Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Slovakia and delivering a Council opinion on the 2022 Stability Programme of Slovakia
Date: 2022-05-23
Institutions: European Commission, Secretariat-General
Subjects: Slovakia, economic policy, economic recovery, economic reform, energy policy, improvement of housing, public finance, renewable energy, stability pact, stability programme

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   EUROPEAN COMMISSION  Brussels, 23.5.2022  COM(2022) 627 final  Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Slovakia and delivering a Council opinion on the 2022 Stability Programme of Slovakia {SWD(2022) 627 final} - {SWD(2022) 640 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the 2022 National Reform Programme of Slovakia and delivering a Council opinion 
on the 2022 Stability Programme of Slovakia 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the  surveillance  of  budgetary  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular Article 5(2) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

(2) 

the  Recovery  and  Resilience  Facility,  entered 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council2,  which 
established 
force  on 
19 February 2021. The Recovery and Resilience Facility provides financial support for 
the implementation of reforms and investment, entailing a fiscal impulse financed by 
the  Union.  It  contributes  to  the  economic  recovery  and  to  the  implementation  of 
sustainable and growth-enhancing reforms and investment, in particular to promote the 
green and digital transition, while strengthening the resilience and potential growth of 
the Member States’ economies. It also helps strengthen sustainable public finances and 
boost growth and job creation in the medium and long term. The maximum financial 
contribution  per  Member  State  under  the  Recovery  and  Resilience  Facility  [was] 
updated on [XX] June 2022, in line with Article 11(2) of Regulation (EU) 2021/241.  

into 

On  24 November 2021,  the  Commission  adopted  the  Annual  Sustainable  Growth 
Survey,  marking  the  start  of  the  2022  European  Semester  for  economic  policy 
coordination.  It  took  due  account  of  the  reaffirmed  joint  commitment  of  the  Porto 
Social Summit of May 2021 to further implement the European Pillar of Social Rights, 
proclaimed  by  the  European  Parliament,  the  Council  and  the  Commission  on 
17 November 2017. The European Council endorsed the priorities of the 2022 Annual 

1 
2 

OJ L 209, 2.8.1997, p. 1. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021 
stablishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, p. 17). 

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Sustainable Growth Survey on 25 March 2022. On 24 November 2021, on the basis of 
Regulation  (EU)  No  1176/2011,  the  Commission  also  adopted  the  Alert  Mechanism 
Report, in which it did not identify Slovakia as one of the Member States for which an 
in-depth review3 would be needed. On the same date, the Commission also adopted a 
recommendation  for  a  Council  recommendation  on  the  economic  policy  of  the  euro 
area, which was adopted on 5 April 2022 by the Council, as well as the proposal for 
the 2022 Joint Employment Report analysing the implementation of the Employment 
Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights,  which  was 
adopted by the Council on 14 March 2022.  

Russia’s  invasion  of  Ukraine,  in  the  wake  of  the  global  pandemic,  has  significantly 
altered the geopolitical and economic context. The impact of the invasion on Member 
States’ economies has been felt for example through higher energy and food prices and 
weaker  growth  prospects.  The  higher  energy  prices  weigh  particularly  on  the  most 
vulnerable households experiencing or at risk of energy poverty. The EU is also seeing 
an unprecedented inflow of people fleeing Ukraine. In this context, on 4 March 2022, 
the  Temporary  Protection  Directive  was  triggered4  for  the  first  time,  granting 
displaced persons from Ukraine the right to legally stay in the EU as well as access to 
education  and  training,  labour  market,  healthcare,  housing  and  social  welfare. 
Exceptional  support  is  made  available  to  Slovakia  under  the  Cohesion’s  Action  for 
Refugees in Europe (CARE) initiative and through additional pre-financing under the 
Recovery  Assistance  for  Cohesion  and  the  Territories  of  Europe  (REACT-EU) 
programme  to  urgently  address  reception  and  integration  needs  for  those  fleeing 
Ukraine. 

Taking  account  of  the  rapidly  changing  economic  and  geopolitical  situation,  the 
European Semester resumes its broad economic and employment policy coordination 
in 2022, while evolving in line with the implementation requirements of the Recovery 
and  Resilience  Facility,  as  outlined  in  the  2022  Annual  Sustainable  Growth  Survey. 
The  implementation  of  the  adopted  recovery  and  resilience  plans  is  essential  for  the 
delivery of the policy priorities under the European Semester, as the plans address all 
or a significant subset of the relevant country-specific recommendations issued in the 
2019  and  2020  Semester  cycles.  The  2019  and  2020  country-specific 
recommendations  remain  equally  relevant  also  for  recovery  and  resilience  plans 
revised, updated, or amended in accordance with Articles 14, 18 and 21 of Regulation 
(EU) 2021/241, in addition to any country-specific recommendations issued up to the 
date of submission of the modified plan.  
The General Escape Clause has been active since March 20205. In its Communication 
of  3  March  20216,  the  Commission  set  out  its  view  that  the  decision  on  the 
deactivation or continued application of the general escape clause should be taken as 
an overall assessment of the state of the economy, with the level of economic activity 
in the EU or euro area compared to pre-crisis levels (end-2019) as a key quantitative 

Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 
on the prevention and correction of macroeconomic imbalances, OJ L 306, 23.11.2011. 
Council Implementing Decision (EU) 2022/382 of 4 March 2022 establishing the existence of a mass 
influx of displaced persons from Ukraine within the meaning of Article 5 of Directive 2001/55/EC, and 
having the effect of introducing temporary protection, OJ L 71, 4.3.2022, p. 1. 
Communication from the Commission to the Council on the activation of the general escape clause of 
the Stability and Growth Pact, Brussels, 20.3.2020, COM(2020) 123 final. 
Communication  from  the  Commission  to  the  Council  on  one  year  since  the  outbreak  of  COVID-19: 
fiscal policy response, Brussels, 3.3.2021, COM(2021) 105 final. 

(3) 

(4) 

(5) 

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(6) 

(7) 

criterion. Heightened uncertainty and strong downside risks to  the economic outlook 
in  the  context  of  war  in  Europe,  unprecedented  energy  price  hikes  and  continued 
supply  chain  disturbances  warrant  the  extension  of  the  general  escape  clause  of  the 
Stability and Growth Pact through 2023. 

Following the approach in the Council opinion of 18 June 2021 on the 2021 Stability 
Programme,  the  fiscal  stance  is  currently  best  measured  as  the  change  in  primary 
expenditure  (net  of  discretionary  revenue  measures),  excluding  COVID-19  crisis-
related  temporary  emergency  measures  but  including  expenditure  financed  by  non-
repayable  support  (grants)  from  the  Recovery  and  Resilience  Facility  and  other  EU 
funds,  relative  to  medium-term  potential  growth7.  Going  beyond  the  overall  fiscal 
stance, in order to assess whether national fiscal policy is prudent and its composition 
is conducive to a sustainable recovery consistent with the green and digital transitions, 
attention  is  also  paid  to  the  evolution  of  nationally-financed8  primary  current 
expenditure  (net  of  discretionary  revenue  measures  and  excluding  COVID-19  crisis-
related temporary emergency measures) and investment. 

On  2  March  2022,  the  Commission  adopted  a  Communication  providing  broad 
guidance  for  fiscal  policy  in  2023,  aiming  at  supporting  the  preparation  of  Member 
States’  Stability  and  Convergence  Programmes  and  thereby  strengthening  policy 
coordination9.  The  Commission  noted  that,  based  on  the  macroeconomic  outlook  of 
the  2022  winter  forecast,  transitioning  from  an  aggregate  supportive  fiscal  stance  in 
2020-2022  to  a  broadly  neutral  aggregate  fiscal  stance  would  appear  appropriate  in 
2023,  while  standing  ready  to  react  to  the  evolving  economic  situation.  The 
Commission announced that the fiscal recommendations for 2023 should continue to 
differentiate  across  Member  States  and  take  into  account  possible  cross-country 
spillovers. The Commission invited the Member States to reflect the guidance in their 
Stability  and  Convergence  Programmes.  The  Commission  committed  to  closely 
monitor  the  economic  developments  and  adjust  its  policy  guidance  as  needed  and  at 
the latest in its Semester spring package of late May 2022. 

(8)  With  respect  to  the  fiscal  guidance  provided  on  2  March  2022,  the  fiscal 
recommendations  for  2023  take  into  account  the  worsened  economic  outlook,  the 
heightened uncertainty and further downside risks, and the higher inflation compared 
to the winter forecast. Against these considerations, the fiscal response has to expand 
public investment for the green and digital transition and energy security, and sustain 
the purchasing power of the most vulnerable households so as to cushion the impact of 
the energy price hike and help limit inflationary pressures from second round effects 
via targeted and temporary measures; fiscal policy has to remain agile so as to adjust 
to the rapidly evolving circumstances, and be differentiated across countries depending 
on their fiscal and economic situation, including as regards the exposure to the crisis 
and the inflow of displaced persons from Ukraine.  

(9) 

On 29 April 2021, Slovakia submitted its national recovery and resilience plan to the 
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant 

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The  estimates  on  the  fiscal  stance  and  its  components  in  this  recommendation  are  Commission 
estimates  based  on  the  assumptions  underlying  the  Commission  2022  spring  forecast.  The 
Commission’s estimates of medium-term potential growth do not include the positive impact of reforms 
that are part of the Recovery and Resilience Plan and that can boost potential growth.  
Not financed by grants from the Recovery and Resilience Facility and other EU funds. 
Communication  from  the  Commission  to  the  Council:  Fiscal  policy  guidance  for  2023,  Brussels, 
2.3.2022, COM(2022) 85 final. 

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to  Article  19  of  Regulation  (EU)  2021/241,  the  Commission  assessed  the  relevance, 
effectiveness,  efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in 
accordance with the assessment guidelines of Annex V to that Regulation. On 13 July 
2021,  the  Council  adopted  its  Decision  on  the  approval  of  the  assessment  of  the 
recovery and resilience plan for Slovakia. The release of instalments is conditional on 
a decision by the Commission,  taken in  accordance with  Article 24(5) of  Regulation 
(EU)  2021/241,  that  Slovakia  has  satisfactorily  fulfilled  the  relevant  milestones  and 
targets  set  out  in  the  Council  Implementing  Decision.  Satisfactory  fulfilment 
presupposes  that  the  achievement  of  preceding  milestones  and  targets  has  not  been 
reversed. 

(10)  On 29 April 2022, Slovakia submitted its 2022 National Reform Programme and, on 
28 April 2022, its  2022 Stability Programme, in  line with  the deadline established in 
Article 4 of Regulation  (EC) No 1466/97. To take account of their interlinkages, the 
two  programmes  have  been  assessed  together.  In  accordance  with  Article  27  of 
Regulation  (EU)  2021/241,  the  2022  National  Reform  Programme  also  reflects 
Slovakia’s  bi-annual  reporting  on  the  progress  made  in  achieving  its  recovery  and 
resilience plan.  

the 

(11)  The Commission published the 2022 country report for Slovakia10 on 23 May 2022. It 
relevant  country-specific 
in  addressing 
assessed  Slovakia’s  progress 
recommendations adopted by the Council in 2019, 2020 and 2021, and  took stock of 
Slovakia’s  implementation  of  the  recovery  and  resilience  plan,  building  on  the 
Recovery  and  Resilience  Scoreboard.  Based  on  this  analysis,  the  country  report 
identified gaps with respect to those challenges that are not addressed or only partially 
addressed  by  the  recovery  and  resilience  plan,  as  well  as  new  and  emerging 
challenges,  including  those  emerging  from  Russia’s  invasion  of  Ukraine.  It  also 
assessed  Slovakia’s  progress  on  implementing  the  European  Pillar  of  Social  Rights 
and on achieving the EU headline targets on employment, skills and poverty reduction, 
as well as progress in achieving the UN’s Sustainable Development Goals.  

(12)  On  23  May  2022,  the  Commission  issued  a  report  under  Article  126(3)  TFEU.  This 
report discussed the budgetary situation of Slovakia, as its general government deficit 
in 2021 exceeded the 3% of GDP Treaty reference value, while its general government 
debt exceeded the 60% of GDP Treaty reference value. The report concluded that the 
deficit  criterion  was  not  fulfilled  while  the  debt  criterion  was  complied  with.  In  line 
with  the  Communication  of  2  March  2022,  the  Commission  considered,  within  its 
assessment of all relevant factors, that compliance with the debt reduction benchmark 
would imply a too demanding frontloaded fiscal effort that risks to jeopardise growth. 
Therefore,  in  the  view  of  the  Commission,  compliance  with  the  debt  reduction 
benchmark  is  not  warranted  under  the  current  exceptional  economic  conditions.  As 
announced, the Commission did not propose to open new excessive deficit procedures 
in spring 2022 and it will reassess the relevance of proposing to open excessive deficit 
procedures in autumn 2022.  

(13)  On  20  July  2020,  the  Council  recommended  Slovakia  to  take  in  2020  and  2021  all 
necessary measures, in  line with  the general  escape clause, to  effectively  address  the 
the  ensuing  recovery.  It  also 
pandemic,  sustain 
recommended  Slovakia  to  pursue,  when  economic  conditions  allow,  fiscal  policies 
aimed  at  achieving  prudent  medium-term  fiscal  positions  and  ensuring  debt 

the economy  and  support 

10 

SWD(2022) 627 final. 

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sustainability,  while  enhancing  investment.  In  2021,  based  on  data  validated  by 
Eurostat, Slovakia’s general government deficit increased from 5.5% of GDP in 2020 
to  6.2%  in  2021.  The  fiscal  policy  response  by  Slovakia  supported  the  economic 
recovery in 2021, while temporary emergency support measures increased from 2.3% 
of GDP in 2020 to 3.3% in 2021. The measures taken by Slovakia in 2021 have been 
in  line  with  the  Council  Recommendation  of  20  July  2020.  The  discretionary 
budgetary  measures  adopted  by  the  government  in  2020  and  2021  were  mostly 
temporary  or  matched  by  offsetting  measures.  At  the  same  time,  some  of  the 
discretionary measures adopted by the government over the period 2020 to 2021 were 
not temporary or matched by offsetting measures, mainly consisting of increases in the 
13th  pension,  changes  in  the  retirement  age  for  parents,  a  reduction  in  the  motor 
vehicles tax and the cancellation of the bank levy. Based on data validated by Eurostat, 
general government debt stood at 63.1 % of GDP in 2021. 

(14)  The  macroeconomic  scenario  underpinning  the  budgetary  projections  in  the  2022 
Stability  Programme  is  realistic  in  2022  and  favourable  in  2023.   The  government 
projects  real  GDP  to  grow  by  2.1%  in  2022  and  5.3%  in  2023.  By  comparison,  the 
Commission’s  2022  spring  forecast  projects  a  higher  real  GDP  growth  of  2.3%  in 
2022 and a lower real GDP growth of 3.6% in 2023, mainly due to an estimated higher 
impact  of  inflation  on  private  consumption  and  a  slower  rebound  of  exports.  In  its 
2022  Stability  Programme,  the  government  expects  that  the  headline  deficit  will 
decrease to 5.1 % of GDP in 2022, and to 2.4% in 2023. The decrease in 2022 mainly 
reflects  the unwinding of most emergency measures  and a strong  growth of nominal 
GDP.  According  to  the  Programme,  the  general  government  debt-to-GDP  ratio  is 
expected  to  decrease  to  61.6%  in  2022,  and  to  decline  to  58.0%  in  2023. Based  on 
policy measures known at the cut-off date of the forecast, the Commission 2022 spring 
forecast  projects  a  government deficit  for 2022 and 2023 of  3.6% of GDP and  2.6% 
respectively. This is lower than the deficit projected in the 2022 Stability Programme 
for  2022  and  higher  for  2023,  mainly  due  to  a  forecasted  more  optimistic  labour 
market development in 2022. The Commission 2022 spring forecast projects a similar 
general government debt-to-GDP ratio, of 61.7% in 2022 and 58.3% in 2023.    

Based  on  the  Commission  spring  2022  forecast,  the  medium-term  (10-year  average) 
potential output growth is estimated at 2.0 %. However, this estimate does not include 
the  impact  of  the  reforms  that  are  part  of  the  Recovery  and  Resilience  Plan  and  can 
boost Slovakia’s potential growth.  

(15) 

In 2022, the government phased out the majority of measures taken in response to the 
COVID-19 crisis, such that the temporary emergency support measures are projected 
to  decline  from  3.3%  of  GDP  in  2021  to  1.0%  in  2022.  The  government  deficit  is 
impacted by the costs to offer temporary protection to displaced persons from Ukraine, 
which in the Commission 2022 spring forecast are projected at 0.1% of GDP in 2022 
and 0.2% in 2023.11  

11 

The total number of displaced persons from Ukraine to the EU is assumed to gradually reach 6 million 
by  the  end  of  2022,  and  their  geographical  distribution  is  estimated  based  on  the  size  of  the  existing 
diaspora, the relative population of the receiving Member State, and the actual distribution of displaced 
persons from Ukraine across the EU as of March 2022. For budgetary costs per person, estimates are 
based on the Euromod microsimulation model of the Commission’s Joint Research Centre, taking into 
account both cash transfers people may be eligible for as well as in-kind benefits such as education and 
healthcare. 

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(16)  On  18  June  2021,  the  Council  recommended  that  in  2022  Slovakia12  maintains  a 
supportive  fiscal  stance,  including  from  the  impulse  provided  by  the  Recovery  and 
Resilience  Facility,  and  preserves  nationally-financed 
It  also 
recommended  Slovakia  to  pursue,  when  economic  conditions  allow,  a  fiscal  policy 
aimed  at  achieving  prudent  medium-term  fiscal  positions  and  ensuring  fiscal 
sustainability  in  the  medium  term,  and  at  the  same  time,  to  enhance  investment  to 
boost growth potential. 

investment. 

(17) 

(18) 

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the 
information incorporated in Slovakia’s 2022 Stability Programme, the fiscal stance is 
projected  to  be  contractionary  at  +0.3%  of  GDP,  while  the  Council  recommended  a 
supportive fiscal stance.13 Slovakia plans to provide continued support to the recovery 
by  making  use  of  the  Recovery  and  Resilience  Facility  to  finance  additional 
investment  as  recommended  by  the  Council.  The  positive  contribution  to  economic 
activity of expenditure financed by Recovery and Resilience Facility grants and other 
EU funds is projected to increase by 0.7 percentage points of GDP compared to 2021. 
Nationally-financed investment is projected to provide an expansionary contribution to 
the  fiscal  stance  of  0.4  percentage  points  in  2022.14  Therefore,  Slovakia  plans  to 
preserve nationally financed investment, as recommended by the Council. At the same 
time,  the  growth  in  nationally-financed  primary  current  expenditure  (net  of  new 
revenue measures) in 2022 is projected to provide a contractionary contribution of 1.6 
percentage points to the overall fiscal stance. This includes the additional impact of the 
costs to offer temporary protection to displaced persons from Ukraine (0.1 % of GDP). 
Due to a lagged indexation with inflation, major government expenditures like social 
benefits  other  than  in  kind  or  compensation  of  employees  have  a  growth  rate  lower 
than inflation in 2022 and contribute to the contractionary stance. 

In 2023, the fiscal stance is projected in the Commission 2022 spring forecast at -0.8% 
of GDP on a no-policy  change assumption.15  Slovakia is  projected to  continue using 
the  grants  from  the  Recovery  and  Resilience  Facility  in  2023  to  finance  additional 
investment in support of the recovery. The positive contribution  to economic activity 
of  expenditure  financed  by  Recovery  and  Resilience  Facility  grants  and  other  EU 
funds  is  projected  to  increase  by  1.0  percentage  points  of  GDP  compared  to  2022. 
Nationally-financed investment is projected to provide an expansionary contribution to 
the fiscal  stance of  0.1 percentage points in  2023.16 At the same time, the  growth in 
nationally-financed  primary  current  expenditure  (net  of  new  revenue  measures)  in 
2023 is projected to provide a broadly neutral contribution of 0.2 percentage points to 
the overall fiscal stance. This includes additional costs to offer temporary protection to 
displaced persons from Ukraine (0.1% of GDP).  

12 

13 

14 

15 

16 

Council  Recommendation  of  18  June  2021  delivering  a  Council  opinion  on  the  2021  Stability 
Programme of Slovakia, OJ C 304, 29.7.2021, p. 121.  
A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 
Other  nationally-financed  capital  expenditure  is  projected  to  provide  an  expansionary  contribution  of 
0.2 percentage points of GDP.  
A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 
Other  nationally-financed  capital  expenditure  is  projected  to  provide  a  contractionary  contribution  of 
0.1 percentage points of GDP.  

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(19) 

In  the  2022  Stability  Programme,  the  general  government  deficit  is  expected  to 
gradually  decline  to  2.3%  in  2024  and  to  2.0%  by  2025.  Therefore,  the  general 
government deficit is planned to go below 3% of GDP by 2023 and remain below 3% 
of GDP over the Programme horizon. These projections assume limiting the growth of 
public expenditure - including compensation of employees and social transfers in kind 
-  at  a  pace  lower  than  that  of  revenue  and  below  the  robust  nominal  GDP  growth. 
According to the Programme, the general government debt-to-GDP ratio is expected to 
decrease  by  2025,  specifically  with  an  increase  to  58.2%  in  2024  and  a  decline  to 
57.3% in 2025. Based on the Commission’s analysis, debt sustainability risks appear 
high over the medium term.  

(20)  Slovakia’s  tax  system  could  be  reformed  to  boost  economic  efficiency,  foster 
environmental  and  fiscal  sustainability,  and  improve  fairness,  while  also  supporting 
broader policy objectives. The labour tax burden is  particularly  high for  low-income 
earners  compared  to  other  EU  countries.  In  contrast,  environmental  and  property 
taxation  is  not  used  to  its  full  potential.  Changing  the  tax  mix  could  support  growth 
and  also  help  foster  the  green  transition  and  environmental  sustainability.  The 
economy’s  energy  intensity  is  significantly  above  the  EU  average,  but  the  revenue 
from  environmental  taxes  stood  at  2.4%  in  2020,  close  to  the  EU  average. 
Environmental  charges  relating  to  waste  management  and  air  pollution  do  not 
sufficiently  promote  efficient  use  of  resources  and  reduce  costs  for  the  environment 
and society. Road taxes and vehicle registration fees do not reflect emission intensity 
well. Environmental taxes and charges are not indexed, and this reduces green revenue 
over time because of inflation. On property taxation, revenues from recurrent taxes on 
immovable property were relatively low in 2020 (0.5% of GDP compared to the 1.2% 
EU average). Slovakia does not currently have sufficient data to  enable updating and 
indexing  the  property  tax  base  in  line  with  market  values,  which  could  also  partly 
mitigate  the  continuing  strong  demand  for  housing  and  related  strong  house  price 
growth. In addition, further efforts in simplifying taxes and improving compliance can 
increase  public  revenues  and  thus  support  fiscal  sustainability  and  improve  fairness. 
Despite  improvements,  the  VAT  tax  compliance  gap  remained  high  in  2019  (16.1% 
compared to 10.4% in the EU). Further improvements in tax administration, including 
in  electronic  invoicing,  pre-filled  tax  returns  and  more  digitalisation,  could  help 
further reduce the leaks in the tax system. 

(21) 

in  addition 

in  2019  and  2020, 

In  accordance  with  Article 19(3), point (b) of Regulation  (EU) 2021/241  and Annex 
V, criterion 2.2, the recovery and resilience plan includes an extensive set of mutually 
reinforcing reforms and investments to be implemented by 2026. These help address 
all  or  a  significant  subset  of  the  economic  and  social  challenges  outlined  in  the 
country-specific  recommendations  addressed  to  Slovakia  by  the  Council  in  the 
European  Semester 
to  any  country-specific 
recommendations issued up to the date of adoption of a plan. In particular, the plan’s 
strong  focus  on  inclusive  education,  public  governance  and  productivity-enhancing 
investment  in  the  green  and  digital  transition,  as  well  as  its  planned  contribution  to 
decreasing  regional  disparities,  can  be  considered  a  comprehensive  and  adequate 
response to the challenges Slovakia is facing. The challenge of accelerating the green 
and  digital  transition  is  tackled  with  determination  and  a  wide  range  of  measures. 
Long-standing  challenges  in  education,  childcare,  healthcare,  and  research  and 
innovation  (R&I)  are  also  addressed  with  comprehensive  measures  for  the  most 
serious  shortcomings,  such  as  the  low  quality  and  inclusiveness  of  education, 
fragmented R&I policy coordination, insufficient public-private cooperation, and weak 
R&I  performance.  Additional  measures  proposed  in  the  plan  to  improve  the  justice 

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system, public procurement and the fight against money laundering have the potential 
to address many of the underlying challenges, if adopted and implemented in line with 
EU  law  requirements  on  proper  safeguards  and  judicial  independence  and  with  due 
involvement of stakeholders. Lastly, several reforms are expected to improve the long-
term sustainability of public finances. Overall, the plan thereby provides for ambitious 
reforms  and  investments,  particularly  in  healthcare,  the  green  and  digital  transition, 
and  public  administration,  which  are  moreover  geared  towards  further  improving 
convergence in the eurozone and boosting economic growth.  

(22)  The  implementation  of  the  recovery  and  resilience  plan  of  Slovakia  is  expected  to 
contribute  to  making  further  progress  on  the  green  and  digital  transition.  Measures 
supporting  the  climate  objectives  in  Slovakia  account  for  45%  of  the  plan’s  total 
allocation, while measures supporting digital objectives account for 21% of the plan’s 
total allocation. The fully fledged implementation of the recovery and resilience plan, 
in  line  with  the  relevant  milestones  and  targets,  will  help  Slovakia  swiftly  recover 
from  the  fallout  of  the  COVID-19  crisis,  while  strengthening  its  resilience.  The 
systematic  involvement  of  social  partners  and  other  relevant  stakeholders  remains 
important  for  the  successful  implementation  of  the  recovery  and  resilience  plan,  as 
well  as  other  economic  and  employment  policies  going  beyond  the  plan,  to  ensure 
broad ownership of the overall policy agenda. 

(23)  Slovakia  submitted  the  Partnership  Agreement  on  8  April  2022,  but  has  not  yet 
submitted  other  cohesion  policy  programming  documents17.  In  line  with  Regulation 
(EU)  2021/1060  of  the  European  Parliament  and  of  the  Council  of  24 June 2021, 
Slovakia shall take into account the relevant country-specific recommendations in the 
programming  of  the  2021-2027  cohesion  policy  funds.  This  is  a  prerequisite  for 
improving the effectiveness  and maximising the added value of the financial support 
to  be  received  from  cohesion  policy  funds,  while  promoting  the  coordination, 
complementarity and coherence between these funds and other Union instruments and 
funds.    The  successful  implementation  of  the  Recovery  and  Resilience  Facility  and 
cohesion  policy  programmes  also  depends  on  the  removal  of  bottlenecks  to 
investment,  to  support  the  green  and  digital  transition  and  balanced  territorial 
development.  In  particular,  regional  disparities  in  competitiveness  and  social 
indicators should be addressed by using a combination of the different funds available. 

(24) 

In  response  to  the  mandate  by  the  EU  Heads  of  State  or  Government  set  out  in  the 
Versailles Declaration, the REPowerEU plan aims to phase out the European Union’s 
dependence on fossil fuel imports from Russia as soon as  possible. For this purpose, 
the most suitable projects, investments and reforms at national, regional and EU level 
are being identified in dialogue with the Member States. These measures aim to reduce 
overall reliance on fossil fuels and shift fossil fuel imports away from Russia. 

(25)  Since 2015, progress to reduce net greenhouse gas emissions has largely stalled. The 
Slovak  economy  has  a  high  energy  intensity,  partly  due  to  the  extensive  industrial 
sector’s dependency on fossil imports. According to 2020 data, Slovakia is particularly 
dependent on Russia for natural  gas (85% compared to the EU average of 44%) and 

17 

Regulation  (EU)  2021/1060  of  the  European  Parliament  and  of  the  Council  of  24  June  2021  laying 
down  common  provisions  on  the  European  Regional  Development  Fund,  the  European  Social  Fund 
Plus,  the  Cohesion  Fund,  the  Just  Transition  Fund  and  the  European  Maritime,  Fisheries  and 
Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the 
Internal  Security  Fund  and  the  Instrument  for  Financial  Support  for  Border  Management  and  Visa 
Policy. OJ L 231, 30.6.2021, p. 159. 

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crude oil (100% compared to  the EU average of 26%). However, the dependence on 
Russia for hard coal is less than the EU average (35% compared to 54%)18. The share 
of natural gas in the energy mix is slightly above the EU average (24.9% compared to 
24.4% for the EU) and solid fossil fuels (14% compared to 10.8% for the EU), while 
the share of oil is lower (21.9% compared to 32.7% for the EU). The share of nuclear 
energy in the energy mix stood at 24.6% in 2020 (compared to 13.1% for the EU). A 
faster  uptake  of  renewables  would  help  reduce  Slovakia’s  dependence  on  fossil  fuel 
imports  from  Russia  and  ease  the  risk  of  energy  poverty  amid  increasing  energy 
prices.  Further  reforms  in  the  area  of  market  design  and  support  to  renewables  are 
planned  in  2022  as  part  of  the  recovery  and  resilience  plan.  Uptake  of  renewable 
energies  can  be  further  accelerated  by  increasing  the  thresholds  for  exemptions  to 
building  permits  for  small  scale  renewables,  streamlining  administrative  and  permit 
procedures in a one-stop-shop, lowering grid connection fees and improving access to 
available grid capacity. Slovakia ended the moratorium for connecting new renewables 
to  the  grid  in  April  2021.  However,  a  forward-looking  mechanism  providing 
transparent  and  reliable  information  on  the  capacity  for  connecting  new  intermittent 
renewables to the grid still needs to be implemented. To accommodate the increasing 
volume  of  renewable  electricity,  Slovakia  should  modernise  the  transmission  and 
distribution networks, create new energy storage facilities and complete the regulatory 
framework  for  renewable  hydrogen.  Additional  investments  in  geothermal  energy, 
sustainable  bio-methane  stations  and  renewable  hydrogen-based  solutions,  which 
respect  relevant  sustainability  criteria,  would  help  address  the  high  domestic 
consumption  of  natural  gas.  There  is  also  scope  to  increase  the  energy  efficiency  of 
district  heating  systems  and  swiftly  deploy  renewable  heat  sources  substituting  for 
natural  gas.  The  decarbonisation  effort  can  be  also  improved  at  regional  level  by 
setting up regional sustainable energy centres. 

(26)  Further efforts  will be needed on energy  efficiency.   In particular, there is  a need to 
focus  on  deep  and  green  renovations,  reduce  heat  consumption  and  increase 
investment  in  renewable  heat  sources,  including  heat  pumps.  Slovakia  could  further 
accelerate  building  renovations  by  attracting  more  private  investments,  including  for 
public  buildings,  providing  technical  assistance,  improving  the  implementation 
capacities and “one-stop-shop” approach and investing in green skills. Moreover, high 
levels  of  skills  mismatches  in  the  economy  call  for  strengthening  adult  learning 
policies,  including  in  relation  to  the  green  transition.  Additional  effort  is  needed  to 
address energy poverty and reform investment in social housing.  Furthermore, several 
regulatory  and  administrative  measures  should  be  put  in  place  to  accelerate  the 
construction permit process, simplify implementation rules, adapt renovation schemes 
improve  coordination  between  different  public  authorities  and  funding 
and 
programmes.  Additional  measures  and  incentives  could  address  the  high  energy 
intensity  in  industry,  including  in  small  and  medium-sized  companies.  This  includes 
investment  schemes  to  improve  energy  efficiency  based  on  energy  audits.  Support 
schemes  should  be  complementary  (e.g.  with  the  decarbonisation  scheme)  and  be 
supported  by  private  funding  and  financial  instruments.  Further  increase  in  ambition 
for  reducing  greenhouse  gas  emissions,  and  increasing  renewables  and  energy 
efficiency  targets  will  be  needed  for  Slovakia  to  be  in  line  with  the  ‘Fit  for  55’ 
objectives. 

18 

Eurostat (2020), share of Russian imports over total imports of natural gas, crude oil and hard coal. For 
the  EU27  average,  the  total  imports  are  based  on  extra-EU27  imports.  For  Slovakia,  total  imports 
include intra-EU trade. Crude oil does not include refined oil products. 

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(27)  While  the  acceleration  of  the  transition  towards  climate  neutrality  and  away  from 
fossil  fuels  will  create  significant  restructuring  costs  in  several  sectors,  Slovakia  can 
make  use  of  the  Just  Transition  Mechanism  in  the  context  of  cohesion  policy  to 
alleviate  socio-economic  impact  of  the  transition  in  the  most  affected  regions.  In 
addition,  Slovakia  can  make  use  of  the  European  Social  Fund  Plus  to  improve 
employment opportunities and strengthen social cohesion.  

(28) 

(29) 

In light of the Commission’s assessment, the Council has examined the 2022 Stability 
Programme and its opinion19 is reflected in recommendation (1) below. 

In view of the close interlinkages between the economies of euro area Member States 
and  their  collective  contribution  to  the  functioning  of  the  Economic  and  Monetary 
Union,  the  Council  recommended  that  the  euro  area  Member  States  take  action, 
the 
including 
recommendation  on  the  economic  policy  of  the  euro  area.  For  Slovakia,  this  is 
reflected in particular in recommendations (1) and (2) below. 

resilience  plans, 

recovery  and 

implement 

through 

their 

to 

HEREBY RECOMMENDS that Slovakia take action in 2022 and 2023 to:  

1. 

2. 

3. 

In 2023, ensure that the growth of nationally-financed current expenditure is in line 
with  an  overall  neutral  policy  stance,  taking  into  account  continued  temporary  and 
targeted support to households and firms most vulnerable to energy price hikes and 
to  people  fleeing  Ukraine.  Stand  ready  to  adjust  current  spending  to  the  evolving 
situation.  Expand  public  investment  for  the  green  and  digital  transition  and  for 
energy  security,  including  by  making  use  of  the  RRF,  RePowerEU  and  other  EU 
funds. For the period beyond 2023, pursue a fiscal policy aimed at achieving prudent 
medium-term fiscal positions. Make the tax mix more efficient and more supportive 
to  inclusive  and  sustainable  growth,  including  by  leveraging  the  potential  of 
environmental  and  property  taxation.  Continue  to  strengthen  tax  compliance, 
including by further digitalising tax administration. 

Proceed with the implementation of its recovery and resilience plan, in line with the 
milestones  and 
the  Council  Implementing  Decision  of 
13 July 2021. Submit the 2021-2027 cohesion policy programming documents with a 
view to finalising their negotiations with the Commission and subsequently starting 
their implementation. 

included 

targets 

in 

Reduce  overall  reliance  on  fossil  fuels  and  diversify  imports  of  fossil  fuels. 
Accelerate  the  deployment  of  renewables  by  further  facilitating  grid  access, 
introducing  measures  to  streamline  permitting  and  administrative  procedures  and 
modernising  the  electricity  network.  Reduce  reliance  on  natural  gas  in  heating  and 
industry. Adjust renovation policies to accelerate and incentivise deep renovations of 
buildings.  

Done at Brussels, 

For the Council 
The President 

19 

Under Article 5(2) of Council Regulation (EC) No 1466/97. 

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