on minority language use and related 
implementing measures. 
Economic reform : establishment of medium-term economic policy priorities and joint 
assessment within the framework of the Europe agreement; implementation of policies aimed 
at tackling internal and external imbalances and sustaining macroeconomic stability; progress 
Council Regulation 622/98, OJ L85 of 20 March 1998 
44 
on structural reforms, and on market-driven enterprise, finance and banking restructuring, and 
to continue the process of conversion of energy intensive heavy industries. 
Reinforcement of institutional and administrative capacity : including the adoption of a 
civil service law and development of public administration reform strategy with emphasis on 
the strengthening of administration dealing with EU accession, institutional strengthening in 
the area of environment, veterinary and phytosanitary administrations, particularly as regards 
facilities at the external borders, begin to set up structures needed for regional and structural 
policy. 
Internal Market : including continued legislative alignment in the fields of standards and 
certification, state aids (progress towards adoption of a law), intellectual property (alignment 
of legislation), public procurement and agriculture (veterinary and phytosanitary fields), 
establishment of standardisation and conformity assessment structures. 
Environment : continue transposition of framework legislation, establishment of detailed 
approximation programmes and implementation strategies related to individual acts. Planning 
and commencement of implementation of these programmes and strategies. 
Progress on the short term accession partnership priorities can be summarised as follows: 
• Political criteria : Free and fair national elections took place in September 1998. 
However, the Office of the President remains vacant. There are concerns about the 
recently adopted municipal election law and its implications for free and fair local 
elections. The participation of the opposition in the parliamentary oversight and 
supervisory committees was not fully satisfactory. No progress was made on the adoption 
of minority language legislation. 
• Economic Reform : While some effort was made to implement policies aimed at 
tackling external and internal imbalances, a medium term economic policy and joint 
assessment framework was not established. Little progress was made in structural reform, 
in financial sector and bank restructuring and in continuing the process of conversion of 
energy intensive industries. 
• Reinforcement of institution and administrative capacity : No progress was made in 
adopting civil service legislation, in institutional strengthening in the environment area 
and in setting up structures for regional and structural policy. Only limited progress was 
made in the development of a public administration strategy and in strengthening 
veterinary and phytosanitary structures. 
• Internal market : While progress was made in alignment of intellectual and industrial 
property legislation, no progress was made in alignment in the areas of standards and 
certification, state aids, public procurement and agriculture. 
• Environment : Only limited progress was made in transposition of legislation and 
detailed approximation programmes and implementation strategies have not yet been 
worked out. 
45 
Slovakia has not adequately addressed any of the short term Accession Partnership priorities. 
In regard to the political priorities, while free and fair elections were held, a President has not 
been elected, the parliamentary oversight committees cannot be considered to have functioned 
optimally and there was no progress in the adoption of legislative provisions on minority 
languages. The economic reform priorities were partially addressed with efforts being made 
to maintain macroeconomic stability but there was little progress in structural reform. 
Concerning the internal market priority, while intellectual and industrial property legislation 
was adopted, insufficient attention was paid to address other priorities, particularly as 
concerns standards and certification legislation and institutional structures. The environment 
priority was not satisfactorily addressed. 
2. National Programme for the Adoption of the Acquis-Assessment 
A first version of the National Programme for the Adoption of the Acquis (NPAA), adopted 
by the Slovak Government, was presented in March 1998. The National Programme for the 
Adoption of the Acquis is composed of 29 chapters corresponding to the 29 negotiation teams 
in the relevant ministries or central state bodies established to prepare for future accession 
negotiations. There is an introduction covering the political and economic criteria. The annex 
contains tables on each of the chapters showing the planned legislation and implementation 
arrangements, the related time-schedules as well as the financing provisions. 
The National Programme for the Adoption of the Acquis covers the Accession Partnership 
priorities but does not adequately cover the whole acquis. It is not consistent in quality 
between chapters, with some sections not reflecting a full understanding of the acquis. 
National legislation is referred to in some sections without necessary links to the acquis being 
drawn. Attention paid to implementation and enforcement of the acquis is inadequate and the 
National Programme for the Adoption of the Acquis does not adequately address the issue of 
reinforcement of administrative capacity. The National Programme for the Adoption of the 
Acquis does not provide sufficient information on institution building. Training and staff 
needs are not accurately assessed. Budgetary needs are as well clearly underestimated. 
Finally, the time schedule for both adopting and implementing the acquis seems quite 
unrealistic. 
The Slovak Government is revising the National Programme for the Adoption of the Acquis. 
On the basis of the revised text, the Commission will take a position on the National 
Programme for the Adoption of the Acquis which it will communicate to the Council during 
the second semester of 1999 on the occasion of the re-examination of the Accession 
Partnership. 
46 
Annex 
Statistical data 
47 
STATISTICAL DATA 
Basic data 
Population (end of period) 
Total Area 
National Accounts 
Gross Domestic Product at current prices 
Gross Domestic Product at current prices 
Gross Domestic Product at current prices 
Structure of Production 
- Agriculture 
- Industry 
- Construction 
- Services 
Structure of expenditure 
- Final consumption expenditure 
- household and NPISH 
- general government 
- Gross fixed capital formation 
- Exports of goods and services 
- Imports of goods and services 
Gross Domestic Product 
Gross Domestic Product per capita 
Inflation rate 
Consumer Price Index 
Balance of payments 
-Exports of goods 
-Imports of goods 
-Trade balance 
-Services, net 
-Income, net 
-Net current transfers 1993 1994 1995 1996 1997 
in 1000 
5336 5356 5368 5379 5388 
in 1000 hectares 
4904 4904 4904 4903 4903 
in Bn Slovak Koruna 
369.1 440.5 516.8 575.7 653.9 
in Bn ECU 
10.2 11.6 13.3 14.8 17.2 
in ECU per capita 
1900 2200 2500 2800 3200 
in % of Total Gross Value Added 
4.9 
32.0 
4.9 
58.2 6.0 
28.0 
4.7 
61.3 
as % of Gross Domestic Product 
69.8 
49.6 
20.3 
27.4 
63.0 
61.2 72.6 
50.3 
22.4 
36.9 
58.0 
70.0 71.6 
50.0 
21.7 
38.6 
56.4 
63.5 
% change over the previous year 
-3.7 4.9 6.9 6.6 6.5 
in Purchasing Power parities 
6400 6800 7400 8200 8900 
% change over the previous year 
23.2 13.4 9.9 5.8 6.1 
in millions of ECU 
4656 
5436 
-779 
232 
-32 
84 5669 
5577 
92 
557 
. -101 
57 6568 
6743 
-175 
413 
-11 
71 6949 
8747 
-1798 
30 
-37 
158 7752 
9058 
-1306 
64 
-109 
153 
48 
-of which government transfers 
-Current account balance 
-Reserve assets (incl. gold) 
-Reserve assets (excl. gold) 
Public Finance 
General Government Deficit/Surplus 
Gross foreign debt 
Financial indicators 
Monetary Aggregates 
-Ml 
-M2 
- Total credit 
Average short-term interest rates 
- Lending rate 
- Deposit rate 
ECU exchange rates 
- Average of period 
-End of period 
- Effective exchange rate 
Foreign Trade 
Imports 
Exports 
Balance 
Terms of trade 
Imports with EU-15 
Exports with EU-15 
Demography 
Natural growth rate 
Net migration rate 
Infant mortality rate 
Life expectancy: Males 
Females 
Labour market 
Economic Activity rate (ILO methodology) 3 
-495 
825 
373 5 
604 
1777 
1375 13 
298 
2939 
2560 7 
-1646 
3109 
2729 9 
-1198 
3264 
2925 
in % of Gross Domestic Product 
1993 11.3 19.6 21.6 
1994 1995 1996 1997 
in Bn ECU 
3.1 
6.9 3.2 
7.8 3.9 
9.1 4.3 
10.3 4.3 
11.8 
12.2 
% per annum 
14.4 
8 14.6 
9.3 16.9 
9 13.9 
9.3 18.7 
13.4 
(lECU=..National currency) 
36.03 
37.04 38.12 
38.47 38.86 
38.86 39.38 
39.95 38.11 
38.43 
74.74 
in millions of ECU 
5409 
4663 
-746 
corresp 5560 
5627 
-67 6705 
6559 
-146 8760.8 
6954.9 
-1805.9 
tonding period of the previous yea 
1 9050.8 
7753.7 
-1298.1 
r = 100 
as % of total 
20.6 
24.1 26.2 
28.4 34.8 
37.8 37.3 
41.3 39.5 
45.0 
per 1000 of population 
3.9 
0.3 2.8 
0.9 1.6 
. 0.5 1.7 
0.4 ; 
'. 
per 1000 live-births 
10.6 11.2 11.0 10.2 8.7 
at birth 
68.4 
76.7 68.3 
76.5 68.4 
76.3 68.8 
76.7 68.9 
76.7 
in % of labour force 
62.1 59.9 59.8 60.0 59.5 
49 
Unemployment rate (ILO methodology): Total 
< 25 years 
> 25 years 
Average employment by NACE branches (LFS) 
- Agriculture and Forestry 
- Industry 
- Construction 
- Services 
Infrastructure 
Railway network 
Length of motorways 
Industry and Agriculture 
Industrial production volume indices 
Gross agricultural production volume indices 12.2 
25.7 
9.4 13.7 
27.6 
10.9 13.2 
24.8 
10.8 11.1 
20.6 
9.2 11.6 
9.4 
in % of total 
8.9 
31 
8.5 
51.6 8.6 
30.4 
8.9 
52.1 
in Km per 1000 Km2 
75 75 75 75 75 
in km 
: 
96.3r 
92.0 : 198 
previous year = 
104.9r 
102.6 108.3 
102.4 215 
100 
102.5 
102.7 : 
102.7 
99.2 
50 
Methodological Notes 
Gross domestic Product per capita in PPS : Revised data using the new PPP results from 
the 1996 International Comparison Project. 
Reserve assets : are end-year stock data. They are defined as the sum of central bank holdings 
of gold, foreign exchange, and other (gross) claims on non-residents. Gold is valued at end-
year market price. 
General government deficit / surplus : is an approximation of the national accounts 
definition, derived from data based on the IMF's GFS . (government finance statistics) 
methodology. The general government deficit / surplus is obtained by adding the central 
government deficit / surplus (normally including certain extra-budgetary funds) to the local 
government deficit / surplus. The total is adjusted for net lending / borrowing for specific 
policy purposes, which is a financing item in the national accounts. 
Monetary aggregates : are end-year stock data. Ml generally means notes and coin in 
circulation plus bank sight deposits. M2 generally means Ml plus savings deposits plus other 
short-term claims on banks. Total credit generally means domestic credit to the government 
and private sectors. It should be noted that the problem of measuring the circulation of foreign 
currency in some Applicant Countries may affect the reliability of the data. 
Interest rates : Annual average rates. Lending rates generally consist of the average rate 
charged on loans granted by reporting banks. Deposit rates generally refer to average demand 
and time deposit rates. 
Exchange rates : Where available, the ECU exchange rates are those officially notified to DG 
II. The effective exchange rate index is weighted by major trading partners, with a base year 
of 1990. 
Imports and exports (current prices) : The data is based upon the "special trade" system, 
according to which, external trade comprises goods crossing the customs border of the 
country. Trade data excludes direct re-exports, trade in services and trade with customs free 
zones as well as licences, know-how and patents. Value of external trade turnover includes the 
market value of the goods and the additional costs(freight, insurance etc.). Trade 
Classification: Merchandise trade flows are using the commodity classification according to 
the Combined Nomenclature. 
Imports are recorded on FjOB basis and are captured with the date the commodities are 
released into circulation in the country. Exports are recorded on FOB basis and are captured 
with the date on which the commodities cross the state border. The value of exports is given 
in FOB., i.e. the price of the goods decreased by direct trade costs abroad. That price, 
converted by a valid exchange rate into the Slovak crown, gives a base for the calculation of 
customs duty, value added tax and other charges and fees. 
Eurostat has converted the National Currency to the US dollar by applying the International 
Monetary Fund annual average exchange rates. 
51 
Imports and exports with EU-15 : Source: Data declared by \he republic of Slovakia. Data 
for years 1993 and 1994 refer to trade with EU-12 only. 
Economic activity rate (ILO Methodology) : Percentage of labour force in the total 
population aged 15+. This rate is derived from LFSS (Labour Force Sample Survey) observing 
the following ILO definitions and recommendations: 
Labour force: employed and unemployed persons in the sense of the ILO definitions stated 
below. 
The employed : all persons aged 15+, who during the reference period worked at least one hour 
for wage or salary or other remuneration as employees, entrepreneurs, members of cooperatives 
or contributing family workers. Members of armed forces and women on child-care leave are 
included. 
The unemployed : all persons aged 15+, who concurrently meet all three conditions of the ILO 
definition for being classified as the unemployed: (i) have no work, (ii) are actively seeking a job 
and (iii) are ready to take up a job within a fortnight. 
Unemployment rate (by ILO methodology) : - Percentage of the unemployed labour force. 
This rate is derived from LFSS (Labour Force Survey) observing the ILO definitions and 
recommendations (see ILO definitions above) 
The unemployment rate is recalculated on economically active persons (excluding women on 
additional maternity leave). 
Average employment by NACE branches (LFS) : This indicator is derived from LFSS 
(Labour Force Sample Survey) observing the ILO definitions and recommendations. 
Industrial production volume indices : Industrial production covers mining and quarrying, 
manufacturing and electricity, gas, steam and water supply (according to the NACE Rev.l 
Classification Sections C,D,E). The total industrial production includes estimates for 
enterprises and for tradesmen. The indices are in constant prices of December 1995. 
Gross agricultural production volume indices : The gross agricultural output has been 
calculated on the basis of the gross turnover at current prices. Agricultural output index is 
recalculated to the constant prices of the corresponding period of the previous year. 
52 
Sources 
Basic data, National Accounts, Foreign trade, Demography, Labour market, 
Infrastructure, Industry and Agriculture : New Cronos. 
Reserve assets and Financial indicators : Where possible Eurostat B-4's questionnaire on 
monetary and financial statistics has been used as the source. Applicant Countries are asked to 
supply regularly an update of tables contained in the questionnaire. The statistics covered 
include foreign official reserves, monetary aggregates, interest rates, and exchange rates. 
Failing this, the IMF's 'International Financial Statistics' publication has been used as the 
source. The European Commission (DGII) is used as the source for exchange rates against the 
ECU, where possible 
Concerning gross foreign debt, the OECD External Debt Statistics publication has been used 
as the source. 
Concerning general government deficit / surplus, Applicant Countries are presently unable to 
provide reliable data. Unit B-4 is working closely with these countries with the aim of 
improving their national accounts based government finance statistics. Given the lack of 
reliable data, an approximation for general government deficit / surplus is derived from the 
IMF's Government Finance Statistics Yearbook (for an explanation of methodology, see 
below). 
53 

ISSN 0254-1475 
COM(98) 703 final 
DOCUMENTS 
EN 01 02 06 11 
Catalogue number : CB-CO-98-645-EN-C 
Office for Official Publications of the European Communities 
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