Source: EURLEX
Language: en
Format: md

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COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 15.07.1997
COM(97) 2004 final

**Commission Opinion**

**on Slovakia's Application**

**for Membership** **of** **the European Union**

**Contents**

**A. INTRODUCTION**

**a)** **Preface**
The Application for Membership
The Context of the Opinion
The Contents of the Opinion

- **b) Relations Between the European Union and Slovakia**
Historical and Geopolitical Context
Slovakia's Position Concerning the European Union
Contractual Relations

The Pre-Accession Strategy
Trade Relations

General Evaluation

**B. CRITERIA FOR MEMBERSHIP**

**1. Political Criteria**

**1.1** **Democracy and the Rule** **of** **Law**
Parliament and Legislative Powers: Structure
Functioning of Parliament
The Eexecutive: Structure

Functioning of the Executive
The Judiciary: Structure
Functioning of the Judiciary
**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**

I. **The Economic Situation**

Background
Liberalisation

Stabilisation of the Economy
Structural Change
Financial Sector

Economic and Social Development

ii

Page

**2.2 The Economy in the Perspective** **of** **Membership**
Introduction

The Existence of a Functioning Market Economy
The Capacity to Cope with Competitive Pressure and Market Forces
Prospects and Priorities
**2.3 General Evaluation**

**3. Ability to Assume the Obligations** **of** **Membership**

**3.1 Internal Market Without Frontiers**

The Four Freedoms

    - General Framework

    - Free Movement of Goods

    - Free Movement of Capital

    - Free Movement of Services

    - Free Movement of Persons

    - General Evaluation

Competition
**3.2 Innovation**

Information Society
Education, Training and Youth
Research and Technological Development
Telecommunications

Audio-visual

**3.3 Economic and Fiscal Affairs**

Economic and Monetary Union
Taxation

Statistics

**3.4 Sectoral Policies**

Industry
Agriculture
Fisheries

Energy
Transport
Small and Medium 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

Ill

**3.9 Financial Questions**

Financial Control

Budgetary Implications

**4. Administrative Capacity to Apply the** _**Acquis**_

**4.1 Administrative Structures**

**4.2 Administrative and Judicial Capacity**

**4.3 General Evaluation**

**C. SUMMARY AND CONCLUSION**

**Annexes**

Composition of Parliament
Single Market: White Paper Measures
Statistical Data

iv

**A. INTRODUCTION**

a) Preface

The Application for Membership

Slovakia presented its application for membership of the European Union on 27 June
1995, and the Council of Ministers decided on 17 July 1995 to implement the
procedure laid down in Article O of the Treaty, which provides for consultation of the
Commission.

That is the framework in which the Commission submits the present Opinion,
responding to the request of the European Council in Madrid in Decemoer 1995 to.
present the Opinion as soon as· possible after the conclusion of the Intergovernmental
Conference, which commenced in March 1996 and concluded in June 1997.

The Context of the Opinion

The Slovak application for membership is being examin~d at the same time as
applications from nine other associated countries. Slovakia's accession is to be seen
as part of an historic process, in which th~ countries of Central and Eastern Europe
overcome the division of the continent which has lasted for more than 40 years, and
join the area of peace, stability and prosperity created by the Union.

The European Council in Copenhagen in June 1993 concluded that:

"The associated countries in Central and Eastern Europe that so desire shall become
members of the Union. Accession will take place as soon as a country is able to
assume the obligations of membership by satisfying the economic and political
conditions. Membership requires:

   - that the candidate country has achieved stability of institutions guaranteeing
democracy, the rule of law, human rights and respect for and protection of
minorities;

   - the existence of a functioning market economy, as well as the capacity to cope
with competitive pressure and market forces within the Union;

   - the ability to take on the obligations of membership, including adherence to
the aims of political, economic and monetary union. ..

The Union's capacity to absorb new members, while maintaining the momentum of
European integration, is also an important consideration in the general interest of both
the Union and the candidate countries".

This declaration spelled out the political and economic criteria for examining the
accession requests of the associated countries of Central and Eastern Europe.

The European Council in Madrid in December 1995 referred to the need, in the
context of the pre-accession strategy, "to create the conditions for the gradual,
harmonious integration of the application countries, particularly through:

    - the development of the market economy,

    - the adjustment of their administrative structure,

    - the creation of a stable economic and monetary environment".

In its Opinion, the Commission analyses · the Slovak application on its- merits, but_
according to the same criteria as the other applications, on which it is delivering
Opinions at the same time. This way of proceeding respects the wish, expressed by
the European Council in Madrid, to ensure that the applicant countries are treated on
an equal basis.

In addition to the individual Opinions the Commission is presenting separately to the
Council, in the framework of its communication "Agenda 2000", a general assessment
of the accession requests, and its recommendations concerning the strategy for
successful enlargement of the Union. At the same time, it is presenting an evaluation
of the impact of enlargement on the Union's policies ..

The Contents of the Opinion

The structure of the Opinion takes account of the conclusions of the European Council
in Copenhagen. It:

describes the relations up to now between Slovakia and the Union,
particularly in the framework of the association agreement;

   - analyses the situation in respect of the political conditions mentioned 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 (market economy, capacity to
cope with competitive pressure);

    - 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;

2

    - makes finally a general evaluation of Slovakia's situation and prospects in
respect of the conditions for membership of the Union, and a recommendation
concerning accession negotiations.

In assessing Slovakia in respect of the economic criteria and its capacity to assume the
_acquis,_ the Commission has included a prospective assessment; it has attempted to
evaluate the progress- which .can reasonably be expected on the part of Slovakia in the
coming years, before accession, taking account of the fact that the _acquis_ itself will
continue to develop. For this purpose, and without prejudging the actual date of
accession, the Opinion is based on a medium-term time horizon of approximately five

years.

During the preparation of the Opinion, the Commission has obtained a wealth of
information on Slovakia's situation from the Slovak authorities, and ·has utilised
many other sources of information, including the member states and numerous
international organisations.

3

**b)** **Relations Between the European Union and Slovakia**

**Historical** **and** **Geopolitical** **Context**

Slovakia is a mountainous, landlocked country situated centrally in Europe and
sharing borders with Austria, the Czech Republic, Poland, Hungary and the Ukraine.
2
It has an area of 49000 km and a population of 5.3 million.

Slavs have inhabited the Slovak lands since the 5th century. From the 10th to 20th
centuries, the Slovak lands were part of the Hungarian and Austro-Hungarian empire,
apart from a period of partial Turkish occupation after 1526. In the nineteenth century
a sense of Slovak national identity emerged, partly in reaction to policies of
Magyarisation applied to the Slovak lands.

The Czechoslovak Republic was proclaimed in October 1918. Its composition was
multiethnic: 51 % Czech, 23% German, 14% Slovak and 5.5% Hungarian, according
to a 1921 census. The country inherited 60-70% of the industrial base of the AustroHungarian Empire.

In the 1930s the Sudeten Germans' demands for autonomy created increasing tension.
Under the 1938 Munich Agreement and the Vienna Arbitration the regions bordering
Germany and mostly settled by Germans were ceded to Germany, and a quarter of the
Slovak lands ceded to Hungary. In March 1939 German troops occupied the rest of
the Czech lands and Slovakia became a nominally independent state under President

Fr. Jozef Tiso.

After the War the Czechoslovak Republic was restored to its pre-war borders, except
for Ruthenia, which was annexed by the Soviet Union. Virtually all Sudeten Germans
were forced to leave Czechoslovak territory and their possessions were confiscated.

Czechoslovakia was one of the founding members of the post-war international
economic institutions (IMF and IBRD in 1945, GATT in .1948). But after the
formation in 1948 of a government composed of only Communists and their allies the
Communist party expanded its hold on power. Under the division of labour agreed
within COMECON Czechoslovakia concentrated on developing its heavy industry. In
the 1960s central controls were partially relaxed. Reform pressures within the
Communist Party resulted in the election of Alexander Dubcek as First Secretary in
January 1968. The introduction of democratic elements into political and cultural
life, known as the Prague Spring, was brought to a brutal end by invasion by members
of the Warsaw Pact on 21 August 1968, which led to re-imposition of Soviet
orthodoxy under Gustav Husak.

Nevertheless, a small dissident movement, later associated with the Charter 77 group,
remained active through the 1970s and l 980s. The political unrest in many countries
of central anq. eastern Europe in 1989 led that November to protests in
Czechoslovakia. Popular reaction to the violent police repression of a student
demonstration in Prague on 17 November led to Husak's abdication and the election
the following month of Vaclav Havel, a leading member of Charter 77, as President.

4

After 1989, the name of the country was officially changed to the Czech and Slovak
Federal Republic. Differences between Czech and Slovak politicians on the future
federal structure and economic policy became unbridgeably wide. In October 1992
the parliaments of the two Republics passed a joint resolution dissolving the
federation and creating two independent successor states as of 1 January 1993.

The political situation during the first year of independence was unstable: though
there was consensus on the need for political and economic reform, there were sharp
differences over the pace and nature of the latter. Between March and September
1994 a multi-party interim government replaced the first post-independence
government. Elections in September 1994 led to the formation of a coalition
government, whose term in office has been characterised by turbulence between it and
the other institutions of the state.

**Slovakia's Position Concerning** **the** **European Union**

The Czechoslovak Government which was formed in 1990 committed itself clearly to
European integration. This commitment was reflected in the signature of the Europe
Agreement in March 1992. The Slovak Government assumed the positive policy
stance towards Europe integration as well as the rights and obligations under the
Europe Agreement concluded by the federation. The policy of the current Slovak
Government towards the European Union was set out in its programme of January
1995. This stated that its foreign policy priorities included membership of Slovakia in
the EU; and underlined its commitment to implement fully the Europe Agreement, to
approximate legislation and standards to those of the EU, to prepare for entry into
EMU and to proceed with full trade liberalisation. The Memorandum accompanying
the Slovak application for membership submitted on 27 June 1995 states "The
strategic objective of the Slovak Republic is to become a full-fledged member in the
EU within the time horizon around the year 2000. The Slovak Republic wishes to
join the EU as an equal member actively contributing to the advantageous
multifaceted cooperation".

**Contractual Relations**

Diplomatic relations between the European Community and the Czechoslovak
Republic were established in September 1988. The first agreement between them was
the four-year Trade Agreement on industrial products which entered into force in
April 1989. A Trade and Cooperation Agreement was concluded in 1990. In the
autumn of 1990 the Union proposed to Czechoslovakia, and to Hungary and Poland,
conclusion of Association Agreements, to be known as Europe Agreements to support
their political and economic transformation. The agreement with Czechoslovakia was
signed on 16 December 1991. Its trade provisions entered into force in March 1992
by way of an Interim Agreement replacing the 1989 Agreement. The Interim
Agreement provided for the consolidation of previous trade concessions as well as the
gradual and asymmetric establishment of a free trade area over a period of ten years.

5

The division of Czechoslovakia made it necessary to negotiate new Europe
Agreements with the two successor states. The Agreement with Slovakia was signed
in October 1993 and entered into force in February 1995.

The Europe Agreement is the legal basis for . relations between Slovakia and the
Union. Its aim is to provide a framework for political dialogue, promote the
expansion of trade and eco.nomic relations between the parties, provide a basis for
Community technical and financial assistance, and an appropriate framework to
support Slovakia's gradual integration into the Union. The institutional framework of
the Agreement provides a mechanism for implementation, management and
monitoring of all areas of relations. Sub-committees examine questions at a technical
level. The Association Committee, at senior official level, provides for discussion of
and often solutions to problems arising under the Agreement. The Association
Council, at Ministerial level, examines the overall status of and perspectives for
relations and provides the opportunity to review Slovakia's progress on preparation
for accession.

The Slovak Government has established a coordinated institutional framework for

dealing with European integration matters and specifically for the implementation of
the Europe Agreement. At ministerial level, there is a Council for Integration into
the Europe Union, chaired by the Deputy Prime Minister. His deputies are the
Minister of Foreign Affairs and the Deputy Prime Minister responsible for
approximation of legislation. Each Slovak ministry has a department responsible
for all EU related matters and is represented in this Council depending on the
European integration issues being discussed. In 1996 a parliamentary committee on
Europe Integration was established. 

**The** **Pre-Accession** **Strategy**

_lmvlementation_ _of_ _the_ _Europe_ _Agreement_ _and_ _the_ _White_ _Paper_

The institutional framework of the Europe Agreement is fully functional. The
Association Council has met three times; the Association Committee twice. The
Joint Parliamentary Association Committee has also met on four occasions. A
structure comprising nine multidisciplinary subcommittees has been established to
assist the Association Committee. The full range of issues has been discussed. The
political circumstances in Slovakia have made necessary a particular focus on issues
relating to the establishment of civil society.

The trade provisions have been implemented according to schedule, but there have
been some delays regarding the entry into force of some of the other provisions of the
Agreement. The implementing rules on competition entered into force on 1 January
1997 instead of March 1995 as foreseen under the Agreement. Those on state aids
are only now being finally approved. Slovakia has not yet implemented its
commitments on intellectual and industrial property.

6

Most of the trade problems which have arisen in the implementation of the Europe
Agreement have been successfully resolved. The use of balance of payments
restriction measures has figured importantly amongst those problems. The Slovak
Government maintained an· import surcharge in place from 1994 to 1 January 1997,
longer -than necessary in light of balance of payments developments. The
Government introduced an import deposit scheme in May 1997 on balance · of
payments grounds, which is_ still under discussion. Technical barriers to trade have
arisen because of differences in the Slovak standards and certification rules. Slovakia

notified the EU in mid-1996 of its intention to start discussion with Russia of a

possible free trade agreement. After discussion within the instances of the
Agreement, Slovakia modifi:ed its intentions to seeking no more than trade
liberalisation in certain areas.

The Commission's White Paper of 1995 on the Internal Market set out the-legislation
which candidate countries -would have to transpose and implement in order to apply·
the acquis, and identified elements essential to the implementation of the single
. market (known as Stage I measures) which would need priority attention. Slovakia
has attached considerable importance to the legal, tasks related to transposition. The
Slovak Government has published a strategy for implementing the White Paper. This
fits into an overall strategy for legislative approximation which sets out priorities
which should result in the entry into effect of EC internal market legislation in the
medium term. Progress in legislative alignment has been· achieved in the area of
banking, free movement of capital, indirec~ taxation, agriculture and environment.

With the exception of the intellectual property area, the Slovak Government has
consistently met its obligations under the Europe Agreement and has shown a
willingness to cooperate in the resolution of the problems which have arisen. Its
attachment to balance-of-payment restrictions is, however, evidence of some
continuing unease at its obligations under the Agreement.

_Structured_ _Dialogue_

Slovakia has participated in the Structured Dialogue. Slovakia has submitted
background documents for a number of the Structured Dialogue meetings. At the
Joint Ministerial Meeting (Foreign Affairs) on 29 October, 1996, the Slovak
Government submitted a paper on the status of implementation of the pre- accession
strategy in Slovakia, which included suggestions for improving the Structured
Dialogue, by focusing on accession-related agenda items and involving the associated
countries more in choosing them.

From 1990 - 1996, 212 MECU have been allocated to the Slovak Republic under the
Phare programme, 4 MECU thereof being allocated to cross-border co-operation in
1995. In 1996, Slovakia received only a commitment for 4.5 MECU. Main sectors of
activity had previously been the development of the private sector, infrastructure
development, human resources development and European integration, including
support to public administration reform and approximation of legislation.

7

The Phare programme has had programming and implementation problems. In 1996,
no funds were committed to either national or cross border programmes, because of
administrative bottlenecks and Slovakia's low absorption rate, but also because
Slovakia rejected a funding proposal because of the conditionality it contained. The
situation has improved since.

                      _Participation_ _in_ _Communi(y_ _Pro.grammes_

Slovakia has adopted the Additional Protocol to the Europe Agreement on
Community programmes and . is ready to participate initially in Socrates, Leonardo
and Youth for Europe as from 1997. As from 1998 participation will be extended to
include also MEDIA II, Kaleidoscope, Raphael, Ariane and health and social

programmes. _

Trade Relations

Between 1989 and 1992 trade between EU and the Czechoslovakia increased

dramatically. EU imports jumped from 2.6 billion. ECU to 5.5 billion ECU (+ 112%)
and EC exports from 2.4 billion ECU to 6.3 billion ECU (+ 163%). With the
dissolution of the Czechoslovakia, the Czech Republic became Slovakia's largest
trading partner, receiving 42% of Slovak exports in 1993 and 37% in 1994. But more
than half of the 23.5% jump in Slovak exports from 1993 to 1994 resulted from
increased exports to the EU. Between 1993 and 1995 EU (12) imports from Slovakia
increased from 1.15 billion ECU to 2.61 billion ECU (+124%). For the first half of
1996 EU (15) imports were 1688 MECU. EU (12) exports to Slovakia increased from
1.2 billion ECU in 1994 to 2.69 billion ECU (+ 126%) in 1995. For the first half of
1996 EU(15) exports were 1884 MECU. Apart from 1994 when the EU was in deficit
of 80 MECU with Slovakia, the overall balance of trade has remained in surplus for
the European Union. The EU is now the fastest growing and the biggest trade partner.
Germany alone takes up about half of EU trade with Slovakia.

Slovakia remains largely specialised in a limited number of product lines, especially
chemicals, iron and steel products, textiles and apparel. Slovakia's most important
imports from the Union are machinery and electrical articles, transport equipment and
chemical products. The most important Slovak exports to the EU were base metal and
articles, textiles, transport equipment and machinery and electrical articles.

Slovakia has a Customs Union with the Czech Republic and is a founding member of
the Central Europe Free Trade Agreement (CEFTA). -The Czech Republic is
Slovakia's single most important trading partner, absorbing in 1996 31 % of Slovak
exports and providing 24.5% of Slovak imports. Poland, Hungary, Romania and
Bulgaria are also important export markets.

**General** **Evaluation**

8

The EU-Slovak relationship has developed under the Europe Agreement. Traderelated issues have been relatively few, although the import deposit scheme remains to
be resolved. A wide range of other issues have also had to be addressed within the ~

relationship: political issues; disagreement over management of the Phare
programme; and the future of Slovakia's nuclear power programme. The Slovaks
have been willing to use the machinery of the relationship to address such issues, even
though not all of them have peen resolved.

**B. Criteria for Membership**

**1.** **Political Criteria**

The European Council in Copenhagen decided on a number of "political" criteria for
accession to be met by the candidate countries in Central and Eastern Europe. These
countries must have achieved "stability of institutions guaranteeing democracy, the
rule of law, human rights and respect for and protection of minorities".

In carrying out the assessment required in this connection, the European Commission
has drawn on a number of sources of information: answers given by the Slovak
authorities to the questionnaire sent to them by Commission staff in April 1996,
bilateral follow-up meetings, reports from Member States' embassies and the
Commission's delegation, assessments by international organisations (including the
Council of Europe and the OSCE), reports produced by non-governmental
organisations, etc.

The following assessment involves a systematic examination .of the main ways in
which the public authorities are organised and operate, and the steps they have taken
to protect fundamental rights. It does not confine itself to a formal description but
seeks to assess the extent to which democracy and the rule of law actually operate.

This assessment relates to the situation in June 1997. It does not examine in detail any
changes which have taken place in the past or which may come about in the future,
though it generally takes account of any stated intention to reform a particular sector.
The situation of the government is mentioned here only in passing: it will be
examined in greater depth in chapter 4.

**1.1** **Democracy and the Rule** **of** **Law**

The constitution adopted in September 1992 at the same time as the declaration of
independence and national sovereignty, established Slovakia as a parliamentary
democracy. However, the operation of institutions in Slovakia has encountered a
number of difficulties.

**Parliament** **and** **Legislative** **Powers:** **Structure**

9

The Parliament is unicameral - the National Council of the Republic of Slovakia - and
comprises 150 members elected for four years by proportional representation. Only
parties which have received at least 5% of the votes cast (7% in the case of a coalition
of two or three parties, 10% if the coalition has four or more parties) are allocated
seats in Parliament.

The large number of political groupings (there are 79 registered parties) testify that
there is a genuine multi-party system in Slovakia. Parties which received over 3% of
the votes in the last election are entitled to state financing.

The President of the Republic· may dissolve the National Council if the government
has been defeated on a vote of confidence three times in the six months following
parliamentary elections. At any other time, a Parliamentary vote with a 2/3-majority is_
the only means of securing a dissolution. ·

Article 78 of the Constitution guarantees members of parliament the traditional
immunities.

Parliament exercises legislative power and shares its right of initiative with the
government. The -government and the individual ministers can make regulations
within the limits laid down by law.

The President of the Republic may organise referenda, at the request either of
Parliament or of at least 300 000 citizens. Referenda are required to confirm
constitutional laws or decide that Slovakia should accede to, or withdraw from, a
union of states. They may cover any subject other than basic rights, the tax system or
the national budget.

**Functioning** **of** **Parliament**

Elections in Slovakia are free and fair. The latest parliamentary elections, in
September 1994, brought into power a coalition government led by the 'Movement
for a Democratic Slovakia', which had lost its majority in March of that year
following internal disputes (see annex for results of the last parliamentary election).

Parliament in Slovakia does not carry out its duties in conditions which comply with
the normal rules for the operation of democracy.

The rights of the Opposition are not fully respected, particularly with regard to its
membership of Parliamentary committees. From September 1994 to January 1997
there was no provision for the Opposition to have a proportional share of the seats on
the Parliamentary committees of enquiry responsible for monitoring the secret
services and the armed forces' intelligence services. These committees have not yet
been established because the government has refused to accept the members appointed
by the Opposition to sit on them. In addition, the Opposition chairs none of
Parliament's standing committees, although it did so up to September 1994.

10

Respect for the mandates of members of parliament and the procedures governing the
work of Parliament is not always guaranteed. The resignation as a Member of
Parliament of Mr Gaulieder, which he contests, is currently being examined by the
Constitutional Court. Since 1994 the Parliamentary majority has also established four
committees of enquiry composed almost exclusively of its own members. Of these
committees, two are respon~ible for investigating the circumstances surrounding the
overthrow of the government in March 1994, one is concerned with the secret services
and the other deals with the armed forces' intelligence services. The Constitutional
Court has criticised the establishment of these committees because their terms of

reference exceed the powers granted to Parliament by the Constitution.

The Executive; Structure

The President of the Republic is elected by a 3/5 majority of Parliament for a fiveyear term, renewable once only. He exercises the traditional prerogatives of a Head of
State. He may be dismissed by Parliament by a 3/5 qualified majority if he acts
contrary to the sovereignty or territorial integrity of the country or its constitutional
and democratic system. He may ask the National Council to reconsider a law which it
has adopted, but the Council may override his veto by a simple Jllajority.,

The Slovak Constitution contains the risk of an institutional impasse if a majority
cannot be found for the appointment of a new President of the Republic. If this post is
vacant, it appears that a new government cannot be appointed and the incumbent
Prime Minister assumes the prerogatives of the President.

The President appoints the Prime Minister and, on his proposal, the ministers. Both
the government and the individual ministers are responsible to Parliament.

Administratively, the country is divided into eight regions and 79 districts headed by
government representatives. The law of July 1996 increased the powers of these
bodies at the expense of those hitherto exercised by local authorities. However, the
allocation of responsibilities between the decentralised levels of the national
government and the local authorities still remains to be clarified.

Slovakia has only one type of local authority, the municipality, of which there are
2,680. They are financed both from their own resources and from a share of national
tax revenue determined each year by the national government.

The Slovak administration has no civil service code clearly defining the rights and
obligations of civil servants. This makes it more difficult to combat the problems of
corruption which the country is experiencing.

The army and police are under the control of the civil authorities while the secret
services are responsible directly to the Prime Minister. In theory, their activities are
subject to Parliamentary scrutiny.

11

**Functioning** **of** **the** **Executive**

The main weakness of the way the executive power operates in Slovakia is that the
present government does not fully respect the role and responsibilities of the other
institutions and frequently adopts an attitude which goes beyond the confrontations
traditionally accepted in a d~mocracy.

The constant tension between the government and the President of the Republic is an
example of this situation. In 1995 the majority party began proceedings to dismiss the
President although the conditions required for this ( see above) were clearly not
satisfied. This process failed because the government was unable to get the 2/3
majority required by the Constitution. In 1996 the operating budget for the Presidency
was sharply reduced.

Similarly, in October 1995 civil servants were invited to sign a petition from the
Minister for Culture seeking the dismissal of the President. Those who did not wish to
sign were threatened with sanctions. Such inter-institutional conflict goes well beyond
what is normally acceptable in democratic politics.

In a demarche on 25 October 1995, the European Union expressed its concern about
the political and institutional tension prevailing in Slovakia and in particular about
measures being taken against the President of the Republic which could infringe the
Constitution and run counter to normal democratic practice in the Union. In a
resolution adopted in November that year, the European Parliament took a similar
line.

When referenda were organised on 23 and 24 May 1997 on the accession of Slovakia
to NATO and the election of the President of the Republic by direct universal
suffrage, the government - following the ruling of the Constitutional Court that the
referendum on the method of electing the President was compatible with the
Constitution - refused to distribute voting papers to polling stations bearing this
question and defied the decision of the central referendum committee, which
accordingly ruled that the voting on 23 and 24 May had not proceeded in accordance
with the law.

The government also sought to extend its methods of exercising control over various
sectors of civil society. The process of privatisation was carried out in conditions
which did not meet the requirements of transparency and fairness. The mechanisms
for carrying it out were criticised by the Constitutional Court. The law on higher
education adopted in 1996 gives the government greater powers to intervene in the
appointment of university teachers.

There is inadequate control of the work of the secret services in Slovakia by the civil
authorities, particularly Parliament. Such control is exercised only by the government,
which has not yet allowed the introduction of Parliamentary control which the
Opposition fully supports. The relevant authorities have not completed the
investigations required into certain matters in which the involvement of these services

12

was suspected such as the kidnapping of the son of the President of the Republic, the
killing of the agent Remias and the attack on the editor-in-chief head of 'Sme', Peter
Toth.

The Judiciary: Structure

The independence of the judicial system in Slovakia is impeded in a number of
respects. Judges are appointed by Parliament acting on a proposal from the
government, initially for a four-year term and then for an unlimited period. This
"probationary period" provid~d for in Article 145 of the Constitution may restrict the
independence of judges, particularly during their early years in office. The Minister
for Justice also has the power, which he has already used, to transfer the presidents
and vice-presidents of judicial districts at his discretion. On the other hand,-judges can
be dismissed only by Parliament after it has received the opinion of a disciplinary.
board and only for serious reasons. They enjoy the same immunities as Members of
Parliament, which can be removed only by the Constitutional Court. Judges, like
prosecutors, may not be members of political parties.

The prosecutor's office, under the authority of a prosecutor-general appointed and
removed by the President acting on a proposal from Parliament, is independent of the
executive. However, the bill establishing the organisation of the Prosecutor's office
and the status of its members provided for in, Article 151 of the· Constitution has not
yet been passed into law.

The civil courts are responsible for the control of administrative acts.

Slovakia has no ombudsman.

The Ccr1stitutional Court, established in 1993, comprises ten members appointed for a
seven-year term by the President of the Republic from a list of twenty names put
forward by Parliament. It monitors the conformity of laws and regulations with the
Constitution and international treaties. It settles conflicts which may arise between the
various constitutional powers, judges parliamentary elections and referendums and
may rule on appeals against the dissolution of a political party or the removal from
office of a Member of Parliament.

Under Article 130 of the Constitution, a decision by the government or the
administration may be referred to the Constitutional Court by one-fifth of the
Members of Parliament, the President of the Republic, the government, the
Prosecutor-General, the courts or any person who considers that his basic rights or
liberty has been infringed and who has been unable to secure redress from other

courts.

**Functioning** **of** **the Judiciary**

13

The judicial process in Slovakia is marked by excessive delays, and judges would
benefit from stronger guarantees of their independence.

The Constitutional Court has played a very active role in endeavouring to keep a
balance between the various powers and preserving their respective responsibilities as
defined by the Constitution. Since 1994 the Court has ruled 12 bills to be
unconstitutional.

**1.2** **Human Rights and the Protection** **of** **Minorities**

Slovakia'has set in place a number ofnonns to ensure observance of human rights and
the rights of minorities. Various international conventions are also applicable, above
all the European Convention on Human Rights and its main additional protocols. In_
accordance with Article F of the TEU, this collection of texts forms part of the _acquis;_
any country wishing to join the Union must have ratified them.

Slovakia, which has been a member of the Council of Europe since June 1993, has
been a party to the European Convention on Human Rights and its additional
protocols since March 1992 as a result of the ratifications carried out by
Czechoslovakia. It has also granted private individuals the right to appeal to the
European Court if they consider that their rights under that Convention have been
violated.

Among other international conventions protecting human rights and minorities,
Slovakia has ratified the Convention against the use of torture and the framework
convention on minorities. It has also ratified the mainUN Conventions on human

rights.

Under the Slovak constitution, international conventions on human rights take
precedence over national law if they are more favourable.

**Civil** **and** **Political** **Rights**

Access to the judicial system is largely guaranteed in Slovakia. Legal aid is available

in criminal cases.

The death penalty was abolished in 1990 and is forbidden under the Constitution in all

circumstances.

There is protection against arbitrary arrest. Nobody may be arrested without a warrant
issued by a public prosecutor and must be brought before a judge within 24 hours.
During that period, an accused person has the right to a lawyer. Within 24 hours of the
arrest, a judge must decide whether the person should be released or charged. Remand
may not exceed a period of one year unless the Supreme Court decides to extend this
period because of the special risk to society presented by the detained person.

14

All citizens over 18 years of age have guaranteed electoral rights.

Freedom of association is guaranteed in Slovakia, as is demonstrated by the
expanding number of associations (12 000 NGOs in the country). Parliam~nt has
adopted a law on foundations imposing stricter conditions which will prevent some
previously registered. NGOs from conforming to the requirements in the future.
Parliament is currently considering a bill on non-profit-making organisations.

The right of assembly is guaranteed in Slovakia.

The government has exerci$ed considerable influence on the public radio and
television networks, marked in particular by a very substantial imbalance in the
amount of access granted to the government and the Opposition. A growing private
audio-visual sector (a private national television network and five local networks, 20
private radio stations) has substantially increased freedom of expression. This trend is
being supported by the growing number of foreign radio and television stations ( 49
cable broadcasting licences).

There is substantial variety in the press (11 national daily newspapers and seven
which cover more than one region) although the government-inclined "Slovenska
Republika" receives substantial public finance.

After the President had twice referred back the draft amendment to the criminal code

containing severe restrictions on freedom of expression and the freedom of assembly
which the European Union had criticised strongly in April 1996, Parliament finally
rejected the bill.

The right to property is recognised and expropriation may take place only in the
public interest and with fair compensation. Slovakia has established an efficient
system to restore property to those who were deprived of it during the Communist
regime. It has restored the property of various religious communities.

Respect for privacy is assured as the police require a warrant before undertaking any
search or telephone tapping.

Slovakia has ratified the Geneva Convention on Refugees, and asylum seekers enjoy
the internationally guaranteed rights and protection.

A number of cases of the police inflicting inhuman and degrading treatment on
persons in preventive detention have been reported recently.

Economic, Social and Cultural Rights

The Slovak Constitution recognises the right to the minimum income required for
survival, and to social security.

15

Trade union freedoms ( except for members of the armed services) are guaranteed by
Article 3 7 of the Constitution. There are currently 4 trade union federations in
Slovakia and the "Trade Union Confederation" (KOZ) is by far the largest. Almost
80% of workers are members of a trade union.

The right to strike is recognised by Article 37(4) of the Constitution for all except
judges, prosecutors, the amied forces and firemen. Although there have been few
strikes in Slovakia since 1989, this right is exercised regularly and encounters no
particular obstacles. '

Freedom of education and religion are guaranteed by the Constitution. Fifteen
denominations and religious organisations are recognised and receive financial
assistance from the State. However, it should be noted that broadcasts on the public
television networks have recently explained that the Jews were deported from
Slovakia because they "enriched themselves at the expense of the Slovak people." The
Slovak authorities recently published a school textbook idealising the pro-Nazi Slovak
regime. The government withdrew the book on 1 July 1997.

Minority Rights and the Protection of Minorities

Minorities in Slovakia make up between 18% and 23% of the population, principally
Hungarians (11 %) and gypsies or Roma (4.8% to 10% depending on estimates).

Minorities are protected first of all by a number of international norms. In September
1995 Slovakia ratified the Council of Europe's framework convention on minorities.
However, it has not subscribed to recommendation 1201 of the Parliamentary
Assembly of the Council of Europe which provides for the collective rights of
minorities although without being legally binding. Following the signature in March
1995 of a treaty of friendship and cooperation with Hungary, the Slovak Parliament
accompanied ratification in March 1996 by two declarations denying recognition of
collective rights for minorities and removing the ·possibility of establishing ethnically
based autonomous administrative structures.

The Constitution grants minorities the right to develop their own culture, to receive
information and education in their own language and to participate in taking decisions
which concern them. The State budget includes funding to encourage cultural and
educational activities for minorities. There are no specific provisions guaranteeing the
representation of minorities in Parliament but since the September 1994 elections the
Hungarian minority has had seventeen Members of Parliament belonging to three
parties in a coalition. Slovakia has also complied with the recommendations of the
Council of Europe on names (Hungarians are no longer obliged to translate their
surnames into Slovak) and the use of the minority language alongside Slovak on road
signs where minorities account for more than 20% of the population.

While the minorities live harmoniously alongside the rest of the population of
Slovakia, there are nevertheless some tensions between the government and the
Hungarian minority.

16

The first problem arises- from the law on the national language of November 1995,
which repealed the earlier provisions allowing the use of a minority language for
official communications in any town or village where the minority represented more
than 20% of the population. The Slovak authorities had given commitments to the
European Union and the OSCE's High Commissioner for national minorities that it
would adopt a new law on the use of minority languages. It should also be noted that
Article 34(2) of the Slovak Constitution expressly states that minorities may use their
own language for official communications and that the arrangements for exercising
that right should be laid down by law.

Nevertheless, Slovakia has not yet passed comprehensive legislation on this point and
has gone back on the commitments it gave earlier. It is true that other texts govern the
use of minority languages in specific fields (public life, courts, radio and television,
public schools and road signs) but these do not cover all situations and there is still no
overall text.

. This ambiguous situation is further aggravated by certain government decisions
concerning the Hungarian minority such as reductions in the subsidies granted to
Hungarian cultural associations and the cessation of bilingual school reports in
Hungarian schools ( a teacher not respecting this rule can be dismissed).

The gypsies or Roma, whose numbers grew in Slovakia after partition, continue to
suffer considerable discrimination in daily life and are quite frequently the target of
violence from skinheads against which they receive only inadequate protection from
the police. Their social position is often difficult, although here sociological factors
play a part, alongside the discrimination they suffer from the rest of the population,
particularly with regard to access to employment, housing and public services in
general (unemployment of about 40% to 50%).

**1.3** **General Evaluation**

The position of Slovakia raises a number of problems from the point of view of the
conditions set by the Copenhagen European Council.

Two of the main features of the way institutions in Slovakia operate are that the
government pays insufficient respect to the powers devolved by the Constitution to
other bodies and too frequently disregards the rights of the Opposition. The constant
tension between the government and the President of the Republic is one example of
this situation. Similarly, the way in which the government recently ignored decisions
by the Constitutional Court and the central referendum committee on the voting which
took place on 23 and 24 May 1997 directly threatens the stability of the institutions.
The frequent refusal to involve the opposition in the operation of the institutions,
particularly where Parliamentary scrutiny is concerned, underlines this trend.

Against this background, the use made by the government of the police and the secret
services gives cause for concern and substantial efforts will have to be made to
provide better guarantees of the independence of the judicial system and of

17

satisfactory conditions for its operation. The fight against corruption also needs to be
made more effective.

Improvement is also required in the treatment of the Hungarian minority, which still
does not benefit from the general law on the use of minority languages which the
Slovak authorities have undertaken to introduce and for which there is provision in the
Constitution. The position of tp.e Roma (gypsies) also requires attention from the
authorities.

In view of the points set out above, while the institutional framework defined by the
Slovak Constitution corresponds to that of a· parliamentary democracy w.ith free and
fair elections, the situation with regard to the stability of the institutions and their
integration into political life is unsatisfactory. Despite recommendations made by the
European Union on the occasion of a number of approaches and statements, there has .
been no appreciable improvement.

**·2.** **Economic Criteria**

In examining the economic situation and prospects of Slovakia, the
Commission's approach is guided in particular by the conclusions of the
European Council in Copenhagen in June 1993, which stated that membership of
the Union requires "the existence of a functioning market economy, as well as
the capacity to cope with competitive pressure and market forces within the
Union".

This section of the Opinion therefore gives a concise survey of the economic
situation and background, followed by a review of Slovakia's progress in key
areas of economic transformation (liberalization of the price and trade system,
stabilization of the economy, structural change, reform of the financial sector) as
well as its economic and social development. It concludes with a general
evaluation of Slovakia in relation to the criteria mentioned by the European
Council and a review of prospects and priorities for further reform.

**2.1 The Economic Situation**

Background

Slovakia, with a population of 5.4 million, had a gross domestic product (GDP) of
38 billion ECU (expressed in purchasing power parity) in 1995; its population is
about 1.5 percent of that of the Union, while its economy is only about
0.6 percent GDP per head is about 41 percent of the Union average. However, at
220 ECU the average monthly wage is low by Western standard~.

Slovakia is a founding member of the WTO and CEFTA, and its application for
membership to the OECD is currently under review.

18

_Progress_ _in_ _Economic_ _Trans/ormation_

Before World War II, Czechoslovakia was one of the richer countries in Europe,
but the Slovak part of the country remained mainly rural and was much poorer.
Under the communist regime, Czechoslovakia espoused central planning in its
entirety, and started to invest heavily in the industrialization of Slovakia, based
on cheap imports of raw materials and energy from the Soviet Union. By 1989,
after almost half a century of central planning, Czechoslovakia's economy had
dropped far behind even the poorest Member States, but economic activity was
more evenly spread over the country.

The fall of the communist regime in November 1989 led to the creation of the
democratic Czech and Slovak Federal Republic (CSFR). The situation at the
beginning of transition was relatively favourable for the CSFR: excess demand
was not really present, fiscal and monetary policies had been priident for a.
number of years, and the external debt was small. The "monetary overhang"
(unwanted savings caused by shortages) was limited, so inflation did not soar as
much as in other countries in the region. The reform process was started
immediately: prices and trade were liberalized, privatization proceeded rapidly,
economic institutions were established, and new bankruptcy and competition
legislation was introduced. However, due to the structure of its industry,
Slovakia was hit harder by the loss of eastern markets, and opposition to reforms
grew. The failure to reach an agreement on the future course of economic policy
was an important element in the decision to split the CSFR.

Since late 1992, Slovakia has had to face the difficult tasks of building a market
economy and, at the same time, establishing the institutions of an independent
state. The process of separation from the Czech Republic comp'?unded the
economic difficulties. Political instability and the lack of a broad social
consensus on the path of economic reform presented additional obstacles to the
transformation process. Also, the termination of transfers from the Czech
Republic unmasked large underlying fiscal and external imbalances. On the
positive side, Slovakia inherited a very low external debt, low inflation and a
tradition of orthodox and sound macroeconomic policy.

A programme of rapid privatization began in 1991, and by the time of the
separation of the CSFR, small-scale privatization and the first wave of large-scale
privatization were virtually completed. After independence, preparations for a
second wave of voucher privatization were started, but after a change of
government, this second wave was cancelled and replaced by direct sales in June
1995.

_Foreign_ _Direct_ _Investment_

Foreign direct investment remains very low (only 0.8 percent of GDP in 1996;
source: EBRD), despite there being few legal barriers. The main reasons for this
seem to be the lack of foreign confidence in the commitment of the authorities
towards market reform, the exclusion of foreigners in most of the privatization
process, and political uncertainty.

19

_Economic_ _Strncture_

**Agriculture** accounts for about 6.3 percent of value added, and employs
9.7 percent of the working population. After the start of transition, and in
particular price liberalization, the collapse of agricultural production was sharper
than the reduction of overall production. However, agricultural production also
recovered faster and started to grow again already in 1993.

Before 1989, over 80 percent of cultivated land was owned by collective or state
farms. Since then, legislation has been . introduced to return the land to the
original owners, to transform the collective farms in privately owned cooperatives, and to privatize the state farms. Nevertheless, in practice the structure
of the agricultural sector has not yet been changed drastically. Only few state
farms have actually been privatized, because of uncertainty over land restitution
claims, the lower quality of their land, outdated machinery, and fogh debts._
Although the members of co-operatives can redraw their part of the land and
assets to set up a new individual farm, the co-operatives still own the major part
of the land. Most individual farms remain small and produce mainly for own
consumption.

|Main indicators of economic structure<br>(all data for 1996 unless otherwise indicated)|Col2|
|---|---|
|Population<br>_million_<br>GDPperhead<br>_PPS-ECU_**_(1995)_**<br>_as%ofEU-15average_<br>_percent (1995)_<br>ShareofAgriculture in:<br>valueadded<br>_percent (1995)_<br>employment<br>_percent (1995)_<br>Gross foreign debt/GDP<br>_percent_<br>Exportsofgoods& services/GDP<br>_percent_<br>Stockofforeign direct investment<br>_billionECU1 _<br>_$ perhead_|5.4<br>7100<br>41<br>5.6<br>9.7<br>43<br>57<br>0.6<br>110|
|_Source: Commission services, national sources,EBRD_<br>|_Source: Commission services, national sources,EBRD_<br>|

(1) FDI stock converted at end 1996 exchange rate of lECU = $1.25299

**Industry** accounts for about one third of GDP, and a somewhat higher share in
employmept. The communist regime invested mainly in the development of
heavy industry in Slovakia. Important parts of the sector have been privatized,
and about 70 percent of industrial production is now produced in private
enterprises. The steel and petrochemical sectors, which are both dominated by

20

one big enterprise, are now competitive and able to export to western markets.
However, the growth potential in these sectors remains limited given the existing
excess capacity across Europe. Likewise, the chemicals and non-ferrous metal
sectors are technically advanced and internationally competitive. Other sectors,
such as textiles and the important defence industry, face a considerable
restructuring effort to ensure survival.

Important parts of the **services** sector (major banks, telecommunications) are still
controlled by the state. Tourism is a potential growth sector for Slovakia, but will
need considerable investment as it has been neglected under the communist
regime.

Liberalisation

_Price_ _Re_gime_

In 1991, 85 percent of consumer prices were liberalized. By 1995 some
10 percent were still administered, mainly for energy, some public services and
rents. In 1996, a Price Law was adopted that gives far-reaching powers to the
administration to assess the justification of large price changes. Although so far
this legislation has only been used to control prices of a limited number of
agricultural products, it could also be applied to control normal market or
seasonal fluctuations, which would distort the role of market price signals.

_Trade_ _Regime_

In general, Slovakia has a liberal and transparent trade regime, characterized by
moderate tariffs and by the infrequent use of non-tariff barriers. After the
dissolution of the CSFR, the two new republics formed a "customs union", with a
common external tariff, but without free circulation of goods coming from third
countries. Slovakia has reached trade agreements with the EU, EFTA and CEFTA,
and is a founding member of the WTO.

In 1993, a 10 percent import surcharge was introduced as a temporary measure to
support the precarious balance-of-payments situation. Although the external
account improved considerably in 1994 and 1995, the surcharge was maintained.
Under pressure of the EU and the WTO, the government lowered the surcharge
rate to 7. 5 percent on 1 July 1996, and to O percent on 1 January 1997.

In May 1997, the Slovak government introduced an import deposit scheme.
Under this measure, importers will have to make a non-interest-bearing deposit
of 20% of the value of imports in a Slovak bank for six months. This deposit
scheme was introduced as a reaction to a similar measure introduced by the
Czech government in April 1997, and with the intention to improve the rapidly
worsening current account balance. Although the cost increasing effect of the
measure is limited, the measure can effectively block all imports by small
importers that do not have sufficient access to the financial markets to finance
the deposit. Consequently, the exact effect of the measure on the trade deficit is
hard to predict. Nevertheless it is clear that this move is an unfortunate step
backwards.

21

_Foreign_ _Exchange_ _Regime_

Slovakia's strengthened external position made it possible to introduce full
current account convertibility of the Slovak crown on 1 October 1995. This
operation, which was originally planned for 1 January 1996; was brought
forward because the Czech Republic ended the Czech-Slovak clearing system for
bilateral trade payments on that date.

The exchange rate is fixed to a basket of the German· mark (60 percent) and the
US dollar ( 40 percent), with a fluctuation margin that has been gradually
increased from ±1.5 percent in 1995 to ±7 percent now. It can be expected that
the National Bank of Slovakia {NBS) .will increasingly use the wider exchange
rate margins as an additional instrument to fulfil its monetary policy objectives.

Stabilisation of the Economy

_Domestic_

The loss of the traditional export markets resulting from the break-up of the

CMEA, aggravated by the disrupted trade with the Czech Republic after the
dissolution of the federation, put Slovakia in a deep recession from 1989 to 1993,
during which period GDP fell by almost one quarter. 1994 saw a sharp recovery,
initiated by rising exports to the EU and the Czech Republic. The leading role of
exports was gradually taken over by domestic demand, resulting in some of the
highest GDP growth rates in the region during 1995 and 1996. Economic growth
is now completely driven by domestic demand and the economy risks
overheating. If macroeconomic policies remain restrictive, this should not result
in re-emerging inflationary pressures in·the short term. Nevertheless, the external
balance has already been affected by the sizeable growth of domestic demand.
The longer-term development of the Slovak economy will not only depend on
continued sound macroeconomic policies, but also on microeconomic factors,
such as the degree of restructuring of banks and enterprises. Indeed, noninflationary high growth can only be maintained when competitiveness increases
sufficiently.

22

|Main economic trends|1994|1995|1996|
|---|---|---|---|
|RealGDPgrowthrate<br>_percent_<br>Inflation rate<br>annual average<br>_percent_<br>DecemberonDecember<br>_percent_<br>Unemploymentrate, end-year<br>_percent_<br>_(ILOdefinition)_<br>Generalgovernmentbudget<br>balance<br>_percentofGDP_<br>Current account balance<br>_percentofGDP_<br>Debt/export ratio<br>_percent_<br>Foreign direct investment inflow<br>_percentofGDP_<br>|4.9<br>13.3<br>11.6<br>13.3<br>-1.3<br>4.8<br>47.9<br>1.3|6.8<br>9.9<br>7.2<br>12.8<br>0.1<br>2.3<br>53.1<br>1.0|6.9<br>5.8<br>5.4<br>10.9<br>-1.3<br>-10.2<br>71.6<br>0.8|
|~~_Source: Commission services, national sources,_~~_EBRD_|~~_Source: Commission services, national sources,_~~_EBRD_|~~_Source: Commission services, national sources,_~~_EBRD_|~~_Source: Commission services, national sources,_~~_EBRD_|

As a result of tight monetary and fiscal policies, inflation remained limited
during the transition period. Only in 1991, as a result of the price liberalization,
and in 1993, because of the introduction of VAT, higher inflation rates were
recorded. Since then, inflation steadily declined to reach 5.8 percent on average
in 1996, the lowest rate of the associated transition countries. However, because
of the buoyancy of domestic demand and some adjustment of administered
prices, inflation accelerated again in the first months of 1997. Therefore, it is
expected that the inflation rate will not continue its downward trend in 1997.

In sharp contrast to the evolution in the Czech Republic, unemployment rose
very quickly in Slovakia after the start of transition. Unemployment peaked
twice at 15.2 percent, in January 1994 and in January 1995, but declined to
12.8 percent at the end of 1996. However, in the first quarter of 1997,
unemployment was higher than in the corresponding period of 1996. It remains
unevenly spread over the country, and the proportion of long-term unemployed is
high. Only a small part of the high economic growth is translated into additional
employment because of the high growth rate oflabour productivity.

During the first year of independence, the general government deficit rose to
7.6 percent of GDP as a consequence of the termination of fiscal transfers from
the Czech Republic, and of difficulties of setting up a new tax administration.
Public finances improved considerably in 1994 and were approximately in
equilibrium in 1995, mainly resulting from higher-than-expected tax receipts,
generated by higher growth. The stance of fiscal policy has become more
expansionary in 1996, with an estimated general government deficit of 1.3% of

23

GDP. In the state budget for 1997, expenditures are further increased compared
to the outcome of 1996, resulting in a higher planned deficit for 1997. However,
an important proportion of the increased expenditures will be used· for necessary
investment in infrastructure.

_External_

Slovakia inherited a low foreign debt from the CSFR, and debt remained relatively
low after independence.· Thanks to its stability-oriented economic policy,
Slovakia has gained access to private capital markets and has obtained
investment-grade ratings from the major credit rating agencies.

**As a** consequence of the dissolution of the federation, Slovak exports to the
Czech Republic were reduced by one third in 1993. Nevertheless, because of the
repressed domestic demand, and after a devaluation of the koruna and the_
introduction of a 10 percent import surcharge - a temporary additional tax on
imports - the current-account balance recovered quickly from a deficit of more
than 5 percent of GDP in 1993 to a surplus of almost 5 percent in 1994. However,
in 1996 the continued growth of domestic demand pushed up imports of
consumer and investment goods considerably, while exports stagnated, resulting
in a rapid deterioration of the current account to a deficit of more than 10 percent
of GDP.

The evolution of the foreign exchange reserves clearly shows the overall
improvement of the balance of payment~. Reserve holdings of the National Bank
almost doubled in 1995, and represented 4 months of imports of goods and
services, compared with only 2.4 months at the end of 1994. However, with the
deterioration of the current account, the reserve position has deteriorated
significantly in recent months. Without a significant increase of foreign direct
investment, the reserve position might be threatened in the longer term, if the
high current account deficit is maintained.

**Structural** **Change**

_Foreign_ _Trade_

The Slovak Republic is a very open economy with exports of goods and services
accounting for 57 percent of GDP in 1996.

External trade has been substantially reoriented towards western markets, and in
particular to the Union. The EU is now the fastest growing and the biggest trade
partner, accounting for around 36 percent of Slovak imports and 41 percent of
exports. Germany alone takes up almost half of the EU trade with Slovakia.
Despite its diminishing share, the Czech Republic remains the most important
single country for trade with Slovakia, representing about one quarter of imports
and almost one third of exports. One fifth of imports still come from the former
Soviet Union (FSU), mainly energy and raw materials, but the FSU accounts for
less than one tenth of all exports.

24

The most important import product categories are machinery and equipment,
energy, intermediate goods, and chemicals. As a consequence of higher
investment, imports of machinery and equipment are growing fastest. In 1996,
38.3 percent of exports consisted of intermediate goods v (mainly steel),
23.2 percent of machinery and transport equipment, and 12.4 percent of
chemicals. Exports of steel, cars, and chemicals are each time dominated by only
one enterprise.

_Labour_ _Market_

After the start of the transition process, unemployment in . Siovakia increased
much faster than in the Czech Republic, although the macroeconomic and
structural policy frameworks were the same under the CSFR. This can be
explained by Slovakia's higher dependence on exports to CMEA markets, its
important defence industry, and the higher reliance on cheap imports of energy.
and raw materials from the former Soviet Union, which all led to a sharper
reduction of employment. Furthermore, the Slovak labour force did not decline
as much as in the Czech Republic because retirement was lower than in the
Czech Republic.

Unemployment stabilized when the economy recovered in 1994, and started to
decline in 1995. This positive evolution is mainly the result of additional
employment creation. The declin~ of the participation rate is now largely
completed, after the initial exit of women and older workers from the labour
market. More than half of the unemployed has been out of work for more than a
year. Long-term unemployment is particularly widespread among people with a
low education level. Given the continued potential for high labour productivity
growth, it can be expected that future unemployment reductions will only be
gradual.

Real wages began growing again in 1994. More recently, real wage growth has
even exceeded productivity gains, which risks to harm competitiveness.

_Public_ _Finances_

The initial public finance conditions after independence were particularly
difficult in Slovakia: the costs of establishing a new state and a new
administration were aggravated by the continuing economic recession, the
ending of the important fiscal transfers from the federation, and the difficulties
associated with the reform of the tax system (introduction of VAT). As a result,
the initial objective of a balanced budget for 1993 proved to be unrealistic, and a
general government deficit of 7,6 percent was recorded.

Because of tight expenditure control and higher-than-expected tax receipts,
generated by higher economic growth and improved tax collection, public
finances recovered considerably in 1994 and 1995, when a small general
government surplus was recorded. As a result of higher expenditures, mainly
infrastructure investment, and a lowering of the v AT rate, the deficit rose again in
1996, and is planned to be almost 2 percent of GDP in 1997. In the future, there
is a risk that the restructuring of the banking sector could have negative effects

25

on the budget, because of a possible introduction of tax deductibility for
provisions on bad loans, or because of the calling in of state guarantees on bad
debt. However, according to the government's programme, the general
government deficit should be kept below 3 percent of GDP.

The structure of government finances has changed considerably. On the
expenditure side, subsidies to enterprises were reduced and the social security
system was moved from the state budget to separate institutions, which are
financed by social security contributions. Social security expenditures are
relatively high ( about one-third of general government expenditures), especially
for pensions. On the revenue side, the turnover tax was replaced by a valueadded tax, and personal income and corporate profit taxes were introduced.
Revenues from personal income tax remain low compared-to other sources of

revenue.

_Enterprise_ _Sector:_ _Privatisation_ _and_ _Enterprise_ _Restructuring_

A first wave of voucher privatization was concluded under the CSFR. To avoid
excessive dispersion of ownership, the Slovak authorities decided to cancel the
second wave of voucher privatization and replace it by direct sales. Most
enterprises were sold to the management and workers at preferential prices, with
the possibility to extend payments over a period of up to ten years. In general, the
second wave of priyatization has lacked transparency and was considered as
inequitable.

Progress on enterprise restructuring has not been fully satisfactory in Slovakia.
Besides a core group of highly profitable enterprises, there is still a relatively
large group of loss makers, which need to restructure to survive. The main
reasons for the lack of enterprise restructuring are the continued involvement of
the state, a weak banking sector, ineffective bankruptcy procedures, and
insufficient foreign direct investment. Consequently, the enterprises do not have
to face a sufficiently "hard budget constraint" - there is still an expectation by
enterprise managers that the government or the banks will bail them out when
they incur losses.

The authorities are trying to maintain their influence on important decisions in
privatized enterprises that are considered strategic. Although the constitutional
court has removed the legal basis for the compulsory creation of "golden shares",
which would have given the government a veto on important decisions, the
government is trying to convince the new owners of privatized enterprises to
obtain the same result on a voluntary basis. Moreover, the proposed law on the
revitalization of enterprises would increase the government's influence on
strategic enterprises in difficulty. The draft law foresees possibilities to
reschedule or cancel debts to the budget and banks, through a secretive and
untransparent procedure, with an important political involvement.

Slovakia has not been able to attract significant amounts of foreign direct
investment, while the scale of the bad debt problem prevents domestic banks
from playing an active role in financing enterprise restructuring. Most new

26

owners of privatized enterprises will typically also lack the financial means for
investment, since they already had to invest to acquire the control of the
company. Consequently, investment for restructuring will mainly have to be
financed out of retained earnings of the enterprises, which is only possible for
already profitable entities. Only the biggest of these profitable enterprises might
also be able to finance their restructuring efforts on the international capital
markets

Little progress has been made in the implementation of an effective bankruptcy
law. The current 1993 law includes conciliation procedures and exemptions that
obstruct a quick and jus~ procedure. Furthermore, the courts are overburdened
and inexperienced. The proposed law on the revitalization of enterprises would
add an additional hurdle for creditors to file bankruptcy proceedings, because the
enterprises that would be selected for restructuring under the provisions of this
law would be exempt from bankruptcy for the period of the revitalization

programme.

**Financial** **Sector**

The authority responsible for monetary policy is the National Bank of Slovakia,
which was created on 1 January 1993, taking over from its federal predecessor. It
is independent from the government, .. and is responsibl~ for monetary and
exchange rate policy, as well as banking regulation and supervision. Interest rates
have been fully liberalized and, following the abolition of the remaining credit
ceilings on individual banks in January 1996, monetary- policy is now fully
exerted through indirect instruments. Banking regulation and supervision have
been progressively strengthened.

The number of banks operating in Slovakia has increased from only four at the
end of 1991 to 29: 10 without foreign capital participation, 14 with foreign
capital participation, and 5 branches of foreign banks. There are also
1 0representative offices of foreign banks. Participations by the state, foreign
capital, and private domestic capital, take up about equal shares of the subscribed
capital of banks. However, the banking system remains heavily concentrated in
the three largest banks, which are still mainly state owned. The shares of the
three biggest banks in total loans and deposits are about 65 and 70 percent
respectively. Privatization of these banks is currently under discussion. It has
recently been decided that two of the major banks (VUB and IRB) can be
privatized, but that the Savings Bank, which still holds most of the private
deposits, and the State Insurance Company, the largest insurer in Slovakia, will
remain in state hands until 2003. It is not yet clear which method will be used for
the privatization on VUB and IRB, and if foreign participation in the privatization
process will be invited.

Despite direct assistance from the state and the banks' own work-out efforts, the
proportion of non-performing loans remains relatively high: l_oans reported as
overdue by at least three months represented almost one third of outstanding
loans at the end of 1995. The large majority of these bad loans is held by state

27

controlled banks, and most debtors are state-owned enterprises, which often
benefit from state guarantees. The authorities favour a gradual solution of the
bad-debt problem by imposing further provisioning by the banks. The state
intends to support this process, but no decision has yet been taken on the form,
size and conditions of the state participation in bank restructuring. While
73 percent of the risk of the bad loans is now covered by provisions and reserves,
their weight remains excessive and puts a significant burden on the profitability
of the banking sector. Consequently, to support their financial position, the banks
have to maintain relatively high margins between deposit and lending rates,
which limits the possibilities of the banking sector to support enterprise
restructuring by providing credits at acceptable rates.

The main tendency in enterprise and personal sector lending is a continuous
decrease in the personal lending share and a growing share of enterprise lending
in the total amounts of bank lending. Credits in foreign currency also grew
considerably in recent years, although their share in the total lending remained
relatively low (around 10 per cent). In 1995 there was an increase in the share of
private borrowers in the total volume of banks loans. In that year short-term
loans accounted for 75 percent of the total volume of new loans drawn by private
organizations. Share issues do not represent an alternative financing source for
companies, while bond issues are more widely used as source of corporate
finance. The market for short-term funds is not yet fully developed, although it
has the structure and features of money markets in mature market economies.

Capital markets remain fragmented and illiquid, and the legislative framework
needs to be developed further. The first wave of voucher privatization gave an
impulse to the trade in shares, with an important intermediary role for the
investment privatization funds (IPFs). However, the unexpected cancellation of
the second wave of voucher privatization in 1995, and the more restrictive
regulation on IPFs, reduced market confidence considerably, and limited further
market development. Trade in privatization bonds, which were issued as a
compensation for the cancelled vouchers, has remained marginal due to a lack of
demand and a legally imposed minimum price.

Economic and Social Development

_Social_ _Indicators_

Slovakia has an estimated population of 5.4 million. Population growth has been
declining almost continuously from 1.8 percent a year in the mid-l 950s to less
than 0.5 percent now. This slowing of population growth implies a gradual
ageing of the population, and a rising share of the population of working age.
Life expectancy at birth in 1996 was 68.4 years for men and 76.3 years for

women.

The education level is relatively high. Secondary education has been
concentrated on vocational and technical specializations, which reflects the
importance of heavy industries and engineering in the economy.

28

_R~ional_ _and_ _Sectoral_ _Dtfferences_

Regional differences are particularly pronounced in Slovakia, certainly when the
relatively small size of the country is taken into account. Production is mainly
concentrated in the western part of the country (Bratislava and neighbouring
districts) and around Kosice, in Eastern Slovakia. As a result, unemployment is
also very unevenly spread, varying from 4 percent in Bratislava to more than
20 percent in the more rural districts. A reduction of regional differences in
unemployment levels is obstructed by relatively underdeveloped transport and
communication infrastructure in rural regions, and low geographical labour
mobility, partly as a result of scarce and expensive housing in regions with the
fastest economic growth.·

**2.2 The Economy in the Perspective** **of** **Membership**

**Introduction**

The European Council in Copenhagen in 1993 defined the conditions that the
associated countries in central and eastern Europe need to satisfy for accession.
The economic criteria are:

   - the existence of a functioning market economy;

   - the capacity to cope with competitive pressure and mar~et forces within the
Union.

These criteria are linked. Firstly, a functioning market economy will be better
able to cope with competitive pressure. Secondly, in the context of membership
of the Union, the functioning market is the internal market. Without integration
into the internal market, EU membership would lose its economic meaning, both
for Slovakia and for its partners.

The adoption of the _acquis,_ and in particular the internal market _acquis,_ is
therefore essential for a candidate country, which must commit itself
permanently to the economic obligations of membership. This irreversible
commitment is needed to provide the certainty that every part of the enlarged EU
market will continue to operate by common rules.

The capacity to take on the _acquis_ has several dimensions. On the one hand,
Slovakia needs to be capable of taking on the economic obligations of
membership, in such a way that the single market functions smoothly and fairly.
On the other hand, Slovakia's capacity to benefit fully from the competitive
pressures of the internal market requires that the underlying ~conomic
environment be favourable, and that the Slovak economy have flexibility and a
sufficient level of human and physical capital, especially infrastructure. In their
absence, competitive pressures are likely to be considered too intense by some
sections of society, and there will be a call for protective measures, which, if
implemented, would undermine the single market.

29

The capacity and determination of a candidate country to adopt and implement
the _acquis_ will be crucial, since the costs and benefits of doing so may be
unevenly spread across time, industries and social groups. The existence of a
broad based consensus about the nature of the changes to economic policy which
membership of the Union requires, and a sustained record of implementation of
economic reforms in the face of interest group pressure reduce the risk that a
country will be unable .to maintain its commitment to the economic obligations
of membership.

At the level of the public authorities, Membership of the Union requires the
administrative and legal ~apacity to transpose and implement the wide range of
technical legislation needed to remove obstacles to freedom of movement within
the Union and so ensure the working of the single market. These aspects are
examined in later chapters. At the level of individual firms, the impact on their
competitiveness of adopting the _acquis_ depends on their capacity to adapt to the
new economic environment.

The Existence of a Functioning Market Economy

The existence of a market economy requires that equilibrium between supply and
demand is established by the free interplay of market forces. A market economy
is functioning when the legal system, including the regulation of property rights,
is in place and can be enforced. The performance of a market economy is
facilitated and improved by macroeconomic stability and a degree of consensus
about the essentials of economic policy. A well-developed financial sector and an
absence of significant barriers to market entry and exit help to improve the
efficiency with which an economy works. Good progress in the implementation
of the Europe Agreement should also help to consolidate the functioning of the
market economy.

Slovakia has implemented most of the necessary reforms to establish a market
economy. The price system has been liberalized, allocation decisions are
decentralized by the almost completed privatization process, and 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. The economy has also attained a satisfactory sustainable level of
macroeconomic stability, including the lowest inflation rate of the region, which
allows economic agents to have a sufficiently long planning horizon.

Nevertheless, on a number of occasions, the Slovak authorities have been
favouring non-market-based mechanisms for price formation or resource
allocation. Examples of this are the very low proportion of competitive sales of
. state enterprises in the privatization process, the setting of a minimum price on
the sale of privatization bonds, and the efforts of the government to maintain
control on enterprises that are considered strategic. These are clear indications
that the functioning of the market economy still needs to be reinforced.

A limited number of prices - mainly energy, some public services and rents - are
still administered, which distorts relative prices. The regulation of prices of

30

public services can be considered to be in line with existing practices in Member
States. However, the continued subsidie1. on household energy consumption have
negative effects on energy efficiency and the trade balance. The curbs on rents
increase the concentration of economic activity in certain regi~ns, and reduces
private investment in residential construction. Moreover, the more restrictive
Price Law of 1996 could be used to apply controls on normal or seasonal price
fluctuations, thus distorting the role of market price signals. 

A strong and stable financial sector is an essential element of a functioning
market economy. The Slovak financial sector still has considerable re~tructuring
problems to resolve, such as the high proportion of non-performing loans and the
dominance of a limited number of state-owned banks. Consequently the sector is
not yet able to play its intermediation role to the full extent. Moreover, capital
markets remain illiquid and fragmented, and progress is still needed in their
regulation. Nevertheless, while these problems reduce the efficiency with which·
the economy functions, .the financial system· is sufficiently developed not to
hinder the normal functioning of the economy. 

In a number of important sectors (steel, _banking, petrochemicals) there is little
domestic competition, with the bulk of production oaen concentrated in one
enterprise. Market dominance of a limited number of enterprises can be an
impediment for the entrance of new enterprises in these sectors. Nevertheless, the
trade regime is sufficiently open to foreign competition to guarantee competitive
behaviour on the domestic market.

Little progress has been made in the implementation of an effective bankruptcy
law. The current legislation includes conciliation procedures and exemptions that
obstruct a quick and just procedure. Furthermo~e, the courts are overburdened
and inexperienced. The proposed Enterprise Revitalization Act would add an
additional hurdle for creditors to file bankruptcy proceedings, because the
enterprise.s that would be selected for restructuring under the provisions of this
law would be exempt from bankruptcy for the period of the revitalization

programme.

The Capacity to Cope with Competitive Pressure and Market Forces

It is difficult, some years ahead of prospective membership, and before Slovakia
has adopted and implemented the larger part of Community law, to form a
definitive judgement of the country's ability to fulfil this criterion. Nevertheless,
it is possible to identify a number of features of Slovakia's development which
provide some indication of its probable capacity to cope with competitive
pressure and market forces within the Union.

This requires a stable macroeconomic framework within which individual
economic agents can make decisions in a climate of a reasonable degree of
predictability. There must be a sufficient amount of human and physical capital
including infrastructure to provide. the background, so that individual firms have
the ability to adapt to face increased competitive pressures in the single market.
Firms need to invest to improve their efficiency, so that they can both compete at

31

home and take advantage of economies of scale which flow from access to the
single market. This capacity to adapt will be greater, the more firms have access
to investment finance, the better the quality of their workforce, and the more
successful they are at innovation.

Moreover, 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 ahead of accession. The more integrated a country already is with the
Union, the less the further restructuring implied by membership. The level of
economic integration is related to both the range and volume of goods traded
with member states. Direct benefits from access to the single market may also be
greater in sectors where there are a sizeable proportion of small firms, since these
are relatively more affected by impediments to trade.

The Slovak economy has a number of important assets to be able to face
competitive pressure· and market forces in the single market. The economy is
stabilized and rapidly growing, while wage costs remain relatively low, and the
population is well-educated. The central location on the crossing of important
North-South and West-East trans-European network (TEN) corridors could also
contribute to the development of a competitive services sector, if sufficient
investment in these ~orridors takes place.

Slovakia has also been able to re-orient its exports towards west European
markets, after the loss of its traditional export markets resulting from the breakup of the CMEA and the dissolution of the federation with 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.

Another indicator of competitiveness is t~e capacity of enterprises to adjust.
Although the traditionally important heavy industrial enterprises in the steel and
petrochemical sectors are now capable of supplying quality basic products, at
competitive prices, the growth potential in these sectors remains limited given
the existing excess capacity in Europe. Likewise, the chemicals and non-ferrous
metal sectors are technically advanced and internationally competitive. Other
sectors, such as textiles and the important defence industry, face a considerable
restructuring effort to ensure survival. In general, additional investment will be
needed in all sectors to modernize and restructure production capacity, and to
adapt it to fulfil the requirements of the _acquis._ 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 also
remain limited because of insufficient foreign direct investment.

The diversification and restructuring effort could be 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

32

domestic financial sector remains limited by the bad-debt problem. Most new
owners of privatized enterprises will typically also lack the financial means for
investment, since they already had to invest to acquire the control of the
company. Consequently, investment for restructuring will mainly have to be
financed out of retained earnings of the enterprises, which is only possible for
already profitable entities. Only the biggest of these profitable enterprises might
also be able to finance their restructuring efforts on the international capital
markets Therefore, a restructuring, probably associated with some form of recapitalization, of the financial sector, is an essential pre-condition to support
enterprise restructuring in general, but in particular of small and medium sized
enterprises, which do nothave easy access to international capital markets. Given
the constraints on the government budget, such a revitalization of the financial
sector is probably only possible in combination with its privatization. Foreign
involvement in the privatization process seems to be essential, -in order to
introduce the necessary·skills and capital into the sector.

Slov-akia could in principle resolve its remaining economic problems sufficiently
rapidly to be among in the first associated countries to join the Union. However,
the uncertainty remains if these structural problems will be tackled swiftly, and if
it will be done in a transparent way, using market mechanisms that are
compatible with the rules of the single market. The reas~n for this doubt is the
fact that economic policy in recent years has been characterized by a lack of
predictability and transparency. The 1:11ost prominent examples of this can be
found in the privatization process, where the second voucher programme was
unexpectedly cancelled, the role of IPFs was changed abruptly ( causing important
losses for these funds), and the privatization of the major banks has been
announced and postponed again several times. The proposed law on enterprise
revitalization also lacks transparency because the choice of enterprises that
benefit from this legislation is subject to political influence. Moreover, the
Slovak authorities are still relying frequently on non-market-based mechanisms
for price formation or resource allocation.

A sufficiently convincing track record of consistent economic reform is yet
missing. The announcement and implementation by the Slovak authorities of a
comprehensive, transparent and market-oriented medium-term structural reform
programme would help to attract the necessary support of foreign investors, and
would enable the Slovak economy to be sufficiently competitive to face the
competition in the single market at the time of accession.

Prospects and Priorities

The economic policies of the Slovak Republic have not to date been guided by
an elaborated medium-term programme. Documents exist on some aspects of
economic policy (monetary policy, industrial policy, etc.), but they are mainly
short-term and not integrated in one general blueprint. Nevertheless, in the
framework of the association subcommittee on economic issues, the Slovak
authorities have declared their willingness to elaborate a comprehensive
medium-term stabilization and modernization strategy. This would help to

33

determine future reform priorities, in order to tackle the remaining economic
difficulties.

In its first years of independence, Slovakia has achieved remarkable progress in
macroeconomic stabilization. Of all associated Central European countries, it
recorded in 1995 and 1996 among the highest GDP growth rates, combined with
the lowest inflation r~te of the region. However, while the current account
remained positive in 1995, continued high domestic demand for consumption
and investment goods has turned it sharply into deficit in 1996. Some
acceleration of inflation in the first quarter of 1997, and the high current account
deficit, are clear indicati_ons that the eeonomy is now starting to overheat. In
order to guarantee the continued stability of the economy, macroeconomic
policies need to be sufficiently restrictive, and need to be well co-ordinated.
Additionally, microeconomic factors, such as the degree of restructuring of banks
and enterprises, will also have to be improved. Indeed, non-inflationary high
growth can only be maintained when the competitiveness of the economy
increases sufficiently.

Once the difficulties of establishing a new state and a new administration were
overcome, the general government budget deficit was rapidly reduced, and even
recorded a small surplus in 1995. However, the stance of fiscal policy became
more expansionary in 1996, as a result of lower than expected revenues and the
need for higher public investment. Because of budgetary costs associated with
restructuring the enterprise and banking sectors, government deficits are
expected to rise in the coming years. The upward pressure on expenditures could
be alleviated by targeting social expenditures to those who really need them.
Also, completion of price liberalization would allow to further reduce subsidies
to enterprises.

Although unemployment has been declining in recent years, the high
unemployment rate and its considerable regional variation will continue to put a
burden on future economic and budgetary developments. Although the
unemployment problem cannot be solved overnight, support for creating new
small and medium-scale enterprises, a more flexible labour market, limiting the
fiscal burden on wage costs by tightening access to social security programmes,
and higher regional wage differences to promote inter-regional mobility, could
all accelerate employment creation.

To ensure sustained economic growth, Slovakia will need continued enterprise
and financial sector restructuring. Given the choice for a gradual approach to the
solution of the bad-debt problem, the banking sector will not be able to be a
major source of financing for enterprise restructuring in the short term. Further
restructuring will have to be financed from abroad, or from internally generated
enterprise resources. Foreign direct investment has so far remained limited
because of a lack of confidence in the market-orientation of policy makers.
Moreover, restructuring will probably not be helped by the continued efforts of
the government to maintain influence in already privatized enterprises, and by
the untransparent procedures of the proposed Enterprise Revitalization Act.

34

Slovakia has introduced most of the reforms necessary to establish a market
economy. The price system has been liberalized, and allocation decisions are
decentralized by the advanced privatization process. Nevertheless, a restrictive
Price Law has been introduced in 1996, and the draft Enterprise Revitalization
Act would be a major step back from market mechanisms. The financial sector
needs to be reinforced, and progress is needed in the regulation of the bankruptcy
process and capital mar~et.

Slovakia 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. For a number of years, the economy has grown
rapidly, with low inflation. The country has low wage costs and a skilled labour
force. However, enterprise restructuring has been slow, which is gradually
undermining economic growth and external balance. The low leveLof foreign
direct investment reflects these structural problems, which need to be tackled swiftly and in a transparent way.

**2.3** **General Evaluation**

Slovakia has introduced most of the reforms necessary to establish a market
economy. The price system has been liberalised, and allocation decisions are
decentralised by the advanced privatisation process. Nevertheless, a restrictive
Price Law has been introduced in 1996, and the draft Enterprise Revitalisation
Act would be a major step back from market mechanisms. The financial sector
needs to be reinforced, and progress is needed in the regulation of the bankruptcy
process and capital markets.

Slovakia 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. For a number of years, the economy has grown
rapidly, with low inflation. The country has low wage costs and a skilled labour
force. However, enterprise restructuring has been slow, which is gradually
undermining economic growth and external balance. The low level of foreign
direct investment reflects these structural problems, which need to be tackled
swiftly and in a transparent way.

35

**3.** **Ability to Assume the Obligations** **of** **Membership**

The European Council in Copenhagen included among the criteria for accession "the
ability to take on the obligations of membership, including adherence to the aims of
political, economic and monetary union".

In applying for membership on the basis of the Treaty, Slovakia has accepted without
reserve the basic aims of the Union, including its policies and instruments. This
chapter examines Slovakia's capacity 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.

With the development of the Union, the _acquis_ has become progressively more
onerous, and presents a greater challenge for future accessions than was the-case in the _
past. The ability of Slovakia to implement the _acquis_ will be central to its capacity to
function successfully within the Union.

The following sections examine, for each main field of the Union's activity, the
current and prospective situation of Slovakia. The starting-point of the description and
analysis is a brief summary of the _acquis,_ with a mention of the provisions of the
Europe Agreement and the White Paper, where they are relevant. Finally, for each
field of activity there is a brief assessment of Slovakia's ability to assume the
obligations of membership on a medium-term horizon.

**3.1** **Internal Market Without Frontiers**

Article 7a of the Treaty defines the Union's internal market as an area without internal
frontiers in which the free movement of goods, persons, services and capital is
ensured. This internal market, central to the integration process, is based on an openmarket economy in which competition and economic and social cohesion must play a
full part.

Effective implementation of the liberties enshrined in the Treaty requires not only
compliance with such important principles as, for example, non-discrimination or
mutual recognition of national regulations - as clarified by Court of Justice rulings but also concomitant, effective application of a series of common specific provisions.
These are designed, in particular, to provide safety, public health, environmental and
consumer protection, public confidence in the services sector, appropriately qualified
persons to practise certain specialist occupations and, where necessary, introduction or
coordination of regulatory and monitoring mechanisms; all systematic checks and
inspections necessary to ensure correct application of the rules are carried out on the
market, not at frontier crossings.

          It is important to incorporate Community legislation into national legislation
effectively, but even more important to implement it properly in the field, via the
appropriate administrative and judicial structures set up in the Member States and

36

respected by companies. This is an essential precondition for creating the mutual trust
indispensable for smooth operation of the internal market.

This chapter must be read in conjunction with, inter alia, the chapters on social policy,
the environment, consumer protection and sectoral policies.

**The** **Four** **Freedoms**

A step-by-step approach is being taken to absorption of the _acquis_ by the applicant
countries:

The Association Agreement between the Community, its Member States and
Slovakia came into effect on 1 February 1995. With regard to the four freedoms and
approximation of legislation, the Agreement provides~ in particular, for immediate or·
gradual application of a number of obligations, some of them reciprocal, covering, in
particular, freedom of establishment, national treatment, free trade, intellectual
property and public procurement.

- The Commission's 1995 White Paper (COM(95) 163 final) guidelines, intended to
help the applicant countries prepare for integration into the internal market, gives a
closer definition of the legislation concerned. It identifies the "key measures" with a
direct effect on the free movement of goods, services, capital and persons and outlines
the conditions necessary in order to operate the legislation, including the legal and
organizational structures. Twenty-three areas of Community activity are examined,
dividing the measures into two stages, in order of priority, to provide a work
programme for the pre-accession phase. The Technical Assistance and Information
Exchange Office (T AIEX) was set up with the objective of providing complementary
and focused technical assistance in the areas of legislation covered in the White Paper.
A legislative database has recently been established by the Office.

- The applicant countries will have to transpose and implement all the _acquis._ The
"Action plan for the single market" submitted to the Amsterdam European Council
gives details of the priority measures necessary to make the single market work better
among the fifteen current Member States in preparation for introduction of the single
currency. This will inevitably entail changes to the _acquis._

**General Framework**

Whatever their field of activity, undertakings must be able to operate on the basis of
common rules. These are important since they shape the general framework within
which economies operate and, hence, the general conditions of competition. They
include the rules on competition ( on undertakings and State aid) and tax measures
discussed elsewhere in this opinion, the opening-up of public works, supply and
service contracts, harmonisation of the rules on intellectual property (including the
European patent), harmonisation of the rules on company law and accountancy,

37

protection of personal data, transfer of proceedings and recognition of judgments
(Article 220 EC Conventions).

38

**Descriptive Summary** ..

Public procurement is regulated by the Act on procurement of goods, services and
public works passed in 1993- which has since been amended. The Ministry of Building
and Public Works is in charge of managing the various aspects of public procurement
policy.

With regard to intellectual and industrial property~ Slovakia is a member of TRIPs
(Trade Related Aspects of Intellectual Property Rights) and undertook to apply its
provisions sinceJanuary 1, 1996. An Industrial Property Office has been set up. The
responsibility for intellectual property issues rests with the Ministry of Culture.

Company law is governed by a number of different statutes, in particular the
Commercial Code. A variety of kinds of enterprise exists in the Slovak- Republic,
including public trading companies, limited liability companies and joint stock
companies. As of 31 March 1997, there were 2957 joint stock companies-and 34,495
_ limited liability companies registered. Only joint stock companies are entitled to
issue shares to raise finance and shareholders appear to be protected in this event.
Minimum capital requirements are laid down by law. Creditors appear to be afforded
a basic level of protection. A commercial register is kept with the key elements of
information about trading companies, which is open to anyone on payment of a
modest fee. Such companies are obliged to disclose details of changes relating to
them. Details of non-trading companies are kept with the Ministry of Interior or the
district office of state administration.

With regard to accounting. the _Act_ _on_ _Accountancy_ (1991) provides the basic
framework for the annual accounts of companies. A Regulation from the Ministry of
Finance (1993) provides for the drawing up of consolidated accounts. It is not clear
how accounting standards are set. According to the _Act_ _on_ _Auditors_ (1992), the
Chamber of Auditors regulates the position and activities of auditors.

The protection of fundamental rights of physical persons is enshrined in the Slovak
Constitution and in Act 256/1992 on the protection of personal data.

**Current and Prospective Assessment**

The Slovak legislation on public procurement contains some of the fundamental
principles of the EC public procurement rules. However, it lacks clarity and detail,
not fully meeting all the requirements of the EC directives. This is particularly true as
regards the utilities sectors ( energy, telecommunications, water and transport). In
addition, it remains to be seen whether the review procedures in place are rapid and
effective enough. The legislation in force does not provide any preferential treatment
to Slovak suppliers and therefore exceed~ Europe Agreement obligations in this
respect. The Government plans to amend the existing law on public procurement in
the course of 1997 with a view to achieving full compatibility with the EC directives.

Concerning intellectual and industrial property, Slovakia has not yet ensured a level of
protection similar to that existing in the EC, as provided for in Article 67 of the

39

Europe Agreement. An application for accession to the Munich Convention on the
granting of patents was submitted in early 1997.

Although trade mark legislation adopted on 1 March 1997 is, according to the Slovak
authorities, in full conformity with EC legislation, only partial approximation has
been achieved in regard to patents and -semi-conductors legislation. Copyright
legislation in conformity with EC legislation is expected to be adopted in the course
of 1997. Full conformity in ail legislation in the intellectual and industrial property
area is envisaged by the Slovak authorities by 2000.

Effective implementation and enforcement will remain a significant concern in the
medium term due to the lack of experience of the authorities involved and to the

current weakness of internal control and border enforcement mechanisms.

On the basis of the information on company law provided by the Slovak Republic, the
law relating to trading companies already appears to be in conformity with the First
and Second Directives. As for the law on other companies, and the Third, Eleventh
and Twelfth Directives, it is understood that all legislation currently in force is being
examined and full harmonisation is intended to be achieved by 2000.

Amendments to the Act on Accountancy and the Act on Auditors are foreseen for the
first quarter of 1998. Amendments to the regulation on consolidated accounts are
foreseen during the second half of 2000. These changes are intended to bring about
full conformity with the 4th, 7th and 8th· Directives, but draft texts are not yet
available. Certain transitional problems are in evidence relating to the implementation
in practice of the new rules, including a shortage of qualified accountants and
auditors, and major efforts will be required if these are to be solved in the medium

term.

The current legislation in the data protection field does not comply with the EC
framework directive. Legislative changes are needed in particular to enable the
creation of an independent authority to supervise the application of legislation. A
draft law which aims at compatibility with the Directive has been drawn up and the
Slovak authorities expect that legislation will be adopted and implemented in the
medium term. Slovakia has not yet acceded to the Council of Europe Convention n°
108 on data protection.

On the subject of civil law, Slovakia has not yet been invited to accede to the
Convention of Lugano on matters of competent jurisdiction and the execution of civil
and commercial decisions. The States already party to the Convention must first
assess whether there has been progress in the protection of civil interests.

**Conclusion**

Slovakia is progressively adopting important measures in compliance with the
provisions of the Europe Agreement and the White Paper's recommendations
especially in regard to company law, public procurement and intellectual and

40

industrial property. However, in all of these areas, new legislation and legislative
amendments to complete the alignment proce~s are needed.

~
In the public procurement and intellectual and industrial property areas, a major effort
has to be made to strengthen the implementation and enforcement structures so as to
ensure the effective application of the legislation.

The information so far available on accounting and auditing does not provide a
sufficient basis on which to make a detailed assessment of its present conformity with
the _acquis,_ or Slovakia's prospects of achieving it, although the timetable for reform
seems reasonable. Slovakia already has several years of experience in implementing
data protection legislation, but improvements still need to be made in the legislation
and implementing structures.

Free Movement of Goods

Free movement of goods can be achieved only by removing measures which restrict
trade - not only customs duties and quantitative restrictions but all measures with
equivalent, i.e. protectionist, effect, irrespective of whether or not they are specifically
aimed at domestic or imported products. Where technical standards are not
harmonised, the free movement of goods must be ensured by applying the principle of
mutual recognition of national rules and accepting the rule that national specifications
should be no more stringent than is required to achieve their legitimate objectives.
This rule was established in the _Cassis de Dijon_ judgment.

For the purpose of harmonisation, the European Community has developed the "New
Approach" which introduces an approach carefully balanced between government and
private autonomous bodies and in which Community legislation and European
standards play a distinct complementary role. Thus, instead of imposing technical
solutions, Community legislation is limited to establishing the essential requirements
which products must meet. Products manufactured in accordance with European
standards are presumed to meet such essential requirements, but European standards
are not the only way to prove such conformity. The "New Approach" works in
conjunction with the "Global Approach" on product certification which governs the
apposition of the "CE Mark" on the product. For other products such as
pharmaceuticals, chemicals, motor vehicles, and food products, Community directives
follow the traditional regulatory pattern of providing fully detailed rules.

The free movement of goods also dictates that a number of Community harmonisation
measures be transposed into national law. Implementation of health and safety
harmonisation rules is particularly important and requires the establishment of
appropriate mechanisms and organisations, both for businesses and the authorities.

Two of the "horizontal" directives essential to smooth running of the single market
are the Directive on general product safety and the Directive on liability for defective
products. The regulations concerning general product safety are covered in the section
on consumer protection.

41

The rules on agricultural products ( compliance with veterinary and plant-health
standards) are explained in detail in the section on agriculture.

**Descriptive** **Summary**

Having liberalised its price, -trade and foreign exchange regime and established basic
legal and commercial rules ensuring lega! security and transparency for private
economic operators, Slovakia has set the foundations for free movement of goods and
services. Furthermore, in compliance with the provisions of the Europe Agreement,
Slovakia has made a firm commitment to trade liberalisation, th_e abolishment of all
quantitative restrictions and elimination of discriminatory measures, resulting in the
creation of a free trade area by 2002. 95% of prices have been liberalised, with the
remaining 5% of controlled prices applying to rents, energy and certain other.
household goods.

Certain technical barriers to trade have developed in relation to Slovak standards and
testing procedures. Slovakia took the first step towards application of the
Community's New Approach to technical harmonisation with the adoption of Law
142/1991 which established the basis for voluntary standardisation as opposed to
mandatory requirements .. The Slovak Office of Standards, Metrology and Testing
**(UNMS),** an affiliate member of the Comite Europeen de Normalisation (CEN) and
the Comite Europeen de Normalis,ation Electrotechnique (CENELEC) was set up to
draft and enforce legislation in this field. In 1995, however, Slovakia passed
legislation which is not in complete conformity with EC legislation and practice,
requiring a greater extent of pre-market testing and mandatory certification than is the
case in the EU. In addition, sectoral legislation has been introduced (e.g. on food
labelling and mineral water) which is not in conformity with EC legislation and could
develop into technical barriers to trade.

**Current and Prospective Assessment**

Slovakia has made significant progress in liberalising prices and trade and hence
establishing the foundations for the free movement of goods. Slovakia has
consistently met the deadlines established under the trade provisions of the Europe
Agreement (EA) and has been actively engaged in further liberalisation measures such
as the adoption of new provisions on rules of origin. However, the Slovak record in
complying with the balance of payments provisions of the Europe Agreement has not
been optimal. On 01.05.97 the Slovak Government introduced an import deposit
scheme. These matter is presented in other parts of the opinion.

Potential constraints to free movement of goods could arise in relation to Slovak
domestic legislation on prices as well as standards and testing procedures. With
regard to the former, a law on prices which gives very broad powers to the Ministry of
Finance and to local administrations to intervene in the domestic market for products,
services, works, leases, rents and intangibles as well as the import and export of these
items could represent, if ever implemented, a serious impediment to the free
movement of goods.

42

With regard to technical legislation standards and certification, the Slovak National
Programme on legislative approximation, foresees detailed implementation of White
Paper measures mostly in period 1997-1999, while year 2000 is indicated as the final
date for complete implementation of all remaining measures. Most New Approach
directives are planned for adoption once the general legislative framework is in place.

This should be ensured by the adoption of a general Act on technical requirements for
products which will contain the principles of New and Global Approaches. Important
delays have already affected the adoption of this framework legislation and the
necessary accompanying legislation on product liability. Although in the automotive,
pharmaceutical, foodstuffs and chemical sectors, legislative alignment is tentatively
scheduled until 1999, no concrete evidence of substantive work has been made

available to the Commission.

The problem of standards remaining mandatory in Slovakia is not entirely-solved. The
movement to the system of voluntary standards has been impeded by a lack of
consensus, at national level, as to the role and scope of technical regulations and to the
adoption of a system based on private responsibility rather than on a central legislative
authority.

Concerning conformity assessment, a wide coverage of products is submitted fer to
mandatory certification. This situation should be remedied through. the regulatory
adaptations described above and the full application of voluntary standardisation.

The Slovak authorities intend to amend the current civil code to achieve full

conformity with EC requirements in respect of civil liability for defective products.

In the areas subject to national rules and not covered by Community harmonisation,
there is not enough information available to assess whether Community legal
principles on the free movement of goods are properly applied in Slovakia. The
reporting procedures which form part of the intern-al-market machinery are not yet
operational and so cannot be used in the pre-accession period. The most important
instruments in this connection are: Directive 83/189, requiring governments to report
draft national technical standards and regulations; Decision 3052/95 on measures
derogating from the principle of the free movement of goods; procedures by which
complaints can be submitted to the Commission; and Article 177 of the Treaty,
enabling Member States to ask for preliminary rulings from the Court of Justice. It is
also hard to assess whether Slovakia complies with the principle of mutual
recognition; more information is required on its national rules, and on administrative
practices, which can have an effect on product marketing.

**Conclusion**

Slovakia is progressively taking on the full _acquis_ related to free movement of goods
and has a solid record of compliance with the trade liberalisation provisions of the
Europe Agreement. However, the tendency to revert to balance of payments
restriction measures and the slow progress in legislative alignment and in

43

implementing a compatible system of voluntary standardisation and conformity
assessment reflect weaknesses in compliance with the provisions of the Europe
Agreement and do not figure positively in the assessment of Slovakia's facilitation of
the free movement of goods.

In the area of standards and certification, a considerable effort will be needed before a
sufficiently developed situation exists for enabling a conclusion to the effect that the
_acquis_ will be fully and effectively implemented by Slovakia over the medium term.
The Slovak authorities also need to ensure that in fields not covered by Community
harmonisation their own national legislation is not likely to hinder trade, in particular
by checking that provisions in. force are commensurate with the goals pursued. If these
various elements are achieved, it is not expected that the free circulation of goods will
be a major obstacle at the point of accession.

Free Movement of Capital

The Europe Agreement establishes the principle of the free movement of capital
between Slovakia and the EU. This, as far as the obligations of Slovakia are
concerned, applies from the entry into force of the EA as regards direct investments
made by companies already established in the Slovak Republic and, as regards
branches and agencies of Community companies (as well as the self employed),
gradually during the transitional period). The White Paper highlights the link between
the free movement of capital and the free movement of financial services. It suggests
a sequence of capital movements liberalisation starting from long term capital
movements and those linked to commercial transactions to short term capital.

**Descriptive Summary**

The main volume of capital account inflows are accounted for by foreign loans
(upwards of480 MECU, roughly 75% of which is of a long term nature), followed by
inward portfolio investment (mainly related to privatisation and trading of securities
with the Czech Republic). Foreign Direct Investment (FDI), the third largest category
of capital inflow into Slovakia, has been modest. Between 1990-1995 FDI reached640

MECU.

The large foreign exchange inflows other than FDI have boosted foreign exchange
reserves over last two years to reach a current level of 3 billion USD. The volume of
Slovak direct investments abroad is approximately 200 million SKK.

**Current and Prospective Assessment**

Slovakia has introduced full current account convertibility: the Koruna was made
fully convertible for current account transactions (October 1, 1995) and for incoming
long-term capital movements (foreign investment). The capital transactions of the
banks are fully liberalised. The strategy adopted by Slovakia in implementing the
White Paper in the capital movements area corresponds in general to that suggested

**44**

by the WP by liberalising first direct investment, credits linked to commercial
transactions and inward capital movements.

However, given the good macroeconomics situation and performance of the country, a
quicker pace of capital liberalisation (notably regarding capital outflow) could allow a
more rapid integration of Slovakia in the international economic and financial system.
In the context of its OECD- application, the Slovak Government announced in mid1996 its intention to fully liberalise capital inflows in 1998, followed by capital
outflows in 1999, and liberalisation of remaining portfolio and overseas account
restrictions in 2000.

The schedule was accelerated with the Government lifting a number of capital
movement restrictions already in December 1996 which authorised Slovak FDI in
OECD countries (with liberalisation of FDI in other countries ·to be autborised on_
December 31, 1998); enabled Slovak citizens to purchase real estate in the OECD
member states; allowed the acceptance and extension of financial credits for three or
more years and the extension to financial credits for 5 or more years to OECD
countries. The Slovak Government expects to liberalise fully capital movements by
the year 2000.

Remaining restrictions on foreign direct investment and othet · capital movements
include the purchase of shares in resident bartks, shares of 'the stock exchange; real
estate for non-business purposes by non-residents, auditing compimies, strategic
companies and to the issue or placement of securities issued by ~on-residents on the
domestic market.

**Conclusion**

The Slovak Government has made a commitment both in regard to the Europe
Agreement and within the OECD to an ambitious schedule of liberalisation in the
capital market. Europe Agreement commitments have been met and indeed exceeded
in the area of inward capital movements. It can be expected that further liberalisation
commitments will be met as well.

**Free Movement** **of** **Services**

The basis of the free movement of services is the prohibition of discrimination, in
particular on grounds of nationality, and rules on the alignment of divergent national
legislation. These rules often concern both the right of establishment, which comes
under the heading of the free movement of persons, and the freedom to provide
services. Their implementation implies the establishment of administrative structures
(banking control boards, audio-visual control authorities, regulatory bodies) and
greater cooperation between Member States in the area of enforcement (mutual
recognition arrangements).

A substantial amount of the legislation applicable to the free movement of services
relates to financial services. It also concerns the problems relating to the opening-up

45

of national markets in the sectors traditionally dominated by monopolies, e.g.
telecommunications and, to a certain extent, energy and transport. These subjects will
be dealt with in the sections of the Opinion specifically referring to them.

**Descriptive Summary**

The share of the three largest banks in terms of total loans and deposits at end of
March 96 was 65% and 70% respectiv~ly. These three banks are predominantly state
owned. The participation of foreign banks increased significantly. The Banking
Supervisory Authority is a department of the National Central Bank.

As a result of the first wave of voucher privatisation most of the Slovak medium sized
and large enterprises are currently listed or registered on the Bratislava S1Qd
Exchan~e (BSE) and the MR-System (MRS - Market Registration System). The_
supervisory authority is for the time being the Ministry of Finance, but the setting up
of an independent Securities Commission is being considered by the Slovak
authorities.

The former Slovak monopoly, is the largest insurance company with 72% of the life
insurance and 76% of the non life market (1996). A new insurance law was adopted
in March 1991 to abolish state monopoly of the insurance industry and set up an
Insurance Supervisory Authority.

**Current and Prospective Assessment**

Considerable progress has been made in adopting the acquis related to financial
services 02anb) both in terms of Stage 1 and Stage 2 measures. The 1st Banking
Directive, the Own Funds Directive, the Deposit Guarantee Scheme, and the Solvency
Ratio Directive have been approximated. The Money Laundering Directive, the Large
Exposures Directive and the Second Banking Directive have been partially
approximated. The latter are for the most part in conformity with the EC directives
but will require changes to conform fully. For example, on money laundering,
provisions of the Slovak legislation on proof of identity should include the deposits on
transferable bearer passbooks.

Important directives that have not been adopted are the Directive on the Supervision
of Credit Institutions on a Consolidated Basis, the Capital Adequacy Directive, the
Directive on Annual Accounts and Consolidated Accounts of Credit Institutions. The

directive concerning the supervision on a consolidated basis is very important since it
permits the bank supervisors to reach a global view of the risks of the individual
banks and their related groups. The directive on annual accounts is important because
it provides the basis for the calculation of solvency ratios on an individual and
consolidated basis.

It is expected that Slovakia will be able to fully approximate EC directives in the
banking sector over the next three years. A considerable effort will be required,
however, particularly in view of the high level of state ownership in the domestic
banking sector and the weak financial situation of the domestic banks, related to the

46

accumulation of 'bad debts', to adequately enforce the banking regulations. In this
context the independence of the Slovak National Bank in its supervisory role will
need to be further strengthened.

Although legislation (Law on Collective Investment **and** **the** **Securities** Law) has been
adopted which largely approximates the EC directives, further work needs to pe
carried out.

Adjustments needed in the legislation include provisions for a clear~r definition of the
environment for the listed companies, independent supervision, effective protection of
minority shareholders, a definition of effective control, increased transparency on tax
and fiscal implications for different groups of securities, clearer procedures for the
issuance and revocation of licences, financial disclosure and the identification of
major shareholders, shareholder information in conformity with the EU directives and.
the prevention of insider trading. Legislation on collective investments in securities
needs to be modified.

The securities market suffers from a lack of transparency and weaknesses concerning
the protection of minority shareholders. Regulation of the capital markets is left to the
Ministry of Finance which does not have transparent standards and criteria for
decision making, including those covering the granting and revoking of licenses. The
implementation and enforcement of legislation would benefit from the creation of an
independent securities commission or any other independent supervisory authority.

The Stage l White Paper measures on insurance have not thus far been fully
approximated in Slovak Legislation. The 1991 Act on Insurance departs significantly
from EC legislation although amendments approved in. 1995 and 1996 have improved
the situation considerably. There are still weaknesses and gaps in the legislation
related to licensing and prudential supervision. In particular, provisions on basic
solvency margins/technical reserves and the requirement to deposit 30% of technical
reserves with domestic banking institutions are not in line with EC directives.
Concerning establishment, foreign branches are not allowed. Foreign insurance
companies have to set up full subsidiaries or joint ventures. These restrictions on
establishment are not fully in line with Slovakia's obligations under the Europe
Agreement.

Considerable progress will have to registered if full adoption and adequate
implementation of the acquis in the insurance sector is to be achieved over the
medium term. The Slovak Government has indicated that alignment of the Insurance
Act with Stage l measures will be accomplished in the second half of 1998. Stage 2
measures are going to be adopted at the time of Slovak accession. The Insurance
Supervisory Authority is supposed to be an independent body but is in effect part of
the Ministry of Finance. Its ability to effectively monitor and control the industry is
weak. Finally, the ability to achieve market conditions in this sector over the medium
term is questionable given the state monopolisation of the industry. Only the
privatisation of the main state owned insurance company will improve this situation,
but it was decided at the end of 1996 that such privatisation could occur only after
2003. This decision also applies to the State saving Bank.

47

**Conclusion**

It is expected that Slovakia will be able to fully approximate EC directives in the
bankin~ sector over the next five years .. However, a considerable effort will be
required to adequately enforce the legislation, particularly in regard to the remaining
state owned banks, one of which is not to be privatised before 2003.

Legislative approximation in the **securities** area is achievable over the medium term.
The implementation and enforcement of legislation would benefit from the creation of
an independent securities commission or any other supervisory authority. There is a
strong commitment of the authorities to conform as soon as possible to the European
requirements, but the attitude of the Parliament on privatisation calls for a certain
prudence on their possibility to achieve their goal.

Considerable progress will have to be registered in privatisation and approximation
and enforcement of legislation if Slovakia is to be able to effectively adopt and
implement the acquis in the insurance sector. On the basis of progress to date, the
prospects for full adoption of the acquis in this area are not positive.

Free Movement of Persons

The free movement of persons encompasses two concepts with different logical
implications in the Treaty. On the one hand, Article 7a in Part One of the Treaty on
'Principles' mentions the concept in connection with the establishment of the internal
market and implies that persons are not to be subject to controls when crossing the
internal frontiers between the Member States. On the other hand, Article 8a in Part
Two of the Treaty on 'Citizenship of the Union' gives every citizen of the Union the
individual right to move and reside freely within the territory of the Member States,
subject to certain conditions. The abolition of frontier checks must apply to all
persons, whatever their nationality, if Article 7a is not to be meaningless. While the
rights deriving from Article 8a apply in all Member States, those stemming from
Article 7a have never been fully applied throughout the Union.

_(a)_ _Free_ _Movement_ _of_ _Union_ _Citizens._ _Freedom_ _of_ _Establishment_ _and_ _Mutual_
_Recognition_ _o.,(Diplomas_ _and_ _Qualifications_

The Europe Agreement provides for the non-discriminatory treatment of workers that
are legally employed ( as well as their families). It covers the possibility of cumulating
or transferring social security rights, and encourages Member States to conclude
bilateral agreements with Slovakia on access to labour markets. During the second
phase of the transitional period, the Association Council will examine further ways of
improving the movement of workers.

The White Paper considers the legislative requirements in order to achieve a
harmonious· development of the labour market, whilst simultaneously preventing
distortions of competition.

48

The free movement of workers is one of the fundamental freedoms enshrined in the

Treaty; freedom to practise certain professions (e.g. in the legal and health fields)
may, however, be subject to certain conditions, such as qualifications. Depending on
the case,. these may be dealt with through coordination or by applying the principle of
mutual recognition. Freedom of establishment is also guaranteed under the Treaty and
. covers the economic activity .of self-employed natural persons and companies.

The free choice of place of residence may thus be subject to minimum conditions as to
resources and health insurcµice where the person does not exercise a profession in the
country concerned.

**Descriptive Summary**

Slovak legislation does not impose national quotas for work permits. Current
regulations require that foreign workers have a visa, a work permit and a long term
. residence permit. Possession of a work permit is a necessary condition for receiving a
long term residence permit for employment purposes. If the validity of the work
permit is not extended by the labour office, the validity of the residence permit expires
as well. Work permits are issued for certain professions. They are issued for a period
of one year maximum and are renewable. There is no limit on the employment of
foreign workers as long as the situation on the labour market allows it.

The free movement of persons is closely· linked to the freedom to provide services,
especially those requiring minimum professional qualifications which is in turn
facilitated by legislation on mutual recognition of diplomas. Part of the acquis
( equivalence of curriculum and duration of studies for most of the professions whose
training is coordinated by sectoral directives, structures for many professions) is
already taken over and full approximation is foreseen by Slovakia for 1999. In
particular, training, where coordinated by directives for seven professions, is rather
broadly in line with the acquis, although a number of adaptations are still necessary.
Enforcement structures are adequate but should be strengthened.

Integration with EU professional associations is developing well (for example
engineering diplomas already meet the minimum European standards).

**Current and Prospective Assessment**

While the Slovak Republic has already adopted some measures to adopt its social
legislation to EU standards, amendments to the current legislation on foreigners and
on employment of foreigners will have to be adopted to bring legislation fully into
line with EU principles of free movement of workers. Concerning mutual recognition
of diplomas, Slovakia should be able to take. up the _acquis_ in the medium term.

**Conclusion**

The necessary structures to facilitate the free movement of persons seem to be in place
but it is not possible at this stage to fully assess their effectiveness. Adaptation of

49

legislation and the implementation/enforcement structures related to free movement of
persons is needed if Slovakia is to fully adopt the acquis in this area. The
achievement of these adaptations is feasible in the medium term.

_(b)_ _Abolition_ _o.f_ _Checks_ _on_ _Persons_ _at_ _Internal_ _Frontiers_

. The free movement of persons within the meaning of Article 7a of the EC Treaty, i.e.
the abolition of checks on ali persons, whatever their nationality, at the internal
frontiers has not yet been fully implemented in the Union. Doing away with checks on
persons is conditional on the introduction of a large number of accompanying
measures, some of which have yet to be approved and implemented by the Member
States (see separate section on Justice and Home Affairs). However, that objective has
been achieved by a limited number of Member States in accordance with the
Schengen Convention (seven Member States already apply it and anotfier six are_
working towards implementation).

The draft Treaty aims to make that objective easier to achieve within the Union by
including a new chapter on an area of freedom, security and justice and incorporating
the Schengen _acquis_ into the EU.

Slovakia has indicated its desire to become a party to the Schengen Agreement and
requested observer status in Schengen on the occasion of the EU-SR Association
Council in February 1997. Slovakia has requested institutional and technical
cooperation in regard to border controls.

**General** Evaluation

Slovakia's progress in the implementation of legislation relating to the White Paper is
summarised in the annex. According to that table, Slovakia considers that by 30 June
1997 it will have adopted national transposing legislation for · 664 of the 899
directives and regulations in the White Paper. That figure covers legislation which
Slovakia considers it will have transposed or will have checked for compatibility with
Community rules and does not prejudge actual compatibility as such, on which the
Commission is not able at this stage to state an opinion.

Significant progress towards legislative alignment has been achieved in the important
areas of company law, banking, securities and free movement of capital. In these
fields, most measures have been transposed according to an assessment carried out by
the Slovak authorities, but the Commission is not able to say if they are fully
compatible with Community law.

Further work will nevertheless be necessary in these areas to achieve full alignment
with Community requirements. In the fields of standards and certification, industrial
and intellectual property (in particular copyright). public procurement and insurance,
however, more considerable efforts will have to be made if Slovakia·is to achieve full
alignment with Community legislation in the medium term.

50

Despite the efforts undertaken, real progress in transposing very recently adopted
legislation still has to be reinforced by detailed implementing rules and the
establishment ·of an efficient administrative structure. Slovakia possesses some
infrastructure which functions fairly well, but major efforts still need to be made in
several fields, especially standardisation and the technical structures required to
implement the ''New Approach", as well as in the areas of public procurement and
industrial and intellectual property.

The Commission cannot, at this stage, give an opinion on the ability of businesses,
especially small and medium-sized businesses, to implement the _acquis._

Leaving aside certain specific aspects relating to agriculture, checks at the internal
frontiers of the Union can only be abolished once sufficient legislative harmonisation
has been achieved. This calls for mutual confidence, based in · particular on sound _
administration ( e.g. the importance of safety checks ori some products at the place of
departure). As far as goods are concerned, the completion of the internal market on
1 January 1993 was only achieved by doing away with all the formalities and checks
performed by the Member States at the internal borders of the Union. In particular
these checks covered technical points (product safety), veterinary, animal-health and
plant-health matters, economic and commercial matters ( e.g. prevention of
counterfeiting of goods), security (weapons, etc.) and environmental aspects (waste,
etc.).

In most cases, the abolition of checks was only made possible by the adoption and
application of Community measures harmonising the rules on movement and
placement on the market (particularly as regards product safety) and, where
applicable, by shifting the place where controls and formalities within the Member
States or on their markets are conducted (in particular as regards VAT and excise
duties, veterinary and plant-health checks, and the collection of statistics). A section
of Slovakia's present borders will become the Union's external frontier and this
means border checks will need to be stepped up (see separate sections on Customs).

In view of the overall assessment that can be made of progress achieved to date and
the rate at which work is advancing in the various areas concerned, it is difficult at
present to put a time-scale on Slovakia's ability to take over and implement all the
instruments required to abolish internal border checks and to transfer those checks to
the Union's external frontier.

Slovakia has already adopted significant elements of the _acquis_ relating to the single
market. However, the Commission is not yet able to take a position on every measure
whose transposition has been reported by Slovakia. Further progress will be needed
with regard notably to standards and certification, public procurement and intellectual
property. In most areas, enforcement needs to be strengthened. A particular effort will
be necessary with regard to the strengthening of the administration. In the medium
term, provided current efforts are stepped up, Slovakia can be expected to have
adopted and implemented most of the single market legislation and made the
necessary progress on the mechanisms of enforcement, in order to be able to
participate fully in the internal market.

51

**Competition**

European Community competition policy derives from Art. 3 (g) of the Treaty
providing that the Community shall have _a system ensuring that competition in the_
_internal market is not distorted._ The main areas of application are anti-trust and state
aid.

The Europe Agreement provides for a competition regime to be applied for trade
relations between the Community and Slovakia based on the criteria of articles 85 and
86 of the EC Treaty (agreements between undertakings/abuses of dominant position)
and in article 92 (state aid) and for implementing rules in these fields to be adopted
within three years of the entry into force of the Agreement. Furthermore -it provides
that Slovakia will make its legislation compatible with that of the Community in the·
field of competition.

The White Paper refers to the progressive application of the above provisions and
those of the Merger Regulation ( 4064/89) and of Art. 37 and 90 (Monopolies and
Special Rights).

**Descriptive Summary**

Slovakia has moved quickly to establish a _**legislative and institutional framework**_
compatible with that of the European Union while at the same time proceeding with
privatisation so as to reduce the role of the state in the economy. However, continued
public monopolies, extensive public ownership through the National Property Fund
and the existence of anti-competitive price fixing legislation remain important factors
in assessing the competition environment.

The National Council of the Slovak Republic adopted on July 8, 1994, the _**"Act on**_
_**Protection**_ _**of**_ _**Economic Competition".**_ The purpose of the act is to protect economic
competition in the markets for products and services against prevention, restriction or
distortion as well as to create conditions for its further development, in order to
promote economic progress for the benefit of consumers. The Antimonopoly Office
(AMO) was set up as the central administrative organ, responsible for the enforcement
of the anti-trust law.

With regard to _**public undertakings and undertakings with special**_ _**or**_ _**exclusive**_
_**rights,**_ the Slovak Government's privatisation policy has excluded 29 essential
companies, with a combined book value of 100 billion SKK, from the priyatisation
process. These enterprises are mainly in the energy sector, post and
telecommunications, transport, the armaments sector, water management, insurance
and banking. The Slovak Government has maintained a veto in 12 additional,
so-called, strategic enterprises.

The responsibility for monitoring _**state aid**_ is vested with a department under the
Ministry of Finance. No specific rules have been established for the functioning of the

52

monitoring authority on state aid to define its powers to collect information and adopt
opinions or decisions on the compatibility of state aid with the Europe Agreement.

A first report on existing state aid has been made covering the period 1993/1994.

**Current and Prospective Assessment**

In the field of _**anti-trust**_ the current legislation fulfils to a large degree the
requirements in terms of approximation of legislation. Only a few adjustments need to
be made in the area of block exemptions, merger control and procedures.

As concerns _**public undertakings and undertakings with special exclusive rights,**_ the
29 'essential enterprises' excluded from privatisation and the remaining 12 'strategic
enterprises' in which the state maintains a veto right, are exempt from the· application_
of bankruptcy legislation. Considerable progress will be needed to make these
enterprises commercially viable through restructuring and to liberalise the sectors in
which some of these essential enterprises operate ( e.g. telecommunications, transport,
energy, postal services).

No specific rules on the functioning of the monitoring authority on _**state aid**_ within
the Ministry of Finance have been adopted yet. It remains unclear what are the powers
of the monitoring authority to control state aid and it seems clear that under the
present system it is not possible for the monitoring authority to collect all information
necessary from all aid granting authorities to examine the compatibility of state aid
with the Europe Agreement.

The transparency in the field of state aid has not achieved the level required. A first
aid inventory for state aid granted in 1993/1994 has been established which does not,
however, provide the information necessary to see who benefits from state aid and for
what purpose state aid is granted.

Certain aid measures seem to be contingent upon export performance which is clearly
not compatible with the Europe Agreement and an important part of state aid seems to
be granted through indirect forms of state aid, such as tax reliefs, debt write-offs and
tax arrears. These aid measures constitute operating aid which are only allowed under
very strict conditions. Due to the lack of transparency it is as yet unclear whether the
conditions for granting operating aid are complied with. The adoption of the draft
revitalisation Act would aggravate further the situation.

In addition to the adoption of legislation sufficiently approximate to that of the EC,
_**credible enforcement**_ of competition law requires the establishment of well
functioning anti-trust and state aid monitoring authorities. It requires moreover that
the judicial system, the public administration and the relevant economic operators
have a sufficient understanding of competition law and policy.

**Conclusion**

53

Approximation of legislation in the field of _**anti-trust**_ is progressing satisfactorily and
will be in place in the medium tenn. Moreover, the Antimonopoly Office seems to
have the skills and resources necessary to enforce the law. However, the most
important challenge will be to ensure that the law applies to all undertakings,
including the so-called essential and strategic enterprises.

In the field of _**state aid**_ much work lies ahead, in particular to establish the necessary
transparency, to bring into line with the Europe Agreement the existing state aid
measures and to adopt the rules for the efficient functioning of the monitoring
authority on state aid. In particular, the aid inventory should cover all measures
granted by the State, regional or local authorities or through State resources. The rules
on state aid should apply to all undertakings, including the so-called essential and
strategic companies. A considerable effort will be necessary to fulfil the requirements
in the field of state aid control over the medium tenn.

54

**3.2** **Innovation**

**Information** Society

**Present Situation**

. The economic and social effects made possible by the combination of information
technology and telecommunications are great. In Slovakia these possibilities were
neglected before 1989 although education generally was not. The result seems to be
that demand for· computers has spurted beyond normal expectation deduced from
GDP per capita. The number of host computers on the Internet (1.6 per 1000
inhabitants in Jan 1997), as a relative measure of development towards the
Information Society (IS), is growing very fast although Slovakia is about average
for the region and has not yet reached the position which the average EU country _
reached two years ago. . The ongoing modernisation of the telecommunications
network should soon begin to boost the volume of data transmission including for

~ the Internet.

**Conclusion**

The size of the market for information technology (IT) products is an encouraging
sign of rising potential in Slovakia for IS related activities. A more liberal approach
to new entrants to the data services market might have a positive effect but the key
stimulus will probably be the more general availability of advanced services.

Education, Training and Youth

Articles 126 and 127 of the EC Treaty provide that the Community shall contribute to
the development of quality education and implement a vocational training policy
aimed at promoting the European dimension in education and at enhancing industrial
adaptation and the responsiveness of the labour market through vocational training
policies.

The Europe Agreement provides for co-operation in raising the level of education and
professional qualifications. The White Paper includes no measures in this field.

**Descriptive Summary**

Slovakia's spending on education amounts to 1.5 % of GDP. It takes 3.2 % of the
state budget. _

There are 1,150,000 pupils, 72,500 students and 82,500 teachers in Slovakia.

The Slovak education system is composed of primary, secondary and higher
education, including vocational educational training. Education reforms undertaken

- since 1989 in the primary and secondary education fields have included the
authorisation of private education, increased autonomy for school principals and local

55

and regional authorities, curricula reform and an increase in the duration of obligatory
school education. There are 14 higher education institutions in Slovakia (including
three for teacher training), two military colleges and one police academy, all of which
are financed by the Government.

A Council of Higher Education was established in 1990 to represent the higher
education institutions in their gealings with the Ministry of Education. The Higher
Education Act of 1990 which granted a high degree of autonomy to academic
institutions was amended in 1996. The amendments were generally perceived as
significantly increasing the influence of the Ministry of Education and encroaching on
academic freedom. A new vocational education and training system is being
developed.

Tempus has contributed to the goals of achievement of higher education-reform and_
created the basis for cooperation with EU higher education institutes.

About 16.5% of the total Slovak population is aged between 15 and 25. Slovak youth
institutions have been involved in European Youth activities since 1990. From 1995
on, youth co-operation with Slovakia has also been included in the Youth for Europe

programme.

**Current and Prospective Assessment**

In compliance with the Europe Agreement, cooperation with Slovakia having the aim
of raising the level of general education and professional qualifications has been
established and the participation of the Slovak Republic in Community programmes
in these areas is imminent.

Further reforms are envisaged, a1mmg at qualitative improvement of the Slovak
education system at all levels. Teacher training will be an important component of
those reforms. With a view to the adaptation of the work force to the ongoing process
of economic restructuring, and given the need to ensure compatibility of standards
with those in the EU member states, continued reform of the vocational education
system is of crucial importance.

Provided that reforms proceed as foreseen, the Slovak education and training sector
should be fully able to participate in co-operative actions within the European Union.

**Conclusion**

In the perspective of accession, no major problems should be expected in these fields.

**Research** **and** **Technological** Development

Research and Technological Development activities at Community level, as provided
for by the Treaty and in the Framework Programme, aim at improving the

56

competitiveness of European industry, the quality of life, as well as supporting
sustainable development, environmental protection, and other common policies.

~
The Europe Agreement and its additional protocol provides for co-operation in these
areas, notably through participation in the Framework Programme. The White Paper
includes no measures in this field.

**Descriptive Summary**

The main responsibility for the development, co-ordination and impiementation of the
national science and technology policy, which was with the Office for Strategy of the
Development of the Society, Science and Technology of the Slovak Republic since
1995, was moved back to the Ministry of Education in the beginning of 1997. The
most important grant agency is still attached to the above mentioned· -office and_
operates on the principle of general tenders, open to researchers of all institutional
backgrounds. The Slovak Academy of Sciences, the 14 Slovak universities and the
applied research institutes are the main actors in the science and technology field.

Total expenditure fell from 2.25% of GDP in 1991 to 1.04% in 1995 and public
expenditure from 0.71 % of GDP in 1991 to 0.37% in 1994, but public expenditure has
since increased to 0.51 % in 1996.

The general priorities of the government in this sector are: to establish an effective
system of state support, and to increase the share of science and technology in the
state budget expenditure to 1 % of GDP. Priority subjects are: reducing raw-material
requirements, increasing energy efficiency, optimising the agro-ecosystems.

Regular cooperation with the European Community · started in 1992 with the 3rd
Research and Technology Development Framework Programme. So far, cooperation
was mainly concentrated on COPERNICUS (Specific Programme for Cooperation
with CECs and NIS) and remains rather low for participation in the 4th Framework
Programme. Slovakia is a member of COST (European cooperation in the field of
scientific and technical research) and EUREKA (European Research Coordination
Agency).

Since 1994, the statistics in this sector are compatible with OECD standards.

**Current and Prospective Assessment**

Slovakia disposes of a high level research and development sector which, due to
substantial reductions in government support, has been rapidly rationalised. The legal
and financial framework for research and development needs now to be consolidated
in order to stabilise the sector and give it a clear perspective for future development.
Draft legislation on research and development is in preparation. Funding should be
increased and become more diversified.

Increased participation in Community programmes should help consolidate this sector
and better serve the industrial innovation.

57

**Conclusion**

In the perspective of accession, no major problems should be expected in this field.
Accession would be of mutual benefit.

**Telecommunications**

The objectives of EC telecommunications policy are the elimination of obstacles to
the effective operation of the Single Market in telecommunications equipment,
services and networks, the opening of foreign markets to EU ·companies and the
achievement of universally available modem services for EU residents and
businesses. These are achieved through harmonisation of - the standards and
conditions for service offerings the liberalisation of the markets for terminals,
services and networks and the adoption of necessary regulatory instruments. The
. Directives and policies needed to achieve this have now been established, but the
liberalisation of public voice telephony and operation of related infrastructure will
be deferred for a year or two after 1998 in certain member states.

The Europe Agreement provides for co-operation aimed at enhancing standards and
practices towards EC · levels in telecommunication and postal policies,
standardisation, regulatory approaches and the modernisation of infrastructure. The
White Paper focuses on the approximation of regulation, networks and services,
followed by further steps ensuring gradual sector liberalisation.

**Descriptive Summary**

Telephone penetration has increased to 23.2 per 100 inhabitants at the end of 1996.
At the end of 1996 there were 145,000 unsatisfied requests for telephone service. The
government aims to reduce the waiting time for a telephone line to five months by the
year 2000 and to have 35 lines per 100 by that date.

The majority of telecommunications services are provided by Slovenske
telekomunikacie (ST) which is a state monopoly. Its transformation into a joint stock
company is currently under preparation. The government has recognised that private
sector capital will be needed to continue expansion of the sector and is considering
options for privatisation of ST.

**Current and Prospective Assessment**

_Degree_ _ofLiberalisation_

The Government has undertaken in the WTO negotiations to liberalise the remaining
monopoly held by Slovenske Telecom (ST) on voice telephony by 1 January 2003.
There is liberalisation in all other services except alternative infrastructures and there
is competition except in paging where ST has recently merged with the only paging
company which had French and Czech companies as partners .. Until 1997 there was

58

only one mobile operator (analogue) but two new mobile networks working to the
new pan-European digital standard (GSM) came into service in 1996.

_Approximation_ _to_ _EC_ _Law_

The Telecommunications Act of 1964 was amended in 1992 (by the former Federal
Government) so as to separate regulatory functions from operational ones. The
changes also abolished the statutory monopolies, permitted privatisation, imposed
licensing requirements on existing operators and thereby empowered the Government
to adopt a policy of liberalisation which, however, it has yet to do. A more effective
separation of the regulatory and policy body from any operating company will be
necessary to comply with the _acquis_ and to enable the Government to administer a
pro-competitive policy successfully.

New telecommunications legislation is due in 1997 to prepare for the privatisation of
ST. This new legislation, currently in draft form, provides for the division of
regulatory activities between four entities: the Ministry of Transport and
Communications, the Telecommunications office, the Regional Telecommunications
Offices and the Ministry of Finance which will regulate some tariffs. Since
independence, progress on passing new legislation in the sector has been slow and
there seems to be insufficient administrative capacity to meet the targets adopted.

Tariff rebalancing is in hand although pricing· policy is complicated· by the division of
powers between two ministries. As the main network expands into areas that are less
economically vigorous, policy measures will be needed if universal service is to be
achieved.

_Infrastructure_

The Government's principal objective has been to boost investment in the expansion
and modernisation of the public telecommunications networks and to improve the
quality of services available. Much expansion has taken place so far on the basis of
internally generated profits and on loans from the International Financing Institutions
and as the long distance network reaches completion, the availability of advanced
services, especially in cities, will greatly improve. Between 1991 and 1996 the fixed
network grew from 14.3 to 23.5 lines per 100 inhabitants compared to the average of
43. 9 for Greece, Portugal and Ireland. The Government aims to reduce the waiting
time for a telephone line to five months by the year 2000 and to increase penetration
35 lines per 100 inhabitants by that date. Provided that the Government can finance
the investment, this target may be achievable. The digitisation rate of the public
network is 38% compared to an average of 62.4% for Greece, Portugal and Ireland.

The Government is considering options for privatisation of ST as a further;_ means to
obtain finance for investment. The current revenue per line may be too low to achieve
universal service. The level of purchasing power would suggest that further tariff
reform could produce more revenue. At the end of 1996 there were only 25,000
cellular mobiles, ie 0.4 7 per 100 inhabitants.

59

_Competitiveness_ _of_ _the_ _Sector_

In 1995, there were 13. 7 employees per 1000 lines compared to the average of 6.2 for
Greece, Portugal and Ireland and new subscribers had waited on average 1.5 years for
their lines. There is a large n~ber of unsatisfied requests for telephone service and
even at today's high rate of network expansion, it will be a few years more before
even basic telephone service will be universally available. Revenue per line ( about
264 ecu pa in 1995) is close to the lower limit needed to ensure that the network can
be run as a profitable business white supplying affordable universal service.
Efficiency savings. by the public operator are necessary if it is to be competitive.
Provided that tariff rebalancing is continued and the economy continues to grow, the
telecommunications services sector should be able to face full liberalisation when it

comes in 2003.

**Conclusion**

Slovakia will have some difficulty in complying with the acquis communautaire in the
medium term because there is insufficient administrative capacity to complete new
legislation and enforce it. Greater competitiveness of the public operator must be
achieved to attract investment and to prepare for competition.

**Audio-visual**

The audio-visual _acquis_ aims, in the context of the internal market, at the provision
and free movement of audio-visual services within the EU as well as the promotion of
the European programme industry. The Television Without Frontiers Directive, which
is applicable to all broadcasters regardless of the modes of transmission (terrestrial,
satellite, cable) or their private or public nature, contains this _acquis,_ setting down
basic rules concerning transfrontier broadcasting. The main points are: to ensure the
free movement of television broadcasts throughout member states; to promote the
production and distribution of European audio-visual works (by laying down a
minimum proportion of broadcasting time for European works and those by
independent producers); to set basic standards in the field of television advertising; to
provide for the protection of minors and to allow for the right of reply.

The Europe Agreement provides for co-operation in the promotion and modernisation
of the audio-visual industry, and the harmonisation of regulatory aspects of audiovisual policy.

The Television Without Frontiers Directives is a Stage I measure in the White Paper.

**Descriptive** **Summary**

The legal framework for the audio-visual sector is determined by the 1991 Slovak
Television Act, and the 1991 Radio and Television Broadcasting Act. The first Act
dismantles the State's monopoly and prescribes the basic rules, rights and regulations

60

for broadcasting and broadcasters, whilst the latter provides for the Radio and
Television Broadcasting Council, which decides on licences granted to broadcasters.

The main television broadcaster is Slovak Television.

Since the State monopoly over film production and distribution was lifted, small
private producers have become active. The distribution sector is occupied by several
companies.

**Current and Prospective Assessment**

The audio-visual sector in Slovakia is attempting to re-establish itself after major
upheavals in recent years, and is characterised by rapid growth and constant change.
Its ability properly to adhere to the _acquis_ presupposes an upgrading of the capacity of
the programme-making industry to meet the important challenges of an adapted
regulatory framework.

Slovak audio-visual legislation is not fully compatible with EU requirements;
deficiencies remain over the promotion of European works, independent producers
and recent works, the definition of European works, isolated advertising spots and the
contents of advertising.

Amendments to the legislation are under discussion within the Slovak~administration.

**Conclusion**

More complete information is required on the evolving legislative situation. However,
provided that the necessary legislative measures are pursued with sufficient urgency
and are accompanied by the necessary structural adaptations of the industry, it is
reasonable to expect that Slovakia should be able to meet EC requirements in the
audio-visual sector in the medium term.

**3.3.** **Economic and Fiscal Affairs**

**Economic and Monetary Union**

By the time of Slovakia's accession, the third stage of EMU will have commenced.
This will mark important changes for all Member states, including those that do not
participate in the euro area. All Member states, including the new ones, will
participate fully in the economic and monetary union. Their economic policies will be
a matter of common concern and they will be involved in the coordination of
economic policies (national convergence programmes, broad economic guidelines,
multilateral surveillance, excessive deficit procedure). They will be required to respect
the stability and growth pact, to renounce any direct central bank financing of the
public sector deficit and privileged access of public authorities to financial
institutions, and to have completed the liberalisation of capital movements.

61

Accession means closer monetary and exchange rate co-operation with the European
Union. This will require strengthening structural reforms in the area of monetary and
exchange rate policies. Member states not participating in the euro area will be able to
conduct an autonomous monetary policy and participate in the European System of
Central Banks (ESCB) on a restricted basis. Their central banks have to be
independent and have price stability as their primary objective. Monetary policy has
to be conducted with market-based instruments and has to be "efficient" in

transmitting its impulses to the real economy. Therefore, reforms need to be pursued
to tackle factors that hinder the efficiency of monetary policy, such as the lack of
competition in the banking sector, the lack of development of financial markets and
the problem of "bad loans" in -the banking sector. Finally all Member states shall treat
their exchange rate policy as a matter of common interest and be in a position to
stabilise their exchange rates in a mechanism yet to be decided.

As membership of the European Union implies acceptance of the goal of EMU, the
convergence criteria will have to be fulfilled by Slovakia, although not necessarily on
accession. While the fulfilment of the convergence criteria is not a precondition for
EU membership, they remain key points of reference for stability oriented
macroeconomic policies, and must in time be fulfilled by new member states on a
permanent basis. Hence the successful conclusion of systematic transformation and
market oriented structural reforms is essential. Slovakia's economic situation and

progress has already been analysed in preceding chapters of this Opinion.

**Current and Prospective Assessment**

The Slovak Central Bank is largely independent from the government in terms of the
appointment procedure of its Governor and the conduct of monetary policy. The
statutory objective of the Central Bank is to ensure the stability of the Slovak
currency, but it has always been interpreted in terms of price stability. The provisions
of the Law on the Central Bank are still far from compatible with the Treaty, but the
Slovak Republic has a sound fiscal record which has implied no budget deficit
financing to date.

Monetary policy has been quite effective in driving inflation down to single digit
levels, although it must be stressed that the Slovak Central Bank started to use market
oriented instruments only in 1996. The control of money supply has been relatively
difficult in the past due to the combination of a fixed exchange rate and the
expectation of positive real interest rates ( due to low inflation). The Central Bank
reacted in 1996 by widening the fluctuation margins of the exchange rate around the
central parity, increasing the reserve requirements and introducing limits on the
volume of refinancing credits to the banks. This has caused severe liquidity shortages
in the interbank market, where there is only one supplier of deposits. Consequently,
interbank interest rates are relatively high. The efficiency of monetary policy is
hindered by an uncompetitive, state-dominated banking sector, that is also burdened
by a substantial amount of bad loans. In addition, the bankruptcy procedures are not
effectively enforced and financial markets are relatively underdeveloped.

The exchange rate regime is a peg with fluctuation bands around the central parity. In
an effort to curb the domestic external borrowing which was endangering its ability to

62

control money supply growth, in 1996 the Slovak Central Banlc progressively
widened the fluctuation margins of the exchahge rate around the central parity. Since
1993, the exchange rate has been stable within the targeted range.

63

**Conclusion**

It is premature to judge whether the Slovak Republic will be in a position, by the time
of its accession, to participate in the euro area; that will depend on the success of its
structural transformation permitting to attain and to adhere permanently to the
convergence criteria, which are not however a condition of accession.

The Slovak Republic's participation in the third stage of EMU as a non-participant in
the euro area should pose no problems in the medium term, provided that central bank
legislation is made fully compatible with EC rules and that the banking sector is
restructured, according to the criteria of a market economy.

**Taxation**

The _acquis_ in the area of direct taxation mainly concerns some aspects of corporation
taxes and capital duty. The four freedoms of the EC Treaty have a wider impact on
national tax systems.

The indirect taxation _acquis_ consists primarily of harmonised legislation in the field
of Value Added Tax and excise duties. This includes the application of a noncumulative general tax on consumption (VAT) which is levied on all stages of
production and distribution of goods and services. This implies an equal tax treatment
of domestic and non-domestic (import) transactions. The VAT _acquis_ also contains
transitional arrangements for the taxation of transactions within the European Union
between taxable persons. In the field of excise duties the _acquis_ contains harmonised
tax structures and minimum rates of duty together with common rules on the holding
and movement of harmonised excisable goods (including the use of fiscal
warehouses). As a result of the introduction of the Single Market, all fiscal controls at
the Community's internal frontiers were abolished in January 1993.

The mutual assistance between Member State tax authorities is an important feature of
administrative cooperation in the Internal Market; the respective Directive covers both
direct and indirect taxation.

The Europe Agreement contains provisions on approximation of legislation in the area
of indirect taxation.

The White Paper contains as Stage I measures those which make up the main
requirements of the indirect taxation _acquis_ ( essentially, those measures applied in the
Community up to 1993), and as Stage II measures those which are in addition
necessary to implement the full indirect taxation _acquis._

64

**Descriptive Summary·**

_Direct_ _Taxation_

The two company taxation Directives and the Arbitration Convention provide for a
mechanism which applies on the basis of reciprocity. Respective provisions can
therefore by definition not be expected to exist before accession.

_Indirect_ _Taxation_

The overall contribution of VAT and excise duty revenue to the Slovak state budget
was about 32% and 12% respectively in 1995. This is expected to continue on an
upward trend.

_Value_ _Added_ _Tax_

- The current Slovak VAT system was introduced on 1 January 1993 replacing the
previous Single-Stage Turnover Tax. Slovakia applies a dual VAT rate system: a
standard VAT rate of 23 % and a reduced VAT rate of 6%. The standard rate applies in
principle to all supplies of goods and services, which are not specifically taxed at the
reduced rate. As regards imports the rate applicable 1s _tp.e_ same as for similar
domestically produced supplies.

Certain activities are exempt from VAT without the right to claim the input credit on
such supplies. These exemptions relate mainly to activities in the public interest,
financial and insurance services, and lotteries and similar games. Taxable persons are
in principle entitled to deduct VAT incurred on their purchases for business purposes
of goods and services. However, the Slovakian VAT Act does not contain any
provisions enabling tax to be refunded to taxable persons not established within the

country.

_Excise_

The current system of excise duty in the Slovak Republic was introduced on 1 January
1993. Excise duties are applicable to mineral oils, alcohol and alcoholic beverages and
manufactured tobacco. For each product category, the duty is specific in nature.

_Mutual_ _Assistance_

The tax administration has not yet had to develop its capacity for mutual assistance
with the tax _authorities of Member States, since mutual assistance is a feature which
would only become applicable on accession.

**Current and Prospective Assessment**

_Value_ _Added_ _Tax_

_65_

The current VAT system in Slovakia has been based on the main principles of the
VAT legislation of the Community. It is· a good starting point in its future alignment
with the Community VAT _acquis,_ although it is relatively general in its application.

Foreign traders who are not permanently established in Slovakia and listed in the
Commercial Register cannot be registered for VAT in the country. Since Slovakia
does not operate any arrangements for the refund of VAT to non-registered foreign
taxable persons, VAT represents an increased cost to such traders. The application of
the reduced VAT rate is notably broader in scope compared to the Community
approach.

The Slovak Republic's membership of the European Union would require additional
adjustments to bring the VAT legislation into line with the requirements of the
Community _acquis,_ in particular as regards the system of taxation necessary in a_
Community with no internal frontier controls.

The Slovak national strategy plan for implementing the recommendations of the
White Paper regarding VAT initially gives priority to restructuring the VAT rate
scheme, and to the tax exempt treatment of supplies of goods · to foreign air and
shipping companies and supplies of services rendered on board such aircraft and
ships. During the period 1998 - 2000 the legislative programme is planned to focus on
arrangements for the refund of VAT to taxable persons not established in Slovakia,
the definition of taxable persons, and tax exemptions applicable to the temporary
importation of goods other than means of transport. It is intended to fully align the
Slovak VAT legislation to that of the Community by 2000 with the exception of the
Community's transitional provisions.

_Excise_

There are significant discrepancies between the Slovak excise regime and EU
requirements.

Firstly, there exists no excise suspension system where goods can move between
authorised tax warehouses without payment of duty.

Secondly, although the level of tax rates broadly oscillates around the minimum rates
specified by individual EC directives, the level of rates applicable to mineral oils are
below the EC minimum level, while the current specific rate of duty on cigarettes will
have to be switched to a compound rate applied in the Community which consists of a
specific element and an ad valorem element.

In order to ensure a correct application of the Community excise legislation it is
essential that the Slovak Republic sets up a warehousing system based on the
Community model as soon as possible, and adapts the structure and level of its excise
rates in such a way that they comply with Community requirements.

The Slovak national strategy plan for implementing the recommendations of the
White Paper does not provide a clear and detailed timetable for future adjustments of

66

the Slovak excise legislation. A short tenn objective consists of an approximation of
Slovak excise legislation towards the Community legislation in the period 1999 2000. However, the effective setting-up of tax warehouses as well as the
harmonisation of the structure of duty on alcoholic beverages would be delayed.
Accordingly a full harmonisation of the legislation is not envisaged for a further few

years.

_Mutual_ _Assistance_

There would also be a need, on accession, to implement the appropriate arrangements
for administrative cooperation and mutual assistance between Member States. These
requirements are essential for the functioning of the Internal Market.

**Conclusion**

The _acquis_ in respect of direct taxation should present no significant difficulties.

As regards indirect taxation, provided a sustained effort is made, the Slovak Republic
should be able to comply with the _acquis_ concerning VAT and excise duties in the

medium term.

It should be possible to start part1c1pating in mutual assistance as the tax
administration develops its expertise in this respect.

**Statistics**

The main principles of the Community _acquis_ relate to the impartiality, reliability,
transparency, confidentiality ( of individual information) and dissemination of official
statistics. In addition there exists an important body of principles and practices
concerning the use of European and international classifications, systems of national
accounts, business registers, and various categories of statistics.

The Europe Agreement provides for co-operation to develop effective and reliable
statistics, in harmony with international standards and classifications.

The White Paper includes no provisions in this field.

**Descriptive Summary**

The Statistical Office of the Slovak Republic (SOSR) is the central body charged with
producing and disseminating official statistics in Slovakia. It is guided by a Statistical
Council of representatives from other government administrations and from the
private sector.

The legal basis for Slovak official statistics consists of the Law on State Statistics.

**Current and Prospective Assessment**

67

Slovak legislation is, with a few exceptions, comparable with the current standards
applied within the European Union.

Some issues of transparency, confidentiality and dissemination need attention, and
there are deficiencies in sectors such as national and regional accounts, and the
business register. Improve~ents are also needed in the regional statistical system
following the reform of the territorial division of the country.

**Conclusion**

Provided that continuing progress is made, Slovakia should be able to comply with
EU requirements for official statistics within the next few years.

**3.4 Sectoral Policies**

**Industry**

EC industrial policy seeks to enhance competitiveness, thus achieving rising living
standards and high rates of employment. It aims at speeding up adjustment to
structural change, encouraging an environment favourable to initiative, to the
development of undertakings throughout the Community, and to industrial cooperation, and fostering better exploitation of the industrial potential of policies of
innovation, research and technological development. ~C industrial policy is horizontal
by nature. Sectoral communications aim at transposing horizontal concepts into
specific sectors. EC industrial policy results from an articulation of instruments from a
number of Community policies; it includes both instruments related to the operation
of markets (product specification and market access, trade policy, state aids and
competitions policy) and measures related to industry's capacity to adapt to change
(stable macro-economic environment, technology, training etc.).

In order to cope with competitive pressure and market forces within the Union, the
industry of applicant countries needs to have achieved a certain level of
competitiveness by the time of accession. The governments of applicant countries
need to be seen as pursuing policies aimed at open and competitive markets along the
lines set out in Article 130 ("Industry") of the Treaty. Co-operation between the EU
and the candidate countries in the fields of industrial co-operation, investment,
industrial standardisation and conformity assessment as provided for in the Europe
Agreement is also an important indicator of development in the right direction.

**Descriptive Summary**

Until World War II Slovakia was a predominantly rural country. Its subsequent
industrialisation followed the imperatives of central planning with little regard to
factor endowments or locational costs. As part of the CSSR in the period leading up to
1990 the country had become one of the most centrally-planned economies. The
structure of the economy was dominated by heavy industry (notably basic industries),

68

which provided to a large extent inputs (steel, paper, petrochemicals) for the Czech
industry.

The collapse of traditional markets and increased competition has led to industrial
restructuring and a strong decline in industrial production. during 1990-1995 the share
of industrial production (including construction) in GDP dropped by a third to 37%
and stood at about 5 bn Ecu~ Total industrial employment fell as well and now stands
at about 650,000 or 35% of the total workforce. Small firms account for three
quarters of all industrial firms and for 25% of total employment while the rest,
medium-sized and large firms, provide the largest share in employment. The major
industries are now mechanical engineering, chemicals, metallurgy, agri-food, wood
and textiles and clothing.

**Slovak Industry, Main Production Sectors in 1995**

Sector %-share

industrial

value added

Mechanical engineering (incl. pressure 10.5
equipment, medical apparatus,
metrological equipmt).

Chemicals 14. 5

Metallurgy 9
Agri-food 8.5
Wood, cellulose, paper 7
Textiles/clothing, leather/shoes 5.5
Automotive industry 5
Electrical engineering (incl. consumer 2
electr., components, telecom, office
equipment)

Pharmaceuticals 2

%-share

industrial

employ
ment

25

9.5

5.5

9.5

8

15

1.5

4

83

17

100

_27_

_5_

_32_

%-share

industrial

exports

7.5

24

20

2.5

8.5

5.5

5.5

3

2.5

79

21

100

Total of the above

Other industries

Total industries

_Industrial prod._ _as%_ _GDP_

_Construction_

_Total industry_ _and_ _construction_

67.5

32.5

100

_32_

_5_

_37_

**Engineering** has remained an important sector despite a strong decline in production.
The main focus of the engineering industry is the production of highway. and heavyduty construction machinery, transport equipment and hydraulics. Most firms have
been privatised and the restructuring forced the exit of a number of public firms.
Nevertheless, production technologies and capital stock remain obsolete and capacity
utilisation rates low, while modernisation is impeded by lack of resources.

The **chemicals** industry has been a traditional leader in the Slovak economy for
decades and seems competitive. The sector currently operates on a capacity utilisation
rate of over 80 per cent and trades actively, mainly to the Czech Republic and the EU.
Privatisation remains to be done for "strategic enterprises".

69

The **steel** sector basically consists of a single large steel company. Both it and the
**non-ferrous metal** sector are technically advanced and competitive but modernisation
took place without capacity reduction.

The **agri-food** industry is an important industrial sector. Capacity utilisation rates in
the industry vary widely.

The base industries **wood and paper, cement, glass and ceramics** are important
industries as well. Generally the forest-based in~ustries in Slovakia are less developed
but opportunities exist for some sectors { e.g. wood panels) and the close proximity of
Slovakia to the EU helps exp~rts . .The relatively high export and capacity utilisation
ratios suggest that these industries so rar have been able to compete on the
international markets, but the low imports together with a number of trade restrictions
for some of the sectors could indicate barriers to entry for foreign exporters, like the
import certification system for ceramics.

The relatively large **textiles, clothing, leather and shoes** sector is still in crisis.
Competition with Asian manufacturers and a general lack of restructuring plague the
industry, but exports still account for most of production and there is a trade surplus.
To increase competitiveness, manufacturers are attempting to target new markets,
upgrade production for EU markets and establish outward processing trade {OPT)
links with EU manufacturers. The **automotive** sector is among the more dynamic
sectors in manufacturing. There are two vehicle producers, one fully owned by a
major German producer, and nearly all of the production is destined for the EU
market. It has moved production from Germany to Bratislava to benefit from low
labour costs and to develop the high quality plant into - a key assembly point for niche
automobiles marketed in Europe. The components industry is only slowly recovering
from the break-up of Czechoslovakia. Slovak component manufacturers co-operate
with a Czech car maker and the number of joint ventures with Western partners is
growing. The **pharmaceutical** industry is relatively small. Most production in 1995
was exported, almost entirely to the Czech Republic. However, exports are
increasingly targeted towards Western markets though it consists mainly of raw
materials. Nevertheless, the production system needs restructuring and the industry is
attempting to move towards Western standards but resources remain scarce. In
addition, a lack of funds for R&D hinders future development. The industry does not
seem to have been successful in attracting foreign partners or investment, possibly
also due to lack of patent protection. The **pressure and metrological equipment**
industries are mostly small-scale. For 1995, exports greatly exceeded imports but the
low capacity utilisation rate does suggest a need for further restructuring.
**Information technology industry** production facilities and methods are mostly old
and obsolete. Privatisation and restructuring have led to a sharp drop in production
and the exit of numerous firms, despite a relatively dynamic demand growth. Those
that are left need further modernisation. Despite the industry decline parts of the
research environment are still maintained by the state and provide a potential for new
development. On the other hand, Slovak software suppliers have successfully
established links with foreign clients.

70

The privatisation process has made progress. It was carried out first through a voucher
method followed by direct sales/management buy-outs, bringing the private sector
share in GNP to 70 %. Since 1995 however privatisation of many large companies
benefited corporate and political insiders and was done in a less than transparent
fashion which led to little revenue for the public authorities and few if any new capital
and management input for the privatised firms. The government nevertheless
maintains a controlling share in a number of "essential and strategic companies".
These include enterprises in energy, utilities, armaments, posts and
telecommunications, railways, pharmaceuticals and agro-industry. These enterprises
are exempt from the application of bankruptcy legislation.

**Current and Prospective Assessment**

So far industry has developed satisfactorily despite the precarious politieal situation
mainly because the macroeconomic environment has remained stable and the open·
trade regime provided for enough competition. But the outlook for industry cannot be
_divorced. from political developments because privatisation is still far from being
complete and what has taken place so far has often been linked to the current regime.
It thus remains to be seen whether industries that have been put in 'politically
friendly' hands will in future behave competitively. This problem will be particularly
acute in a number of sectors that are dominated by a single fi~.

The share of investment in GDP is the hi$hest among the associated states (almost
36%, close to that of some fast growing Asian economies).

The main problems for industry come from the lack of competitive privatisation and
the excessive reliance on energy intensive sectors. The state owned firms will have
less problems of access to long term financing and thus have an advantage over the
private sector in capital intensive areas. This could lead to a development similar to
that experienced by some southern European member states in the 1970s and 1980s
that build up or maintained heavy capital intensive industries in state hands despite
mounting losses. A development in this direction would greatly diminish the capacity
of Slovak industry to undertake the massive restructuring that it still needs to
undertake if it is to graduate to a product mix less reliant on low wages and cheap
access to raw materials.

**Conclusions on Industrial Competitiveness**

The integration of Slovak industry into the European market could face difficulties to
proceed satisfactorily over the medium term. This will require diversification away
from heavy industries and more effective restructuring of enterprises. A major
potential impediment to restructuring and diversification efforts is the lack of
investment capital due to the low levels of foreign investment, the bad debt situation
and the insider oriented non transparent way of privatisation.

Rather than strictly sectoral issues it will be the overall environment in which the
Slovak industry is operating, such as infrastructure, taxation, etc., that will determine
its future. Thus, the industry will be affected by the economic measures introduced in

71

Spring 1997 including the import deposit scheme, and further developments
concerning the exchange rate of the Slovak Crown will be of major importance.

An evaluation of the acquis specific to the free circulation of industrial goods is to be
found in the separate section on the internal market.

**Agriculture**

The Common Agricultural Policy aims to maintain and develop a modern agricultural
system ensuring a fair stand~d of living for the agricultural community and the
supply of goods at a reasonable price for consumers, and ensuring the free movement
of goods within the EC. Special attention is given to the environment and rural
development. Common Market Organisations exist to administer the _CAP-:_ These are
complemented by regulations on veterinary health, plant health and animal nutrition·
and by regulations concerning food hygiene. Legislation also exists in the area of
structural policy, originally developed primarily to modernise and enlarge agriculture,
but more recently with an increasing emphasis on the environment, and the regional
differentiation of the policy. Since reforms in 1992, increasing contributions to farm
support have from direct aid payments compensating cuts in supports prices.

The Europe Agreement with Slovak Republic provide8 for preferential trade in the
field of agriculture (Article 19 to 22 with their annexes). Article 78 of the Europe
Agreement establishes economic cooperation between the parties to assist in the
modernisation of agriculture and the agro-industrial sector. The White Paper covers
the fields of veterinary, plant health and animal nutrition controls, as well as
marketing requirements for individual commodities. The purpose of ~uch legislation is
to protect consumers, public health and the health of animals and plants.

**Descriptive Summary**

_Agricultural_ _Situation_

The value of the agricultural production in 1995 was approximately 0.68% of that

of the Union.

The share of agriculture in GDP declined from 9.4% in 1989 to 5.8 % in 1996. In
1996 employment in agriculture was down on 7.5% of total employment from
12.5% in 1989. The number of employees per 100 ha farm land dropped from
13.3 in 1989 to 6.8 in 1996.

Of the total area of 4. 9 million hectares, half is used for agricultural purposes and
over 40% is covered with forests. About 60 % of arable land is planted with
cereals, mainly wheat, barley and maize and about 25% with fodder crops. The
other arable crops - oilseeds (mainly rape and sunflower), pulses, sugarbeet and
potatoes - are of lesser importance in terms of land use.

72

Following the transformation and privatisation process, basically three fonns of
farms emerged:

~
(1) about 1,000 transformed co-operatives managing 69 % of agricultural land,
with an average size of 1600 ha;
(2) individual (family) farms: at the end of 1994, there were about 7,600
individual farms (with an av~rage size of 15 ha), most of them created by persons
who decided to leave the co-operatives. However, many individual farmers are
part-time farmers and more than 60% of the individual farms have less than 5 ha
with that area itself having small plots whose average size is 0.34 h_a.·
(3) There were around 60 corporate farms Goint stock or limited liability) with an
average size of 290 ha. Together with the individual (family) farms, these
occupied about 9 % of the agricultural area in 1994. Owners are usually
entrepreneurs organising land, capital and labour. They are mostly active in the

cereals sector.

A further 22 % of farmland remains in state farms (137 in 1995), which have an
average size of 2,950 hectares. The process of privatisation of the state farms has
slowed as a result of legislative changes in the scope and methods of privatisation.

In 1995 Slovakia was more or less self-sufficient for the main agricultural
products (cereals: 3.5 million tonnes; 94, 7%; oilseeds: 0.23 million tonnes,
169%, sugarbeet: 1.23 million tonnes, 100%; potatoes: 0.44 million tonnes, 82%;
beef: 60,000t, 94%; pigmeat: 190,000t, 100%; poultry meat: 113%; milk 1.19
million tonnes, 130%).

As regards the food industry, 171 enterprises had been privatised by the end of
1996, representing 92% of the total state-owned processing enterprises.

The country is a net importer of agricultural and food products : ( export: 430
MECU; import: 590 MECU) it accounted for 8 % of Slovakia's total imports and
6,2 % of its total exports in 1995. Most important agro-food market in terms of
value for Slovak exports is the Czech Republic (43% share in 1995), followed by
the EU (17%) and the former Soviet Union (15%). On the import side, the Czech
Republic is also the most important trade partner (36% share in 1994) followed by
the EU (35%). The overall deficit in agro-food foreign trade in 1996 increased by
145 MECU to 330 MECU.

In 1995, main Slovak exports were cereals, malt and starch, milk and milk
products, vegetables and beverages. The main categories of agro-food imports
were tropical products, animal feed, beverag~s and tobacco.

_Agricultural_ _Policy_

The PSE (Producer Subsidy Equivalent) calculated by the OECD in 1995 was
25% compared to 49% in the EC.

73

The agricultural market price support is provided mainly by intervention
purchases, combined with quotas and export subsidies. The Ministry of
Agriculture sets minimum guaranteed prices ( covering at least 90% of average
production costs and adjusted in case input prices rise by more than 5%) for
cereals, slaughter cattle and pigs. In the case of milk, a fixed guaranteed price is
set and the policy instruments include a milk quota system, fixed at regional level
and distributed to individual _fanns. Because of shortages on the domestic market,
a temporary maximum price has been fixed for potatoes.

The State Fund for Market Regulation (SFMR), makes intervention purchases at
the guaranteed price level, provides export subsidies, and grants exports/imports

licenses.

In main sectors, an indirect support regime by the Ministry of Agriculture is
applied, mainly through input subsidies for purchases of seeds, fertilisers, modem
technological equipment, breeding new varieties, irrigation, etc. Exports subsidies
are foreseen by the legislation for a number of products including cereals, sugar,
beef, pork, poultry meat, dairy products, fruits and vegetables.

The rural area plays an important role in the socio-economic development of
Slovakia and the Slovak government aims at a gradual adoption of a rural and
regional development policy to achieve compatibility with the EU. At present
however, there is no rural development policy similar to EC policies. Direct
income support is paid to fanners in less favoured areas in the term of hectare
payments varying according to the quality of the soil. Subsidies are also paid
(premium per head ) for sheep and goat rearing in these regions. Furthermore,
subsidies are available for the purchase of high quality inputs ( certified seeds,
breeding animals) and investments as mentioned above.

Slovak support prices are significantly lower than EC intervention prices. In 1995
the price of cereals was in range 56 to 64% of the average European level, and the
milk support price was fixed at 63% of the EU price. However they apply at the
farm gate level.

In 1995, total agricultural budget expenditure amounted to SKK 7,674 million
(ECU 200 million), out of which 53% was spent on direct payments to less
favoured areas and milk quality payments. Input subsidies accounted for 18% of
the agricultural budget while market regulations including export subsidies
accounted for 8.5%. General services (training) represented 3% of the total
agricultural budget and other support (certain tax reliefs) 9%. In 1995 the absolute
amount of support payment represented about 16% of the value of the agricultural
production (SKK 48 billion).

In 1993, the taxation system was reformed and several new tax laws were
introduced to meet the specific characteristics of the agricultural sector and the
goal of adjusting to the EU system. A wide range of tax reliefs and preferences
were granted to agriculture.

74

With the implementation of the Uruguay Round Agreement the variable levies, as
well as non-tariffs barriers ( compensation levies) were transformed into fixed
tariffs. Slovakia has assumed Uruguay Round commitments on domestic support,
market access and export subsidies. (SKK. 1651 million i.e. Beu 38 million by the
year 2000).

In regard to the preferential trade provisions of the Europe Agreement, some
quotas have not been filled, mainly because of insufficient marketing and
promotion. but also due to the insufficient supply of some of these products.

The Slovak Republic is also a member of CEFT A (Central Europe Free Trade
Agreement) which aims at the further liberalisation of agricultural trade. Given
the fact that other partners in CEFT A have their GA TT commitments bound to
higher level of protection than Slovakia, liberalisation result in a favourable
outcome for Slovakia's exports of agriculture products.

Slovakia is introducing the legislation identified in the White Paper.

Slovakia has an institutional infrastructure with, as the central body for national
administration for agriculture, the Ministry of agriculture; 36 regional land and
information services represent the national administration in the districts;, in
addition, a certain number of "funds" manage,.different aspects of agricultural
policies. The Slovak Agricultural and Food Chamber (SKPPK), which.· i_s a nonstate, public and autonomous institution, co-operates with the Ministry m
establishing the agrarian policy.

**Current and Prospective Assessment**

After a five year gap in investment, there is an important need for the replacement
of machinery. In the medium term Slovakia is expected to produce increasing
exportable surpluses of cereals, oil seed, sugar, pigmeat and poultry.

Even though Slovakia has made progress is adopting new legislation and
structures compatible with the EU, major differences remain between the Slovak
and EU policies related to agriculture.

In implementing its Agricultural Policy Programme of 1993, the Slovak
Government has been quite successful in fulfilling its objectives of ensuring
economic stability and supporting agriculture. The revision of the current policy
programme foreseen in 1998 is not expected to fundamentally change the current
policy framework.

Adjustments of certain market organisations are necessary however in order to
bring the sector more closely in line with that in the EU. Import and export
arrangements will have to be adapted to match the Union's. Import and export
licences currently applied would have to be abandoned. Also _certain input
subsidies (for ex-purchase of fertilisers, breeding of new varieties) are granted
which appear to be inconsistent with the _acquis._

75

The main market policy instruments applied in the EC are not applied in Slovakia.
This includes key instruments like sugar quotas, main arable crop schemes (base
area, compensatory payment scheme), as well as certain rural and structural
development programmes.

Management and control o~ these schemes will require relatively sophisticated
administrative systems, including an appropriate land register and cattle
identification and registration systems. The ·Slovak administrative capacity would
need to be further developed in these areas if these measures were to be applied in
Slovakia. Producers· organisations and wholesale markets in the fruit and
vegetable sector need to be set up.

It is difficult to foresee the development of agricultural support prices in Slovakia
in the period before accession. This will depend on a number of factors including
the domestic economy, the situation on export markets and the development of
price support levels in the Union.

In general food processing industry is still suffering from over-capacity and is in
need of modernisation.

As far as rural policy is concerned, at present, there is insufficient co-ordination of
financial support for rural development programmes between the various sectoral
bodies at horizontal and regional level. Horizontal and regional measures often
overlap. Responsibility for rural development policy at national level has not been
clearly assigned.

Negotiations are ongoing to solve the difficulties which have arisen m the
application of the trade provisions of the Europe Agreement.

The Slovak Republic is making progress in introducing the legislation identified
in the White Paper. In the veterinary and phytosanitary field, Slovakia is
negotiating an agreement on equivalency with the European Commission. The
negotiations are nearing completion.

For the wine sector, current rules of classification of individual wine varieties and
their cultivation are based on an Act of 1964. An Act on Viticulture approximated
to EC legislation has been adopted. It will require changes in the structure and the
system of registration, filing and control. It will also necessitate the reinforcement
of inspection bodies in terms of staff and equipment. Slovakia is an OIV member
(Organisation internationale de la vigne et du vin).

As far as marketing requirements are concerned, a revised Food Codex is planned
to enter into force during 1997. Slovak Technical Standards will have to be
adapted and should also cover phytosanitary aspects.

76

In the fruit and vegetables sector, it seems there is no inspection at entry to
Slovakia (frontier, ports, airports), as required in the EC legislation. Inspection
bodies at the frontier points would have to be created.

In the veterinary field approximation to, and an implementation of the _acquis_ has
been partly achieved. Further progress is needed in the adoption and
implementation of the new v~terinary and breeding basic legislation.

The timetables for the approval and implementation of secondary legislation in
the different sections vary from 1997 until the year 2000.

Traditionally the Slovak Republic had a well established infrastructure for
veterinary control and inspection, both at the borders and internally, under the
Ministry of Agriculture.

Due to some administrative changes in the veterinary structure at the regional
level, some difficulties may be expected in implementation and enforcement of
new legislation. In the approximation process, further adaptation will be needed
with regard to the concept of HACCP (Hazard Analysis Critical Control Point)
and auto-control, monitoring and surveillance programmes, disease eradication (in
particular classical swine fever), internal market control measures (safeguard, the
license system, veterinary checks, additional ~uarantees, regionalisation), import
regime (approved third countries, approved establishments) and the iqe!).tification
and registration system of animals (particularly back yard holdings ). The
facilities and professional experience at border inspection posts .and veterinary
laboratories need upgrading. The computerised information system, the
identification and registration system of animals, and the rendering infrastructure
need to be iri1proved. In general the implementation of the _acquis_ should be
achieyable to a large extent on the medium term.

As regards seeds and propagation material, and plant health the harmonisation
with EC legislation is well advanced, and new laws are in preparation. The
structures to adequately implement the legislation need to be strengthened.

Progress is being made in the approximation of animal nutrition, plant protection
products and pesticide residues legislation. Further exchange of information
between the Commission and the Slovakian authorities will be needed generally
and in relation to the structure for implementation.

**Conclusion**

Further alignment to the Community _acquis_ is still necessary although significant
progress has been made in adopting the measures mentioned in the White Paper.

Particular efforts are needed in relation to :

- implementation and enforcement of veterinary and phytosanitary requirements and
upgrading of establishments to meet EC standards; this is particularly important

77

with regard to fhe inspection and control arrangements for protecting the EU
external border;

- strengthening of the administrative structures to ensure the necessary capacity to
implement and enforce the instruments of the CAP;

- further substantial restruc_µuing of the agro-food sector to improve its competitive
capacity.

If such progress is accomplished, accession in the medium term should not be
accompanied by significant p~oblems in applying the common agricultural policy in
an appropriate manner.

Fisheries

The Common Fisheries Policy includes common market organisations, structural
policy, agreements with third countries, management and conservation of fish
resources, and scientific research in support of these activities.

The Europe Agreement includes provisions concerning trade in fisheries products
with the Community. The White Paper includes no measures in this field.

**Descriptive Summary**

Slovakia has only inland water fisheries and the sector is not very important to its
economy. In 1995 the production was 6015t. There are only 25 state and private
producers.

As a trading partner of the Community, Slovakia represents 0.01 % of EC total
imports (independently of origin) of fisheries products and 0.40% of EC imports
of fisheries products from the candidate countries alone (in terms of value). As
regards EC exports, Slovakia receives 0.32% of our total exports of fisheries
products and 3.8% of our exports of these products to the candidate countries (in
terms of value).

**Current and Prospective Assessment**

Slovakia's production and foreign trade data, when compared to the
corresponding EC figures, are quiet low and therefore should not have a
significant impact upon the Community as a whole. It will be necessary for
Slovakia to ensure compliance with the EC's health, hygiene and environmental
standards.

**Conclusion**

The fisheries sector does not present a problem for accession.

78

**Energy**

Main EU energy policy objectives, as reflected in the Commission White Paper "An
energy policy for the EU'' include enhancement of competitiveness, security of energy
supplies and protection of the environment. Key elements of the· energy _acquis_
comprise of Treaty provisions and secondary legislation particularly con~erning
competition and state aids, internal energy market (including directives on electricity,
price transparency, gas and electricity transit, hydrocarbons licensing, emergency
response including security stock obligations, etc.), nuclear energy; as well, as energy
efficiency and environmental rules. Development of Trans-European Energy
Networks and support for energy R&D are other important elements of energy policy.
Ongoing developments include liberalisation of the gas sector, energy efficiency
_acquis_ and the Auto-oil programme.

In the field of nuclear energy, the Community _acquis_ has evolved substantially from
the original EAEC Treaty to a framework of legal and political instruments, including
international agreements. At present, it addresses issues of health and safety, including
radiation protection, safety of nuclear installations, management of radioactive waste,
investment including EURA TOM financial instruments, promotion of research,
nuclear common market, supplies, safeguards, and international relations.

The Europe Agreement provides for co-operation to develop the progressive
integration of the energy markets in Europe and includes provisions on assistance
within the related policy areas. The White Paper preparing CEECs for the internal
energy market underlines the need for full application of key internal market
directives in combination with EC competition law. As to the nuclear sector, the
White Paper refers to nuclear supply safeguards and shipments of nuclear waste.

**Descriptive Summary**

Slovakia is heavily dependent on external energy resources, importing more than 80%
of its needs, particularly oil, gas and nuclear fuel from Russia.

The limited indigenous resources (poor quality lignite and brown coal) present severe
environmental consequences and are mined with State interventions. It is intended to
continue current production levels (3. 7 million tons) until at least 2005.

The Slovak energy sector is two to three times less efficient than the EU-average, due
to, past supply oriented policies, low prices and the heavy industry structure.

Slovakia is a strategic transit country, both for the EU and the region, for Russian gas,
and transit and storage capacities are being enlarged. Hs electricity networks are since
October 1995 synchronously linked as a test to the Western European UCPTE

network.

Slovakia operates at Jaslovske Bohunice two VVER 440-230 (first generation) and
two VVER 440-213 (second generation) nuclear reactors representing nearly half of

79

the electricity production. For Units 1 and 2 after a short term improvement
programme, they are currently further upgraded (1996 - 1999) and should then
increase the safety level towards EC safety standards. Finally, the early Al prototype
reactor, had to be shut down prematurely in 1977 and is currently being
decommissioned. Its spent fuel is being shipped to Russia. At Mochovce, two VVER
440-213 reactors are under construction with some participation of Western firms and
they should be on stream wi!}lin the next two years. Two more units of the same type
are foreseen on the site for the first decad~ of the next century. The safety of this
nuclear power plant is considered to be close to safety objectives generally accepted in
the EU, once the upgrading programme will be completed. There is no uranium
mining or nuclear fuel fabricat~on.

**Current and Prospective Assessment**

Slovakia's energy policy objectives are. in line with those of the EU and include·
introduction of more competition; enhanced security of supply, environmental
protection and energy efficiency.

The competition framework in the energy sector does not yet fulfil the directives of
the internal energy market in combination with the application of EC competition law.
The application of the 1994 Slovak anti-monopoly law does not offer sufficient
guarantees for competition in the sector according to EC _acquis,_ although there has
been progress in creating conditio~s for the unbundling of accounts of the generation
and transmission part of the electricity company. It is therefore necessary to speed up
the adoption and future implementation of the Energy Act.

The sector is characterised by State dominated monopolies, although a measure of
liberalisation and privatisation is ongoing in the oil and coal sector. Act 192/95
excludes for strategic reasons certain activities in the electricity and gas sector, but
also in oil pipeline transport from privatisation.

Energy prices, particularly gas, electricity and heat prices for households are crosssubsidised and do not cover costs. The Government is expected to decide shortly on a
policy to phase these distortions out by the year 2002.

Slovakia has started developing legislation on emergency preparedness, including
building up oil stocks. At present, the country does not meet the ninety days of stock
requirement for emergency oil stocks (stocks are estimated at 40 - 45 days of
consumption) and cannot, due to the needed investments, be realistically expected to
reach this target in the short term.

Restructuring of the mining sector is unavoidable and its social and regional
consequences will have to be addressed, whereas State interventions should be
assessed against EC State aid rules.

Slovakia has started the development of EC conform efficiency. legislation (e.g.
labelling appliances, minimum efficiency norms) as well as environmental norms (e.g.
fuel quality standards), but more remains to be done. The adoption of an Energy

80

Saving Law will underpin future compliance with efficiency _acquis._ It should be
noted that the upgrading of the national refinery to meet EC standards will require
considerable investments and that the refinery will have to compete on a saturated
European market.

A Government Resolution proposed nuclear fuel supply diversification from 1999
. onwards. Accession by the Slovak Republic would increase the EU's dependence on
Russian uranium and enrichment. But the plan to diversify its supply sources in the
future would be in line with the common nuclear materials supply policy of security
through diversification of,sources which would apply to supply contracts concluded
after accession.

Spent fuel from Bohunice was shipped back to the USSR until 1986 but has since
been stored in pools at the site. All spent fuel from the Al reactor will be-returned to
Russia by 1999 in the frame of a former Czechoslovakia - USSR agreement. An
increase in the storage capacity of the existing pools is under study. Longer term
. intermediate storage and final disposal options of spent fuel are also being studied.
Low level and medium level waste repository is under licensing at Mochorve.

Upon accession, the Slovak Republic will need to comply with the provisions of the
Euratom Treaty, in particular those related to supply of nucl~ar material, the nuclear
common market, safeguards, health and safety and international agreements. It is
party to all relevant international regimes ~d conventions. The Slovak Republic also
has a full-scope safeguards agreement with the IAEA, and in this and the other areas
above, no major difficulties in applying Community legislation are expected.
Nevertheless the problem of nuclear safety has to be dealt with and realistic
programmes, including effective closure when necessary, have to be agreed upon and
implemented. The independence of the safety authority should be supported.

**Conclusion**

Slovakia needs  - to step up its efforts in order to comply with most of the EC energy
legislation in the next few years. In particular, matters such as the adjustment of
monopolies including import and export issues, access to networks, 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 need to be closely followed.

No major difficulties are foreseen for compliance with Euratom provisions. Nuclear
safety requires continued particular attention. Safety standards should be tackled
appropriately and realistic programmes implemented quickly. Longer term solutions

for waste need attention.

**Transport**

Community transport policy consist of policies and initiatives in three fundamental

areas:

81

- Improving quality by developing integrated and competitive transport systems
based on advanced technologies which also contribute to environmental and safety
objectives.

- Improving the functioning of the single market in order to promote efficiency,
choice and user-friendly provision of transport services while safeguarding social
standards;

- Broadening the external dimension by improving transport links with third
countries and fostering the access of EU operators to other transport markets( The
Common Transport Policy Action programme, 1995-2000).

The Europe Agreement provides for approximation of legislation with Community
law and co-operation aiming to restructure and modernise transport, the improvement
of access to the transport market, the facilitation of transit and the achievement of
operating standards comparable to those in the Community. The White Paper focuses·
on measures for the accomplishment of Internal Market conditions in the transport
sector, including such aspects as competition, legislative harmonisation and standards.

**Descriptive Summary**

The Slovak transport infrastructure has a strong East-West orientation, largely due to
the particular topography of the country, but also related to close linkages with the
Czech Republic, built up during the time of the former Czechoslovakia. The
mountains in North-Central Slovakia divide the country into two dominant economic
areas (Bratislava in West Slovakia and Kosice in the East) and form a natural barrier
to North-South transport. This has significant implications on the comparative cost of
infrastructures. Border crossings with neighbouring countries are few and require
extensive modernisation.. The Slovak Government adopted an ambitious plan of
motorway construction in February 1996 in order to accelerate the integration of
Slovakia into the Trans-European multimodal transport corridors. The Slovakian
territory is crossed by 3 of these corridors.

There has been a significant move away from rail and inland waterways to public road
passenger transport, despite a rapid growth in car ownership and use. For the moment,
however, the railways remain the most important means of transport.

**Current and Prospective Assessment**

In terms of the internal market, the Slovak Republic is relatively well advanced in
adapting its legislation to the Community _acquis._ The international transport sector in
Slovakia to a large extent already applies rules similar to those applied in the
Community, particularly to maritime transport, inland waterways and combined
transport. New legislation on civil aviation, largely in line with Community rules, is in
preparation. However, particular attention will have to be paid to improving safety
stand3:1"ds. In the railway sector, the amendments made to Slovak legislation to ensure
compliance with Community rules on access to the rail network and the separation of
accounts for the management and the use of infrastructures and the real application of
legislation on public service provision and the standardisation of accounts will have to

82

be monitored over the coming years. Legislation on international road haulage
complies with most of the Community rules but operation of the domestic road
haulage sector poses more of a problem. This will have to be monitored and is
particularly important in the context of a future Union without internal borders where
cabotage in road haulage will be totally liberalised. There are also problems with
market access, safety inspection, technical standards and taxation.

Road passenger transport appears to comply with Community legislation, but its
current structure, which dates from 1989 and only includes state enterprises, could
cause problems in future.

The development of an integrated and competitive transport system is a goal accepted
by the Slovak authorities. The main difficulties are likely to be in achieving
satisfactory levels of safety, and efficient use of the _ transport system. Slovakia has
made relatively satisfactory progress on safety. However, achieving a coherent ·
transport system appears to be more difficult. The share taken by road transport is
likely to continue to grow and Slovakia will have to concentrate its efforts on
promoting use of the rail network and inland waterways. This it is already attempting
to do.

As regards improving links with the Member States of the Community and with its
neighbours, Slovakia has not so far drawn on international financing to develop its
infrastructures. It is, however, planning to invest ECU 2 billion from the national
budget between 1995 and 1999 in transport infrastructures used by international
traffic, particularly the pan-European corridors. This is around 2.8% of GNP, which
would appear satisfactory, but any reduction of this amount owing to budgetary
constraints could pose problems.

**Conclusion**

The Slovak Republic has made progress in adapting transport legislation to the _acquis._
Considerable progress still needs to be made, however, on road haulage (particularly
market access, safety standards and taxation) and railways, where the effective
adaptation of legislation will have to be monitored. The situation in these two sectors
must improve if the transport sector is not to pose serious difficulties as regards the
adoption of the internal market _acquis._

Steps must also be taken to ensure that the means required to lay the basis for the
extension to the accession countries of the trans-European transport network are
provided. This requires particular attention because Slovakia, as a mountainous
country, faces higher costs in constructing infrastructures, which places the country at
a disadvantage compared with neighbouring countries in which TENs are being more
easily developed. Finally, Slovak administrative structures, including inspection
bodies, for example those in the area of safety, should be rapidly and significantly
strengthened at all levels to prevent them further slowing the country's progress.

Small and Medium Enterprises

83

EU enterprise policy aims at encouraging a favourable environment for the
development of SMEs throughout the EU, at improving their competitiveness and
encouraging their Europeanisation and internationalisation. It is ch~acterised by a
high degree of subsidiarity. The complementary role of the Community is defined and
implemented through a Multiannual Programme for SMEs in the EU. This
programme provides the legal and budgetary basis for the Community's specific SME
policy actions. The _acquis_ has so far been limited to recommendations on specific
areas, although legislation in other sectors . also affects SMEs ( e.g. competition,
environment, company law).

The Europe Agreement provides for co-operation to develop and strengthen SMEs, in
particular in the private sector, inter alia through provision of information and
assistance on legal, administrative and tax conditions. The White Paper -eontains no
specific measures.

**Descriptive Summary**

Since 1989 the increase in the number and importance of SMEs has been impressive.
The number of SMEs have grown to 300,000 in 1995 and now account for 35% of
gross output in the industrial sector. In some sectors such as construction, road
transportation, and distribution this contribution is much higher (approximately 80%).
In terms of employment, there are 425,000 SME employees and the combined share
of SMEs represents roughly 25% of total employment. Slovakia, with 54 enterprises
per 1000 inhabitants, is above the EU average of 41. Comparative studies show that
Slovakia has experienced the most dynamic growth of SMEs in the region.

Much of this growth has been spurred on by the privatisation process in which 10.000
companies were auctioned off in 1992-93. Most of these SMEs were craftsmen and
tradesmen rather than legal entities. Very small enterprises of self employed people
represent more than 80% of the SME sector. The post-privatisation growth also results
from "spin offs" as many large companies rationalise. SME growth has been
particularly noticeable in the machinery, fabricated metal product and textile sectors.

The basic legal framework pertaining to entrepreneurial activity in general is
applicable to SMEs. In addition the Slovak Government adopted a specific law on
SME support, in 1995. The primary forms of support, are loans, loan guarantees,
reimbursement of interest, contributions according to the specific regulations,
refundable financial assistance and subsidies. Co-operatives are also regulated in the
Commercial Code while mutualities and foundations are regulated in the Civil Code.
In 1993 an amendment was passed to the tax law allowing tax breaks for certain
newly established companies.

SME development as a government priority is defined in the government's industrial
policy. The National Agency for Support to SMEs (NADSME) was established in
August 1993 to encourage the development and growth of SMEs and co-ordinate all
support activities (advisory and financial) to SMEs. There are also 12 Regional
Advisory and Information Centres (RAICs) whose role is to provide advisory and

84

information services as well as several other support structures such as Business
Innovation Centres and various NGOs.

**Current and Prospective Assessment**

Significant progress has been made in the development of the SME sector and
Slovakia has shown a strong commitment to developing and strengthening SMEs and
EU-Slovak cooperation in the field as foreseen under Article 90 of the Europe
Agreement. The conditions for sustainable SME growth and development are
basically in place. There is however further room for improvement. There is a need
for simplification of legislation to make it more SME friendly, strengthening of the
support infrastructure; improvement of the tax environment and the development of
the SMEs access to financing and their ability to penetrate new markets.

Buoyancy in the SME sector may be constrained over the medium term by a lack of
access to needed investment capital.

The on-going efforts to strengthen the SMEs during the pre-accession period will
therefore need to be continued.

**Conclusion**

There are no specific problems foreseen in Slovakia's integration in this sector.

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**3.5 Economic and Social Cohesion**

**EmplQyment** **and** **SQcial** **Affairs**

Community social policy has been developed through a variety of instruments such as
legal provisions, the European Social Fund and actions focused on specific issues,
including public health, poverty and the disabled. The legal _acquis_ covers health and safety
at work, labour law and working conditions, equal opportunities for men and women,
social security co-ordination for migrant workers and tobacco products. Social legislation
in the Union has been characterised by laying down minimum standards. In addition, the
social dialogue at European _ level is en~ned in the Treaty (Article 118B), and the
Protocol on social policy refers to consultation of the social partners and measures to
facilitate the social dialogue.

The Europe Agreement provides for approximation of legislation with Community law and
co-operation on improving standards of health and safety at work, labour market policies
and the modernisation of the social security system. It also provides for Community
workers legally employed in Slovakia to be treated without discrimination on grounds of
nationality as regards their working conditions. The White Paper provides for measures for
approximation in all the areas of the _acquis._

**Descriptive Summary**

In the Slovak Republic the reform of the social dialogue which was initiated in the former
Czechoslovakia has slowed down since 1993. An important element in further reform will be
the Government's development of respect for the autonomous character of the social partners
in the :framework of political life. The most representative organisation on the employer's
side, the Slovak Association of Employer's Unions is a member of the Union of Industrial
and Employers' Confederation of Europe (UNICE) and of the International Organisation of
Employers. The Slovak Confederation of Trade Unions, which is the most representative
organisation, is a member of the European Trade Union Confederation (ETUC).

Over recent years registered unemployment has been hovering at a relatively high level. In
1996, it was at 10.9% according to ILO methodology. Regional differences in employment
rates are considerable, with unemployment being particularly high in the south and southeastern regions of the country. The number of long-term unemployed has increased
significantly and youth unemployment is high and shows no sign of decline.

A network of regional and local employment offices has been established to implement
labour market policies. The Slovak Republic has introduced measures to make the labour
market more flexible and a continuation of this process will be needed for an integration into
the EU labour market and employment policies.

Social security in the Slovak Republic is aimed at establishing a three-fold system composed
of social insurance, state social support and social assistance. Since the introduction of the
unemployment benefits system in 1991, the rate of registered unemployment has increased
quite significantly, but the beneficiary ratio has dropped sharply. The collection system gives
rise to significant administration problems, including difficulties of collecting contributions

86

from employers and the.self-employed. In many cases, there is a lack of information about
the availability of benefits and the conditions of eligibility. Social expenditure accounts for
about 30 % of total government expenditure and for approximately 14 % of GDP. Pensions
are the largest expenditure item. Continued efforts are required to ensure that measures of
social protection are developed.

The Slovak health system needs to be significantly improved.

**Current and Prospective Assessment**

Health and safety legislation in the Slovak Republic is in the process of being modified in
terms of both orientations and specific provisions. New proposals taking account of EU
directives on health and safety at work are being drafted. Additional legislative initiatives will
be needed to ensure full compliance with the _acquis._ The Slovak inspection ·structures ar~ not
in accordance with the ILO convention n° 81. But Slovakia intends to establish independent
inspection structures with appropriate control methods to comply with ILO rules.

Slovakia is relatively advanced in the area of labour law on issues such as protection against
collective dismissal, maximum working time and adequate rest periods, minimum paid
annual leave and the right to collective bargaining. But various amendments are required to
ensure full compliance with EC rules on the protection of workers in the event of insolvency
of their employer. The existing rules of information and consultation of workers as requested
by a number of EU Directives should be _further developed. Slovakia is planning a new
Labour Code in order to ensure compatibility with EU requirements.

On eqyal opportunity, the basic provisions of EC non discrimination law between women
and men are covered by Slovak legislation.

Concerning the right to the free movement of workers, there would appear to be no
obstacles to prevent Slovakia from being able to implement the provisions of the
acquis in this area. The introduction of the right to free movement will however
require changes in the national law, particularly as regards access to employment and
a treatment free from discrimination on grounds of nationality.

In the field of social security for migrant workers accession does not, in principle, pose major
problems, although some technical adaptations will be necessary. More important is the
administrative capacity to apply the detailed co-ordination rules in co-operation with other
countries. The Slovak Republic is developing some of the administrative structures required
to carry out these tasks, but further preparation and training will be necessary before the coordination rules can be applied.

Concerning the two EC Directives covering tobacco issues, Slovakia has recently agreed a
law which would satisfy EU requirements concerning the warning labelling of cigarette
packages. There is apparently no legislation matching the second tobacco directive imposing
a maximum tar content on cigarettes.

**Conclusion**

87

Since 1993, the Slovak Republic has taken a number of significant steps in preparation for its
future EU-membership. But social reforms need to be further developed, the social dialogue
needs to be ameliorated and the health system to be improved. Slovakia needs to make
substantive progress in the fields of health and safety at work and labour law to ensure
realignment with EU standards. Efforts to implement the _acquis_ effectively need to be
continued. If the Slovak Republic pursues its important efforts, both in terms of adoption and
. of application of the EC _acquis_ it should be possible to take on the obligations of EU
membership in the medium term:

**Regional** **Policy** **and** **Cohesion**

In accordance with Title XIV of the Treaty, the Community supports the
strengthening of cohesion, mainly through the Structural Funds. Slovakia will have to
implement these instruments effectively whilst respecting the principles, objectives
and procedures which will° be in place at the time of its accession.

The Europe Agreement provides for co-operation on regional development and spatial
planning, notably through the exchange of information between local, regional and
national authorities and the exchange of civil servants and experts. The White Paper
contains no specific provisions.

**Descriptive Summary**

In 1995, Slovakia's GDP/cap stood at some 41 % of the EU average. There are
marked regional disparities in Slovakia. Out of the 38 districts which existed prior to
the creation of a new regional administrative structure in July 1996, over 50% of GDP
was created in the four districts of Bratislava, Kosice, Trnava and Banka Bystrica,
with Bratislava alone contributing 32% of Slovakia's total GDP. These four districts

received over 62% of total investment in Slovakia.

Likewise, in looking at unemployment figures, districts where unemployment has
stabilised or is decreasing are in the main urban areas (Bratislava and Kosice) and in
the heavily industrialised area close to the Czech border in the north-west. The regions
with the highest incidence of unemployment are located in the southern and eastern
parts of the country. By way of illustration, while Bratislava registers 4.6%
unemployment, the corresponding figure for the worst hit district (Rimaska Sobota) in

the south-east is 26%.

With a view to creating a regional level of administration, a law was passed in July
1996 on _"Territorial and administrative arrangement_ _of_ _the Slovak Republic"_ which
has established 8 regions and 79 districts. A second law was passed at the same time
relating to the new organisation of local state administrations, following the
modifications in the regional structure.

Hitherto, the Slovak republic has implemented its regional development initiatives
through sectoral policies on the basis of the "Principles for Economic Policy". Indeed,
a legal basis for regional development policy does not exist at the present stage.

88

Nevertheless, a draft Act on Regional Development is currently being elaborated
which would constitute a new legal framework for a prospectiye regional policy.

The institutional structure of Slovakia's regional policy is characterised by the
predominant position of Government. Indeed, regional development initiatives are
subject to a final decision by the Government. The Office for the Strategy. of
Developing the Society, Science and Technology (OSDSST), a state body, ensures the
proper implementation of these initiatives and is associated to the drafting. However,
it role is foremost consultative. The role of district administratiol} is limited to the
implementation of state projects.

The Slovak republic's financial instruments at the disposal of regional development
initiatives are clearly limited. However, the share of development related expenditures
which could constitute potential counterpart funds to EC structural policy-cannot yet_
be determined. Therefore, the Slovak republic's co-financing capacity cannot
presently be evaluated with sufficient reliability.

**Current and Prospective Assessment**

The Slovak Republic's regional development initiatives are implemented through
sectoral policies and co-ordinated, at central level, by the regional policy guarantor
(OSDSST). The financial resources at the disposal of Slovakia's regional policy
instruments are limited.

In addition, the operational and organisational framework of Slovakia's regional
policy suffers from some serious deficiencies. Regional policy decision-making is
overly centralised with all major decision taken direc~ly by the Government. A more
distinct ministerial responsibility is necessary and inter-ministerial co-ordination
improved in order to increase the efficiency of the decision-making process within the
field of regional policy. Special attention needs to be focused on strengthening Slovak
capacity to programme, manage, evaluate and control Community funding.

Finally, Slovakia's is clearly in need of an adequate legal basis determining the
principles, objectives and mode of operation guiding its regional development
initiatives.

**Conclusion**

The Slovak republic presents only limited elements of an integrated development
policy which could ensure compliance with EC structural policy rules. A
comprehensive differentiated policy addressing regional disparities should be
introduced. Moreover, the Slovak republic's administrative capacity to manage
integrated regional development programmes clearly needs to be improved. Thus,
significant reforms including the establishment of appropriate administrative and
budgetary procedures need to be implemented before the Slovak republic can apply
the Community rules and to channel effectively the funds from the EC structural
policies.

89

**3.6 Quality of Life** **and** **Environment**

**Environment**

The Community's environmental policy, derived from the Treaty, aims towards
sustainability based on the integration of environmental protection into EU sectoral
policies, preventive action, the polluter pays principle, fighting environmental damage
at the source, and shared responsibility. The _acquis_ comprises approximately 200
legal acts covering a wide range of matters, including water and air pollution,
management of waste and chemicals, biotechnology, radiation protection, and nature
protection. Member states are required to ensure that an environmental impact
assessment is carried out before development consent is granted for certain public and
private projects.

The Europe Agreement stipulates that Slovak development policies shall be guided by
the principle of sustainable development and should fully incorporate environmental
considerations. It also identifies environment as a priority for bilateral co-operation, as
well as an area for approximation legislation to that of the Community.

The White Paper covers only a small part of the environmental _acquis,_ namely
product-related legislation, which is directly related to the free circulation of goods.

**Descriptive Summary**

Slovakia's environmental problems remain significant, despite improvement during
the last years. The most serious problems are surface and ground water pollution,
waste management, and local air quality.

Environmental quality has improved significantly, largely thanks to restructuring of
heavy industry. In particular, _air_ pollution from heavy industries has significantly
decreased since 1989, and hot-spots are now limited to major industrial areas
(Bratislava, Kosice, Banka Bystrica). Important problems exist in the _water_ sector, in
particular low connection rate of households to sewage systems and often largely
uncontrolled industrial effluent. Improvements have been made in the area of
hazardous and municipal _waste_ but problems remain substantial and treatment/storage
inadequate. New pollution sources such as traffic and light manufacturing have
emerged and need to be addressed. Slovakia possesses areas of great natural value,
which would represent an asset to the environment of an enlarged Union

Slovakia has undertaken a comprehensive reform of its environmental legislation. A
framework environmental act (1992), a Strategy of National Environmental Policy
(1993) and an Action Programme (1996) have been adopted. Their objectives and
principles are adjusted towards sustainable development, prevention, correction at the
source, the "polluter pays" principle, etc. The principle of integrating environmental
issues into other policies is contained in the 1994 act on environmental impact
assessment. However, the introduction of Integrated Pollution Prevention and Control
and further "framework" type legislation as well as adequate enforcement scheduling
regulations is needed. Existing agencies and structures need to be strengthened, their

90

responsibilities clarified and their operations re-orientated to incorporate better the
emergent pollution sources. Slovakia, s expenditure on environmental investment as a
percentage of GDP has been significant in recent years.

**Current and Prospective Assessment**

A considerable effort has been made to establish environmental legislation compatible
with Community law. On the basis of a strategy for the implementation of the White
Paper, progress has been made in adopting a number of White Paper measures such as
legislation on the lead content in petrol and on waste management. Alignment in
relation to other Stage I measures including radiation protection, chemical substances,
control of risks of existing substances, environmental consequences of the deliberate
release of genetically modified organisms is foreseen by 2000 at the earliest. Stage II
measures are scheduled to be in place two to three years later. Approximation has
been talcing place in other areas of the environmental _acquis_ as well. The new air
quality law, with its redefinition of administrative competencies, has been in place
since July 1996. A new water act is being prepared.

Slovakia is in the process of elaborating a detailed environmental accession strategy
which should be ready by the end of 1997. Particular attention should be given to the
quick transposition of framework directives dealing with air, waste, w~ter, and the
Integrated Pollution Prevention and Con!rol (IPPC) directive, as well as the
establishment of financing strategies for legislation in the water, a~r ~and waste sectors
requiring major investments. 

In the area of effective implementation and enforcement of the EC _acquis,_ problems
are considerably greater: substantive compliance with EC standards is low in waste,
water ( especially in certain industrial areas), and air (for certain regions and
municipalities). Polluters are not being effectively monitored and/or prosecuted.
Inconsistencies in the legislation - especially between framework legislation and
secondary legislation on implementation - hamper effective pollution monitoring and
enforcement. While the monitoring system is basically sound, processing of data is a
problem which needs to be addressed. The country's environmental accession strategy
should include implementation timetables for meeting the EU environmental acquis,
starting amongst others with implementation of the framework and IPPC directives
mentioned above.

Key problems which currently hinder effective compliance include inadequate
enforcement of standards; insufficient financial resources, especially at the municipal
level; weak administrative structures and lack of clarity on division of responsibilities
among agencies and levels of government; and inadequate public awareness and
participation.

**Conclusion**

If Slovakia perseveres in its present legislative programme, full transposition of the
acquis should be achieved in the medium term. On the other hand, effective
compliance with a number of pieces of legislation requiring a sustained high level of

91

investment and considerable administrative effort ( e.g. urban waste water treatmeO:t,
drinking water, aspects of waste management and air pollution legislation) could be
achieved only in the long to very long term.

**Consumer** **Protection**

The Community _acquis_ covers protection of economic interests of consumers
(including control of misleading advertising, indication of prices, consumer credit,
unfair contract terms, distance selling, package travel, sales away from business
premises and timeshare property) as well as general safety of goods and the specific
sectors of cosmetics, textile names and toys.

The Europe Agreement provides for approximation of legislation with -eommunity_
law and co-operation with a view to achieving full compatibility between the systems
of consumer protection in Slovakia and the Community. Stage I measures of the
White paper focus on improving product safety, including cosmetics, textiles and
toys, and on the protection of the economic interests of the consumer, notably
measures on misleading advertising, consumer credit, unfair contract terms and
indication of prices. Stage II measures relate to package travel, sales away from
business premises and time-share property. New EC legislation which has been
adopted recently ( distance selling) or will be adopted soon ( comparative advertising,
price indication) will also need to be taken into account.

**Descriptive Summary**

Slovak consumer protection legislation consists of a general consumer protection law
passed in 1992 which regulates the responsibilities of the public administration in the
field of consumer protection and sets out the rights of consumers and consumer
protection associations. The Ministry of Economy is responsible for consumer
protection and policy while the Trade Inspection within the Ministry is entitled to
implement and enforce the Consumer Protection Act in co-operation with other
testing and inspection authorities. The Consumer Policy Council acts as an advisory
body to the Minister of Economy on consumer policy and priorities and has
representatives from all relevant state authorities, consumer associations, trade and
industry. Consumer organisations have a legal right to work with public authorities in
both developing and monitoring consumer policy as well as in improving the
effectiveness of its administration.

**Current and Prospective Assessment**

At the institutional level, the Slovak Republic appears well placed to continue the
process of implementation of EC and international consumer protection norms.
Relations between the non-governmental organizations and the administration appear
to be constructive. The Slovak Consumer Protection Act is more general and less
complete than the detailed provisions of EC Directives on consumer protection as set
out in the White Paper. Full compatibility with EC Directives has almost been reached
on general product safety, and partial compliance has been attained regarding

92

indication of prices. A new Advertising Act adopted in 1996 brings this field of
consumer law closer to EC provisions.

In various areas, the rules applicable to consumer safety ensure a better level of
protection to consumers than is the case under the European Directive. Separate draft
decrees on the safety of toys and on textile names are under preparation, and
legislation on consumer credit and amendments to the Act on Consumer Protection is
being drafted. Full compliance with White Paper measures is foreseen by the Slovak
authorities by the year 2000.

The development of a strong and independent consumer movement, sustained by
public authorities, will need to accompany the introduction of the _acquis._

**Conclusion**

Although Slovakia will need to make efforts to complete the legislative -program in
line with EC requirements and to strengthen the administration as well as consumer
organizations, Slovakia is likely be in a position to take on the _acquis_ on consumer
protection in the medium-term.

**3.7. Justice and Home Affairs**

**The Present Provisions**

The Justice and Home Affairs (JHA) _acquis_ principally derives from the framework
for cooperatian set out in Title VI (Article K) of the Treaty on European Union
(TEU), "the third pillar", although certain "first pillar" (EC Treaty) provisions and
legislative measures are also closely linked

The EU JHA framework primarily covers: asylum; control of external borders and
immigration; customs cooperation and police cooperation against serious crime,
including drug trafficking; and judicial cooperation on criminal and civil matters. The
TEU stipulates key principles upon which such cooperation is based, notably the
European Convention on Human Rights and the 1951 Geneva Convention on the
Status of Refugees. It is also based implicitly on a range of international conventions
concerning its fields of interest, notably those of the Council of Europe, the United
Nations and the Hague Conference. The legislative content of third pillar _acquis_ is
different from the first pillar; it consists of conventions, joint actions, joint positions
and resolutions, (including the agreed elements of draft instruments which are in
negotiation). A number of EU conventions (including the 1990 Dublin Convention,
and conventions relating to extradition, fraud and EURO POL) have been agreed by
the Council and are now in the process of ratification by national Parliaments; several
other conventions, including one on external frontiers are in various stages of
negotiation in the Council. The JHA _acquis_ involves a high degree of practical
cooperation, as well as legislation and its effective implementation.

_The New Treaty_

93

For many of the above matters, the entry into force of the Treaty resulting from the
Amsterdam Inter-Governmental Conference will mark the end of the current

cooperation framework.

Reiterating the objective of developing the Union into an "area of freedom, security
. and justice", the new Treaty brings these matters, including the free movement of
persons, asylum and immigration, into ~e Community's sphere of competence.

On the free movement of persons in particular, the new Treaty provides for the
incorporation of the Schengen. _acquis_ into the framework of the European Union and
binds any candidate for EU membership to accept that _acquis_ in full.

With regard to matters remaining within the cooperation framework, i.e. policing and
criminal justice, the new Treaty provides for the reinforcement of the cooperation

system.

_The_ _Eurove_ _Agreement_ _and_ _the_ _White_ _Paver_

The Europe Agreement includes provision for cooperation in the fight against drug
abuse and money laundering.

The White Paper does not deal directly with third pillar subjects, but reference is
made to first pillar matters such as money laundering and freedom of movement of
persons which are closely related to Justice and Home Affairs considerations.
Reference is also made to the Brussels and Rome conventions.

**Descriptive Summary**

_General_ _Preconditions_ **u** _for_ _JHA_ _Cooperation_

Slovakia joined the Council of Europe in 1993 and has ratified the most important
instruments concerning human rights. The Constitution provides for an independent
judiciary according to the rule of law.

Some progress has been made in the reform of IBA institutions. The Constitution
guarantees data protection: a new data protection law to be presented during 1997 is
expected to cover all EU requirements in this field. Slovakia has not yet signed the
1990 data protection convention. (See also separate section on Single Market).

_Asylum_

Slovakia has acceded to the Geneva Convention. The Constitution provides for
asylum and the 1995 Refugee act is based on EU practice, including provision for
accelerated procedures and the "safe third country" principle. Implementation of the
new law is now well under way, but refugees have limited legal back-up and staff in
the Migration Office lack knowledge and experience of conditions in third countries.
300 applications for asylum were made in 1995. There are also temporary refugees

94

from former Yugoslavia; the first returns took place in March 1996 in cooperation
with the UNHCR/IOM. Some 400 application~ for asylum were made in 1996.

_Immigration/Border_ _Control_

Some 89 million border crossings were made in 1995; of these some 2,000 w~re
revealed as being illegal. Slovakia is working towards the EU list of third countries
for which visas are required, but visa-free agreements are still in place with Belarus,
Russia, Cuba, Romania, Bulgaria and Ukraine (for the latter invitation letters are
required). The 1995 law on Residence and Border Crossing regulates residence, visa
and border crossing procedures. Readmission agreements are in place with Austria
and its other neighbouring countries, Romania, Croatian Slovenia and Bulgaria.
Slovakia is currently negotiating such agreements with the Benelux countries and
Germany. Border management is currently being modernised.

_Police_ _Cooperation_

Organised crime is active in Slovakia in the fields of drug trafficking, trafficking in
humans and prostitution, racketeering, smuggling of arms, radioactive material,
cultural artefacts, stolen cars and currency; violence, blackmail and extortion are used.
Special units and procedures have been set up in the police and financial authorities to
tackle organised crime (and drugs and stolen cars in particular) more effectively.
Slovakia has signed the money laundering conventions, and domestic law criminalises
money laundering, although implementation is hampered by resource and institutional
constraints. (See also separate section on Single Market). Slovakia experiences no
internal terrorist threat. It has signed the key terrorist conventions and has adopted
appropriate legal and administrative measures to tackle _terrorism.

Slovakia is a transit country for drug trafficking, on the Northern Balkan route.
Significant quantities of heroin have been seized in recent years. Domestic demand is
increasing sharply. Slovakia has acceded to the main international drugs conventions
and is preparing a draft law on the control of drug abuse and drug precursors. The
Slovak police have an anti-drugs unit and a joint drugs unit with Customs as well as
Liaison Officers in Prague, Vienna and Budapest.

_Judicial_ _Cooperation_

Slovakia is working to improve training and solve institutional problems in the
judiciary. Slovakia has ratified the main criminal conventions ( except the 1990 money
laundering convention - see above). Slovakia is party to a number of Hague
conventions and is beginning to develop its capacities o.n the civil side as well.

**Current and Prospective Assessment**

There are some important gaps still to be filled in Slovakia's legislation but for the
most part the legislation is in place or in preparation. An important priority is the

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development of effective JHA institutions free from corruption. Important concerns
are the accountability of the police and the independence of the judiciary. Some
progress has been made in combating organised crime but there is still considerable
work to do to develop and maintain the required degree of effectiveness. Migration
and border control systems will require considerable strengthening to cope with
continuing pressure.

The Government has taken some steps _tq_ prepare the institutions and legislative
framework for participation in the JHA process. There is a small core of officials with
some experience of cooperation with EU counterparts but this will need to be
developed considerably in future years.

**Conclusion**

Slovakia appears to have . the administrative capacity and infrastructure to meet the
justice and home affairs _acquis_ (present and future) in the medium term. But it will
have to demonstrate its commitment to introduce the necessary reforms, notably in the
development of visa policy toward the NIS, border management and migration
control, extradition, and combating organised crime and corruption.

**3.8 External Policies** 

**Trade and** **International** **Economic** **Relations**

The _acquis_ in this field is made up principally of the Community's multilateral and
bilateral commercial policy commitments, and its autonomous commercial defence

instruments.

The Europe Agreement includes provisions in several areas requiring parties to act in
accordance with WTO/ GATT principles, or other relevant international obligations.

The White Paper includes no provisions in this field.

**Descriptive Summary**

Slovakia has developed an open, trading economy and is a member of the World
Trade Organisation (WTO). Upon accession Slovakia would have to comply with the
obligations of the plurilateral WTO agreements to which the Community is a party.

At present Slovakia does not maintain quantitative restrictions on any textile or
clothing products. On accession the Community textiles policy would be extended to
Slovakia; any Community restrictions still maintained at the date of accession would
require adjustment by an appropriate amount to take account of Slovak accession.

**Current** **and Prospective Assessment**

On access~on Slovakia would have to apply the Community's Common Customs
Tariff, and the external trade provisions of the Common Agricultural Policy. The post

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Uruguay Round weighted average levels of most favoured nation duties for industrial
products will be 3.8% for Slovakia and 3.6% for the Community.

In its relations with international organisations Slovakia should ensure that its actions
and commitments respect the Europe Agreement and ensure a harmonious adoption of
its future obligations as a member of the Community. In view of the interest expressed
by Slovakia in mid-1996 in 4iscussing with the Russian Federation the possibility of a
free trade agreement, the EU indicated that any such arrangement should be
compatible with the Europe agreement, and with Slovakia's future obligations as a
member of the EU.

On accession Slovakia would. become party to the Community's various preferential
agreements. Preferential agreements between Slovakia and third countries would, in
general, have to be terminated on accession.

In the area of trade in services and establishment it should be possible to _resolve any
remaining, significant inconsistencies between - the commitments of Slovakia and the

- Community, although some additional liberalisation may be required in Slovakia.

On accession Slovakia would have to repeal national legislation in the field of
commercial defence instruments, and EC legislation would become applicable there.

Experience from previous accessions has shown that the automatic extension of
existing anti-dumping measures to new member states prompts third countries to raise
problems in terms of the compatibility of this approach with relevant WTO
provisions. It has also shown that accession creates a potential for circumventing
measures adopted by the Community under the commercial defence instruments. This
happens when, prior to accession, substantial quantities of the products subject to
measures are exported to the territory of the future member state and, on accession,
are automatically released for free circulation in the enlarged customs territory. These
two problems would have to be addressed during Slovakia's pre-accession phase.

Slovakia is a member of three out of four existing regimes for the non-proliferation of
weapons of mass-destruction, and is a candidate for membership of the fourth.
Slovakia's list of dual-use goods and technologies largely resembles the Community
control list of dual-use items. Arms export is also controlled. It is difficult to assess
the extent to which export controls are effectively enforced, but Slovakia appears to
have no major problems applying EC legislation in this field.

**Conclusion**

Slovakia is well placed to be able to meet Community requirements in this field
within the next few years.

**Development**

The _acquis_ in the development sector is made up principally of the Lome Convention,
which runs until early 2000.

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Neither the Europe Agreement or the White Paper include provisions in this field.

98

**Descriptive Summary**

Slovakia has no preferential trade agreements with ACP countries. However, under its
GSP scheme, Slovakia grants preferential treatment in the form of reduced duties to a
number of ACP countries, and grants duty free access to . those ACP countries
considered as Least Developed Countries.

Slovakia has no budget for development aid.

**Current and Prospective Assessment**

On accession, Slovakia should apply its preferential trade regime to the ACP States
and participate, together with the other member states, in financing the European
Development Fund (EDF), which provides financial aid under the Lome Convention.

Applying the present Lome trade regime should not generally be a source of
difficulties for Slovakia.

Normally, new member states accede to the Lome Convention by means of a protocol
on the date of their accession to the European Union.

**Conclusion**

Slovakia is well placed to be able to meet EU requirements in this field in the next
few years.

**Customs**

The _acquis_ in this sector is the Community customs code and its implementing
provisions; the EC's Combined Nomenclature; the Common Customs Tariff including
trade preferences, tariff quotas and tariff suspensions; and other customs-related
legislation outside the scope of the customs code.

The Europe Agreement covers the establishment of a free trade area with the
Community and the progressive removal of customs duties on a wide range of
products, according to clear timetables starting from the date of entry into force of the

agreement.

The White Paper includes in Stage I, measures to consolidate and streamline the free
trade established under the Europe Agreement, including legislation compatible with
the Customs Code, Combined Nomenclature, etc. Stage II concerns the adoption of
the full Community legislation, with a view to joining the customs union upon
accession.

**Descriptive Summary**

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On accession the Slovak customs authorities would be required to assume all the
responsibilities necessary for the protection and control of their part of the EU's
external border. Besides the provisions on indirect taxation, they would be responsible
for the implementation and enforcement at the external border of the Community's
common commercial policy, the common agricultural policy, the co111lllon fisheries
policy etc.

Slovakia's capacity fully to apply the _acquis_ presupposes the possibility to· adopt and
implement the Community legislation; and the existence of an adequate level of
infrastructure and equipment, in particular in terms of computerisation and
investigation means and the establishment of an efficient customs organisation with a
sufficient number of qualified and motivated staff showing a high degree of integrity.

With the support of the technical assistance provided by customs prognunmes, the
Slovak Republic has achieved almost full compatibility of its legislation to the·
Community's customs code and its implementing provisions. Nevertheless, important
delays exist in the customs-related legislation outside the scope of the customs code.

Slovakia is undertaking a continuous process of aligning its national goods
nomenclature to the Community's Combined Nomenclature. Presently, Slovakia is
working on the preparation of an integrated tariff which will greatly facilitate the
comparison of the Slovak tariff rates with the Common Customs Tariff rates. In
addition, the Slovak Republic operates a Binding Tariff Information system similar to
the one applied in the Community.

Slovakia adopted on 1 January 1997 the new system of cumulation of origin between
European countries.

Slovakia became a contracting party to the EC/EFT A Common Transit Convention
and to the Convention on Simplification of Formalities on 1 July 1996.

**Current and Prospective Assessment**

Slovakia would need to adapt its national procedures to the Community legislation
regarding suspensive arrangements and customs procedures with economic impact. At
the moment of accession, some technical transitional arrangements would be needed,
notably for operations beginning before the date of accession but which are concluded

after that date.

The import deposit scheme operated by Slovakia is a measure having equivalent effect
to a quantitative restriction. Consequently this scheme should be abolished as soon as
possible.

It will be important that the Slovak customs authorities can participate appropriately
in the various .computerised systems necessary for the management, in the customs
union/internal market, of the customs and indirect tax provisions, as well as the
computerised systems for mutual administrative assistance in customs, agricultural
and indirect tax matters.

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Slovakia would need on accession to dismantle customs controls at the borders with

EU member states and with other acceding countries. The resources needed for the
reinforcement of the border posts along its frontiers with non-EU member states
should be taken into account in its strategic planning.

A potential for a problem exists arising from the customs union between Slovakia and
the Czech Republic, in the event that these two countries do not accede
simultaneously to the Community.

**Conclusion**

Slovakia is making a major effort to align its organisation and staff to the duties that
have to be carried out by a modem customs administration.

If it reinforces its efforts, particularly in relation to project management in the
computerisation area, Slovakia should be ready to fulfil the responsibilities of an EU
customs administration within the next few years.

**Common** **Foreign** **and** **Security Policy**

Since 1989, the foreign and security policy of Slovakia (prior to 1993,
Czechoslovakia) has been reoriented towards European and Euro-Atlantic integration.
Slovakia has been an active participant in the dialogue arrangements provided for
under the Union's Common Foreign and Security Policy and when invited has
supported EU actions within that framework.

Slovakia is a member of the UN, OSCE, Council of Europe and many other
international organisations. It is an associate partner of WEU, participates in the
NACC, the PfP and has made clear its desire to become a member of the WEU and
NATO as soon as possible. It has sent troops to participate in IFOR/SFOR. It also
participates in a number of regional organisations including CEFT A and the CEI.

There are no territorial disputes between Slovakia and any member State of the Union.
Neither does Slovakia have any territorial disputes with neighbouring associated
countries. There are, however, some differences with Hungary in interpretation of
their bilateral treaty and there remains a dispute with the same country over the
Gabcikovo dam. This dispute has been referred to the International Court of Justice at
the Hague and both parties have agreed to abide by the adjudication. Slovakia has
signed with all neighbouring countries (apart from Austria) new treaties in respect of
state frontiers or negotiated the succession in respect of existing treaties. There remain
some minor issues to settled with the Czech Republic. The Slovak minority in the
Czech republic enjoys all fundamental rights and do not pose a problem.

There are good relations and close links between Slovakia and Russia: for example
the military co-operation treaty of 26 August 1993 ( one of 70 treaties between
Slovakia and Russia) lays down the commitment "to proceed without delay with

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consultations if either contracting party is concerned about a threat to its security
interests".

The Slovak Republic has a largely new and medium-sized diplomatic service which
would permit it as a member of the Union to play an adequate role. It maintains 64
representations abroad and employs _556_ diplomatic staff.

Slovakia supports non-proliferation of nuclear, biological and chemical weapons and
is a signatory to all relevant international arms control agreements. It exercises strict
control concerning the dual use of technology being a member or candidate member
of all the major existing export control re~mes. The Slovak armed forces, which are
under democratic control, are being reorganised to meet modem requirements. The
defence industrial base, which has declined significantly in recent years, continues to
suffer from a number of major problems and is also in the process of re-organisation. .

The Slovak government has confirmed to the Commission that it is ready· and able to
participate fully and actively in the Common Foreign and Security Policy.

The assessment of Slovak foreign and security policy to date leads to the expectation
that as a member it could fulfil its obligations in this field.

**3.9.Financial Questions**

Financial Control

The implementation of Community policies, especially for agriculture and the
Structural Funds, requires efficient management and control systems for public
expenditure, with provisions to fight fraud. Approximation of legislation is moreover
needed to allow the system of "own resources" to be introduced, with satisfactory
provision for accounting.

The Europe Agreement contains no specific provisions on financial control, however
it provides for cooperation in audit including technical assistance from the
Community as appropriate. The White Paper includes no measures in this field.

**Descriptive Summary**

The Highest Control Office (HCO) of the Slovak Republic is an independent external
body controlling the management of finances of the national budget, the management
and treatment of national property, the treatment of property rights and debt-claims of
the republic, etc .. The HCO submits an annual report to the Parliament on the results
of its control activities and its opinion on the national budget. The HCO can be
requested by the Parliament to perform specific investigations.

The Central Bodies of the State Administration are responsible for performing the
internal financial control of the national budget in the organisations for which they are

102

responsible. In particular, the Ministry of Finance performs such controls on all
subjects connected to the national budget. Local State Administration Authorities
perform controls over that part of the budget attributed for their use.

Various· Slovak Bodies are concerned with the fight against fraud, including the
Central Customs Agency. National customs control is conducted from the Customs
Head Office, which is responsible for the implementation of laws, international
conventions etc. and local customs control is performed by the different local customs
offices. There is no independent customs internal control body, but such internal
control is subordinated to the management concerned by the control action.

Specific legislation on fraud does not exist. Fraud is treated under the provisions of
the Criminal Code. The Office of Financial Police of the Police Corps under the
Ministry of the Interior is charged with the coordination of activities related to the_
disclosure of tax fraud and· illegal financial transactions. This office is authorised not
only to investigate suspicious financial and taxation operations but as well to make
, suggestions for amendments to existing legislation so as to better facilitate the fight
against fraud.

**Current and Prospective Assessment**

The institutional structure for adequate financial control has been established and
basic legislation enacted. The extent to .which the legislation is being effectively
implemented is difficult to assess. Further cooperation with the Slovak Authorities is
needed to determine whether the HCO and the other control authorities enjoy the
necessary independence from the Government to carry out their duties. There is a
need for improvement in existing agriculture-related financial system. Furthermore,
the financial control sector is facing the same kind of difficulties encountered by the
public administration sector in general.

**Conclusion**

Major efforts are essential to strengthen financial control and audit functions.

Budgetary Implications

The communication entitled "Agenda 2000" sets out the overall financial framework
which should accommodate the budget impact of any future enlargements in the
medium term. This is to ensure that any enlargement is compatible with proposed
Community policy guidelines within reasonable budget limits:

As things stand, it would be difficult, not to say premature, to attempt precise countryby-country evaluations of the budgetary implications of each of the applicants joining
the Union. Exactly what the impact would be may vary considerably depending on a

whole series of factors:

the date on which the applicant country joins;

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developments in Community policies between now and then, in particular the
decisions to be taken on further reform of the common agricultural policy and
new guidelines for structural measures;
the progress made by the applicant countries in terms of growth, increasing
their competitiveness and productivity and their ability to absorb the _acquis;_
the transitional measures that will come out of the negotiations.

Only a few orders of magnitude for certain budget categories and an overall estimate
can be given purely as a guide.

**Expenditure**

If the common agricultural policy were to be reformed along the lines suggested by
the Commission, once the reforms were fully up and running and in terms of just.
market intervention measures, Slovakia's accession would give rise to only marginal
additional expenditure in relation to likely expenditure on the present fifteen Member

States.

As regards structural measures, the existing allocations for the Union's less
prosperous Member States account for about 3% to 4% of their GNP. After a phasingin period, the allocations for the new countries could approach the same sort of level,
which would be well within the absorption capacity of the recipients.

Application of the other internal Community policies in the new member countries
would be likely to involve additional expenditure probably in excess of their relative
proportion of Union GNP, since for certain policies the additional implementing costs
also depend on the target population, the geographical area covered or the number of

Member States involved in the coordination and harmonisation measures. The GNP of

Slovakia is currently about 0.2% of total Union GNP.

By contrast, Slovakia's accession should not involve significant additional
expenditure as far as Union external action is concerned.

It should not be forgotten that when an applicant country joins, the Community
budget will no longer have to bear the costs of grants the country was eligible for
under the various pre-accession programmes, such as Phare.

In light of the above, the estimated costs in the three areas mentioned arising from
Slovakia's accession should fall within the range of, annually, ECU 1.0 to 1.3 billion
in 2005-06 (at constant 1997 prices).

**Revenue**

Assuming full application of the own resources system, the new members'
contributions to the Community budget should, in terms of total GNP and VAT
resources (taking account of the capping rules applying to VAT); be close to the
proportion of the Union's GNP they account for, which in Slovakia's case is about

104

0.2%. Slovakia's portion of traditional own resources will depend on the structure of
its trade flows at the time of accession.

~
To ensure that the own resources are established, monitored and made available in
line with Community regulations, Slovakia will have to overhaul its current customs
system. In addition, for the purposes of accurately calculating the · GNP resource
considerable improvements ~ill have to be made to the national accounts to .ensure
that they are reliable, homogeneous and complete. Improving the statistics will also be·
essential for drawing up the VAT own resources base, which will mean bringing
Slovakia's VAT system fully into line with the Community directiyes.

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**4. Administrative Capacity to Apply the** _**Acquis**_

The European Council in Madrid in December 1995 concluded that the harmonious
integration into the EU of the central and eastern European applicant states would, in
particular, require the adjustment of their administrative structures. This chapter
examines the current state of the public administration in. Slovakia, including relevant
. aspects of the judicial system, and assesses the current and prospective ability to carry
out the functions required of it in a modem, democratic state, with a particular focus
on the need to administer matters related to the _acquis._

**4.1 Administrative Structures**

A description of Slovak constitutional structures, their powers and responsibilities, including those of regional and local government, is given in Chapter 1.

At the central level there are 15 ministries and 10 central agencies responsible to the
Government. Within the central government, the Office of the Government acts as a
central coordinating authority under the responsibility of the Prime Minister and two
Deputy Prime Ministers.

Article 73 of the labour code regulates the rights of civil servants. There is currently
no specific civil service legislation, but that, as well as a general code of conduct for
public officials, is under preparation.

Appointments to many positions in the civil service at national, regional and local
level, and at various levels of seniority are at least in part politically determined.

In 1995, approximately 136,000 persons were employed in the Slovak public
administration. Salaries in the public sector are broadly comparable with those in the
private sector.

Efforts to improve the quality of the civil service have led to the establishment of an
Institute for Public Administration under the responsibility of the Ministry of the
Interior.

The responsibility for European integration has been vested in the Office of the
Government, with one Deputy Prime Minister being charged with the overall policy
concerning integration and the other bearing the responsibility for the Government's
legislative programme. There are 133 officials dealing specifically with European
integration and the adoption of the _acquis._ The Government has indicated that it will
reinforce the part of the public administration dealing with European integration by
recruiting and training an additional 107 officials. It intends to establish a European
Education Centre. (See also the section of the Introduction concerning relations
between the European Union and Slovakia).

106

**4.2 Administrative and Judicial Capacity**

Czechoslovakia was administered under central planning during the communist
period. The communist system rejected the primacy of the rule of law and subjugated
the law and the administration to the implementation of Party policy. Against this
background, both the administration and the rule of law itself increasingly came to be

- seen by the public as instruments of political control.

Considerable progress has been made since 1993. The administrative
structure/framework which is in place is comparable to that found in EU countries.
The tasks of the administrative units and control bodies at the central level are

reasonably well defined.

There are strengths in the system. For example, the capacity of individual agencies,.
such as the Slovak Nuclear Authority, the Anti-Monopoly. Office and the Statistics
Office, and the Slovak Central Bank is generally adequate. However, there are also
weaknesses, notably in relation to the structure, the scope, tasks and competence of a
number institutions which throws into question their ability to effectively execute a
legislative programme from the drafting stage to the implementation and enforcement
of legislation. The recent regional reorganisation has created an
implementation/enforcement vacuum as responsibilities. previously vested at both the
central and the local level are transferred to the regional le~eL This .has particularly
affected environmental inspection and monitoring, but applies as well in other areas.

The legal basis of the civil service is not yet fully adequate, but the new law should
represent a substantial improvement. On the other hand, there is little sign at the
moment that in practice the political independence of the civil service will be
developed.

There are many human resource problems confronting the Slovak administration.
There is not a problem of under staffing. However, there is a lack of sufficiently
qualified staff. Language skills are not sufficiently well developed. As yet, a
comprehensive strategy for the training and retraining of civil servants has not been
developed. High turnover of civil servants at all levels is a problem. It is particularly
critical at the high level civil servant level, given that policy-making, legal,
managerial and planning capacities, essential to the accession process, are in short
supply. The problem of staff turnover has been exacerbated by the level of
politicisation of the civil service.

Public confidence in the civil service is generally low, particularly at the regional and
district level where people come into most direct contact with officials. In particular,
the public at large appears to perceive widespread abuse of office by officials. A
recent report from the Supreme Audit Office points to frequent abuse of public funds
by ministries, with 105 inspections revealing 1,093 cases of violations of the law on
public orders and other relevant legislation. In Petty corruption is not uncommon.

For all levels of the civil service there is an urgent need to upgrade professional
capacities, reinforce ethical standards and promote a corporate sense of public service

107

across all government departments. Language skills will have to be considerably
improved in order to facilitate contacts with European institutions as well as to allow
for faster and more direct access to documents relating to European integration.

The coordination capacity within the Office of Government has proved to be weak,
resulting in delays in preparing key strategic documents, the related legislative
programme for the approximation of legislation and the implementation of that
programme. Planned reforms in the EU policy area are, by definition, untested but in
principle should go a long way to dealing with these problems.

_Key_ _Areas_ _for_ _the_ _Implementation_ _Qf_ _the_ _Acquis_

The unifonn cWPlication of EC law: The effective application of the _acquis_
presupposes that the judicial authorities of member states are able to- apply the
provisions of the Treaty dealing with ensuring the unity and application of the _acquis,_
and are able to ensure the proper functioning of the Single Market and Community
policies in general. A high quality and well trained and resourced judiciary is
necessary for the application by the courts of EC law, including cases of direct effect,
and cases of referral to the European Court of Justice under the terms of Article 177
EC.

The judicial system in Slovakia has important weaknesses, particularly concerning
resources, and relevant expertise. Given this situation, the Commission has
significant doubts about the ability of the system to assure the effective application of
the _acquis._

Single market: The ability of Slovakia to ensure the correct application of
Community requirements in the Single Market, particularly concerning the free
movement of goods and services presupposes the existence of highly developed and
effective regulatory, standardisation, certification and supervisory authorities, able to
act fully in accordance with EC rules. An analysis of these points is made in Chapter
3.1 (under "The Four Freedoms").

Concerning the administrative capacity in respect of free movement of goods the
situation in Slovakia is broadly adequate. However, the capacity of the Patent Office
and the copyright authorities in the Ministry of Culture to implement intellectual and
industrial property legislation is weak. The customs administration's ability to combat
piracy has not been well demonstrated. Concerning the free movement of services the
situation has positive aspects. The Slovak National Bank is responsible for banking
supervision (its Banking Supervisory Authority department has 52 staff) and has
coped well with the task. However, there appears to be under staffing in certain areas
(there are, for example, only nine on-site banking inspectors). The ability of the
Insurance Supervisory Authority to monitor and control the industry is weak.

In order to meet EC requirements in this area there is a need for enhanced training in a
variety of specialised areas. The implementation and enforcement of legislation
would benefit from the creation of an independent securities commission.

108

Competition: As explained in Chapter 3.1 (under "Competition") enforcement of
competition law requires the establishment of anti-trust and state aid monitoring
authorities, and that the judicial system, the public administration and the relevant
economic operators have a sufficient understanding of competition law and policy.

In Slovakia the central authority is the Anti-monopoly Office, which has 40 staff; this
is adequate. The level of expertise is not fully sufficient. The ability effectively to
implement EC requirements in this field will require further investment in human
resource development ( especially concerning training in EC law), the definition of the
competencies of the Anti-monopoly office, and improvements in transparency.
Expertise in the state-aids area needs improvement.

Telecommunications: In order to formulate and implement the many liberalisation
regulations contained in the _acquis_ in this field it is necessary to have a regulatory and_
policy making body that is effectively separated from any operating company.

The Telecommunications Office and the Regional Telecommunications Offices are
part of the State administration. The administrative capacity will need to be
strengthened.

Indirect taxation: The effective administration of the indiryct taxation _acquis_
presupposes structures capable of implementing the EC legislation concerning the
harmonisation of Valued Added Tax and excise duties in an environment in which

fiscal controls at internal EU frontiers have been abolished; and the excise system is
based on the tax warehouses, duty being payable at the local rate· in the member state
at the time the goods are consumed. This requires a highly developed and well trained
and resourced service, with a high degree of integrity.

In Slovakia the relevant authority is the Ministry of Finance (a central Ministry, 6
regional offices, and local tax offices additionally). The total number of staff is about
5,000. Due to a large turnover of staff, resulting partly from trained staff being
recruited by the private sector, it is difficult to assess the capacities of existing staff. In
order to ensure the effective administration of the _acquis_ in this area it will be
necessary to consolidate and improve the overall professional standards of the staff,
including training measures and improvements in pay.

Agriculture: The administrative requirements in the agricultural area primarily
concern veterinary and phytosanitary control, to protect public health and ensure the
free movement of agricultural goods; and the ability to administer the mechanisms
and requirements of the CAP, including high standards of financial control and
official statistics. These points are dealt with in Chapter 3.4 (under "Agriculture");
general standards in the statistical field are examined in Chapter 3.3 (under
"Statistics").

Concerning the administrative capacity in respect of veterinary and phytosanitary
controls, traditionally Slovakia had a well established infrastructure for veterinary
control and inspection, both at the borders and internally. Administrative changes
which have taken place in the veterinary structure at the regional level could however

109

lead to difficulties in implementation and enforcement. Numbers of staff in the food
and veterinary inspectorates are not currently available to the Commission.
Concerning the administration of general CAP requirements, some administrative
adjustments will be required. There are 280 staff in the central Ministry of
Agriculture.

In order to meet EC requirements in this area, improvements will be necessary,
despite some good progress.

Trans_port: The application of the EC Internal Market and competition requirements
to the transport sector, the development of relevant infrastructure products, and other
aspects of the transport _acquis_ will present administrative challenges to new member

states.

The responsible government authority in Slovakia is the Ministry of Transport. The
number of staff is currently not available to the Commission. Following the separation
with the Czech Republic, Slovakia has not been able to establish an appropriate
administrative structure which is fully capable of carrying out all the required
functions. This is of particular concern as it relates to safety controls, as well as the
control of standards.

Employment and social policy: A central administrative requirement in respect of the
_acquis_ in this area is adequate inspection capacity, particularly concerning health and
safety at work.

In Slovakia the labour inspectorate ( approximately 180 staff) requires considerable
reinforcement of staff resources and expertise.

Regional policy and cohesion: The main administrative requirements in this area are
the existence of appropriate and effective administrative bodies at regional level, and
in particular a high degree of competence and integrity in the administration of
Community funds.

In Slovakia the Office for the Strategy of Developing the Society, Science and
Technology is the state body charged with ensuring the proper implementation of
regional initiatives, although its role is mainly consultative. The number of staff
employed is not currently available to the Commission. The operational and
organisational arrangements for regional policy in Slovakia are deficient. The
situation concerning financial control is not satisfactory (see the section, below, on
"Financial control"). The effective administration of the _acquis_ in this area will
require significant efforts to create an appropriate institutional, administrative and
budgetary framework.

Environment: Because EC environmental policy, involves the integration of
environmental protection into EC sectoral policies the administrative requirement is
potentially very wide, affecting many bodies not normally associated with
environmental protection. However, the main responsibility lies with environment
ministries and various subsidiary bodies.

**110**

In Slovakia the Environment Ministry employs 291 staff. Monitoring is carried out by
the Slovak Environmental Agency and sectoral authorities, enforcement by the
Ministry and State Inspectorate. These arrangements are not yet adequate since
competencies are not clearly defined. The effective administration of the _acquis_ in this
area will require greater financial and human resources.

Consumer protection: In this area, the effective administration of the _acquis_ requires
the allocation of overall responsibility to a specific State body through which the
formulation, implementation and enforcement of consumer policy and consumer
protection legislation can be undertaken.

In Slovakia the governmental Department of Internal Trade and Consumer Protection
has been given full authority to develop and implement consumer protection policy._
As regards non-governmental consumer bodies in Slovakia an already strong and
independent consumer movement has developed. There remains confusion about the
exact sc~pe and objectives of consumer policy. This in part explains difficulties in the
effective enforcement of consumer laws; however, other factors which need to be
addressed include a lack of expert staff, organisational deficits, and a lack of
sensitivity to consumer questions among the judiciary.

Justice and home affairs: Oversight of justice and home affairs questions falls to the
justice and interior ministries. The administrative structures need to be able to deal
effectively with asylum and migration questions, border management, police
cooperation and judicial cooperation. There is an overriding need for sufficient and
properly trained staff with a high degree of integrity.

In Slovakia the justice and interior ministries are adequately staffed. The capacity to
handle asylum and migration questions is not yet assured, since staff in the Migration
Office are inexperienced. Border management systems are out-dated and need
considerable reinforcing, but improvements are planned. Specialised police units have
been established to combat organised crime, but cooperation with other countries is
poor. The administration of the judiciary is being reformed, but cooperation with
other countries should be improved. The effective administration of the _acquis_ will
require improvements to police accountability, the independence of the judiciary, and
the strengthening of the institutional framework.

Customs: Applying the _acquis_ in this area requires an adequate level of infrastructure
and equipment, including computerisation and investigation resources, and the
establishment of an efficient customs organisation with a sufficient number of
qualified and motivated staff showing a high .degree of integrity.

In Slovakia the customs service employs about 5,000 staff. Due to a high turnover of
staff, it is difficult to estimate their efficiency, and therefore the adequacy of staffing
levels. The effective administration of the _acquis_ in this area will require the retention
of experienced and qualified staff, and computerisation of the customs administration.

111

Financial control: The protection of the Community's financial interests requires the
development of anti-fraud services, training of specialised staff (investigators,
magistrates) and the reinforcement of systems of specific cooperation. The
implementation of Community policies, especially for agriculture and the Structural
Funds, requires efficient management and control systems for public expenditure,
with provisions to fight fraud. Administratively it is essential to have a clear
separation between external _and internal control. Police and judicial authorities need
to be able effectively to handle complex ~ansnational financial crime (including
fraud, corruption and money laundering) which could affect the Community's
financial interests.

In Slovakia the main external control body is the Highest Control Office with 250
staff. The effective administration of the _acquis_ in this area will require major efforts
to strengthen the institutional structures.

**4.3 General Evaluation**

Provided Slovakia undertakes comprehensive and significantly enhanced reform
efforts in this area it could be envisaged that the necessary administrative structures
would be in place, in the medium term, effectively to administer the _acquis._

Concerning the judicial capacity effectively to apply Community law, a definite
evaluation at this stage is difficult.

112

**C. SUMMARY AND CONCLUSION**

Slovakia submitted its application for membership of the European Union on 27 June
1995. Its request is part of the historic process of ending the division of Europe and
consolidating the establishment of democracy across the continent.

In accordance with the provisions of Article O of the Treaty, the Commission has, at
the request of the Council, prepared an Opinion on Slovakia's request for
membership.

Slovakia's preparation for membership is going forward notably on the basis of the
**Europe Agreement** which entered into force in February 1995. Implementation of
the **White Paper** of May 1995 on the Internal Market, another· essential -element of_
the pre-accession strategy, is going ahead on the basis of a Plan agreed by the
government. The goveriunent has put in place the necessary mechanisms to
coordinate its policies for European integration.

In preparing its Opinion, the Commission has applied the **criteria established at the**
**Copenhagen European Council** of June 1993. The Conclusions of this Council
stated that those candidate countries of Central and Eastern Europe who wish to do so
shall become members of the Union if they meet the following conditions:

- stability of institutions guaranteeing democracy, the rule oflaw, human rights and
respect for and protection of minorities;

- the existence of a functioning market economy, as well as the ability to cope with
competitive pressures and market forces within the Union;

- the ability to take on the obligations of membership, including adherence to the
aims of political, economic and monetary union.

A judgement on these three groups of criteria - political, economic, and the ability to
take on the _acquis_ - depends also on the capacity of a country's administrative and
legal systems to put into effect the principles of democracy and the market economy
and to apply and enforce the _acquis_ in practice.

The **method** followed in preparing these Opinions has been to analyse the situation in
each candidate country, looking forward to the medium term prospects, and taking
into account progress accomplished and reforms already under way. For the political
criteria, the Commission has analysed the current situation, going beyond a formal
account of the institutions to examine how democracy and t~e rule of law operate in
practice.

**1. Political Criteria**

Slovakia's situation presents a number of problems in respect of the criteria defined
by the European Council in Copenhagen.

113

**The operation** **of** **Slovakia's institutions is characterised** **by** **the fact** **that** **the**
government does not sufficiently respect the powers devolved by the constitution to
other bodies and that it too often disregards the rights of the opposition. The constant
tension between the government and the President of the Republic is one example of
this. Similarly, the way in which the government recently ignored the decisions of the
Constitutional Court and the Ce11tral Referendum Commission on the occasion of the

vote on 23/24 May 1997 directly threatened the stability of the institutions. The
frequent refusal to involve the opposition in the operation of the institutions,
particularly in respect of parliamentary control, reinforces this tendency.

In this context, the use made by the government of the police and the secret services is
worrying. Substantial efforts need to be made to ensure fuller independence of the
judicial system, so that it can function in satisfactory conditions. The fight against_
corruption needs to be pursued with greater effectiveness.

Apart from this the treatment of the Hungarian minority, which still lacks the benefit
of a law on use of minority languages, even though the Slovak authorities- had
undertaken to adopt one, as envisaged by the constitution, needs to be improved. The
situation of the Roma similarly needs attention from the authorities.

In the light of these elements, although the institutional framework defined by the
Slovak constitution responds to the needs of a parliamentary democracy where
elections are free and fair, nevertheless the situation is unsatisfactory both in terms of
the stability of the institutions and of the extent to which they are rooted in political
life. Despite recommendations made by the European Union in a number of
demarches and declarations, there has been no noticeable improvement.

**2.** **Economic** **Criteria**

After a fall in GNP of nearly 25% between 1989 and 1993 Slovakia has seen positive
growth since 1994 which in 1995 and 1996 reached high levels (6.8% in 1995, 6.9%
in 1996), while inflation has fallen (5.4% in 1996). This has, however, been
accompanied by an increase in budget deficits and in particular by a worsening of

external accounts.

Slovakia has 5.4 million inhabitants and its GDP per capita is 41 % of the EU average.
The agricultural sector employs nearly 10% of the working population, and produces
6% of gross value added. Trade relations with the EU have grown considerably since
1989 and now represent 36% of Slovakia's imports and 41 % of its exports.

On the basis of this analysis, the Commission's judgement as to **Slovakia's ability to**
**meet the economic criteria** established at Copenhagen is as follows:,

Slovakia has introduced most of the reforms necessary to establish a **market**
**economy.** The price system has been liberalised and allocation decisions are
decentralised by the advanced privatisation process. Nevertheless, a restrictive Price
Law has been introduced in 1996, and the draft Enterprise Revitalisation Act would be

114

a major step back from market mechanisms. The financial sector needs to be
reinforced, and progress is needed in the regulation of the bankruptcy process and
capital markets.

Slovakia 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. For a number of years, the economy has grown rapidly, with
low inflation. The country has low wage costs and a skilled labour force. However,
enterprise restructuring has been slow, which is gradually undermining economic
growth and external balance. The low level of foreign direct investment reflects these
structural problems, which ne~d to be tackled swiftly and in a transparent way.

3, **Capacity** **to** **take** **on** **the** **obligations** **of** **membership**

Slovakia's ability to take on the _acquis_ has been evaluated according to a number of
indicators:

the obligations set out in the Europe Agreement, particularly those relating to the
right of establishment, national treatment, free circulation of goods, intellectual
property and public procurement;

implementation of the measures set out m the White Paper as essential for
establishing the single market;

- progressive transposition of the other parts of the _acquis._

Slovakia has for the most part met its obligations under the Europe Agreement and
mostly according to the timetable for implementation set out in it. The Agreement has
operated in a satisfactory manner, but it has not been possible to resolve all the
problems which have arisen in relation to both the democratic functioning of the
institutions and commercial matters. In particular, the introduction by Slovakia of a
system of import deposits is not in accordance with the Agreement. Slovakia has
achieved a satisfactory rate of transposition of the rules and directives identified in the
White Paper.

Significant progress has been achieved on transposing legislation related to key areas
of the **single market** such as company law, banking, free movement of capital and
taxation, even if further work is needed to achieve full alignment with EC rules. More
substantial efforts are needed to apply the _acquis_ in the medium term on standards and
certification, industrial and intellectual property, competition, public procurement and
insurance.

Notwithstanding the efforts which have been made, the progress made in transposing
legislation still needs to be accompanied by concrete measures of implementation as
well as establishment of an effective administrative underpinning.- Slovakia has a
number of instruments which operate correctly, but substantial efforts are still needed

115

in some sectors, notably public procurement, industrial and intellectual property and
standardisation.

As for the **other parts** **of** **the** _**acquis,**_ provided it continues its efforts,Slovakia should
not have particular difficulty in applying it in the medium term in the following fields:
education, training and youth; research and technological development; audio-visual;
small and medium enterprises; consumer protection; international trade relations; and
development.

By contrast, Slovakia will need to make substantial efforts in order to apply the _acquis_
in the fields of telecommunications and customs.

The integration of Slovak **industry** in the European market could face difficulties to
proceed satisfactorily over the medium term. This will require diversification away_
from heavy industries and more effective restructuring of enterprises.

For the **environment,** very important efforts will be needed, including massive
investment and strengthening of administrative capacity for enforcement of
legislation. Full compliance with the acquis could only be expected in the long to
very long term.

Slovakia has made efforts towards applying the _acquis_ in the field of **transport.** But
further progress is needed on road freight transport and· the railway sector, without
which it would be hard for Slovakia to meet the obligations of accession. Only if the
situation improves is the transport sector unlikely to pose major problems. Slovakia
needs to make the necessary effort, in collaboration with the international financial
institutions, to integrate itself into the European transport network and to achieve
establishment of the TENs which are important elements in the effective functioning
of the single market.

Slovakia still has substantial work to do to align its **employment and social affairs**
standards on those of the EU. Progress is needed in particular on labour law, health
and safety at work and the labour inspectorate, which does not currently have the
autonomy necessary to fulfil its role properly.

As for **regional policy and cohesion** Slovakia needs to pay more attention to existing
regional disparities, and also to establish the necessary financial controls, in order to
apply Community rules and in due course utilise structural funds.

In **agriculture,** provided there is progress on veterinary and phytosanitary controls, on
strengthening of the structures needed to apply CAP and on re-structuring the agrifood
sector, accession in the medium term should not cause significant problems for
Slovakia in implementing the CAP in an appropriate manner.

As for **energy,** work is still needed on operation of monopolies, price fixing, access to
networks and state intervention in the solid fuel sector. Slovakia has a nuclear power
station at Bohunice which produces nearly 50% of the country's electricity; and is
constructing a new power station at Mochovce. It must in the medium term

116

modernise two of the units at Bohunice to bring them up to internationally accepted
safety standards; and must talce the appropriate measures to close the units which
cannot be modernised. A long-term solution needs to be found for nuclear waste.

On the basis of the analysis of its capacity to apply the _acquis_ it is not yet possible to
be sure when Slovalcia could become able to take and implement the measures
necessary to remove the controls at **borders** between Slovakia and member states of
the Union and to replace them at the Union's external border.

Slovakia's participation in the third stage of **economic and monetary union,** which
implies coordination of economic policy and the complete liberalisation of capital
movements, could present some difficulties given the incompatibility of the rules
governing the central bank with those of the EU, and also the need to restructure the
banking sector. It is premature to judge whether Slovakia will be in a position by the_
time of its accession, to participate in the Euro area. That will depend on how far the
success of its structural transformation enables it to achieve and sustain permanently
the convergence criteria. These are however not a condition for membership.

Slovakia should be able to apply the _acquis_ on **justice and home affairs** in the
medium term, though particular attention needs to be given to frontier controls, visa
policy and the fight against organised crime. Progress in this sector will also depend
on respect for fundamental democratic rights.

Slovakia should be able to fulfil its obligations in respect of the **common foreign and**
**security policy.**

Since 1989 Slovakia has strengthened its relations with its neighbours and settled
almost all its disputes with them.

**4.** **Administrative** **and** **legal** **capacity**

If Slovakia undertakes substantial efforts to reform its administration, the necessary
structures could be in place in the medium term to apply the _acquis_ effectively.

The capacity of the judicial system to ensure correct and uniform application of
Community law is important, particularly for achievement of the single market. In
current circumstances it is difficult to judge Slovakia's progress in this field.

**CONCLUSION**

In the light of these considerations, the Commission concludes 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.

This situation is so much more regrettable since Slovakia could satisfy the economic
criteria in the medium term and is firmly committed to take on the _acquis,_ particularly

117

concerning the internal market even if further progress is still required to ensure the
effective application of the _acquis._

In the light of these considerations, the Commission considers that negotiations for
accession the the European Union should be opened with Slovakia as soon as it has
made suficient progress in satisfying the conditions of membership defined by the
European Council in Copenhagen.
The reinforced pre-accession strategy will help Slovakia to prepare itself better to
meet the obligations of membership, and to take action to improve the shortcomings
identified in the Opinions. The Commission will present a report no later than the end
of 1998 on the progress Slovakia has achieved.

118

**ANNEX**

**COMPOSITION OF PARLIAMENT**

Movement for a Democratic HZDS

Slovakia

Association of Slovak Workers ZRS

Slovak National Party SNS
Party of the Democratic Left SDL

Christian Democratic Movement KDH

_r_
Hungarian Coalition
Democratic Union of Slovakia DU

40.6

13 8.7

9 6.0

18 12.0

17 11.3

17 11.3

15 10.0

SINGLE MARKET: WHITE PAPER MEASURES

This tab.le is based on infonnation provided by the Slovak authorities and confinned by them as correct as at the end of June 1997. It does not

indicate the Commission's agreement with their analysis. The table includes directives and regulations cited)n the White Paper which total
899. These have been listed in accordance with the categorization used in the White Paper and in relation to the policy areas covered. The
table shows the number of measures for which the Slovak Republic authorities have notified the existence of adopted legislation having some
degree of compatibility with the corresponding White Paper measures.

|White Paper chapters|Directives<br>Stage I Stage<br>II/III|Col3|Regulations<br>Stage I Stage<br>II/III|Col5|Total|
|---|---|---|---|---|---|
|~~**1.Free MovementofCapital**~~<br>~~• Slova~Rep.~~<br>NumberofWhite Paper measures<br>**2.FM a**~~**nd SafetyofIndustrial Products**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br>**3.Comp**~~**etition**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~2 ~~<br>3 <br>|~~**1 **~~<br>l <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~3 ~~<br>4 <br>~~**15**~~**4 **<br>165|
|~~**1.Free MovementofCapital**~~<br>~~• Slova~Rep.~~<br>NumberofWhite Paper measures<br>**2.FM a**~~**nd SafetyofIndustrial Products**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br>**3.Comp**~~**etition**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~**50**~~<br>56<br>|~~**100**~~<br>104<br>|~~3 ~~<br>4 <br>|~~1 ~~<br>l <br>|~~1 ~~<br>l <br>|
|~~**1.Free MovementofCapital**~~<br>~~• Slova~Rep.~~<br>NumberofWhite Paper measures<br>**2.FM a**~~**nd SafetyofIndustrial Products**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br>**3.Comp**~~**etition**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~3 ~~<br>3 <br>|~~0 ~~<br>0 <br>|~~**1 **~~<br>l <br>|~~0 ~~<br>0 <br>|~~4 ~~<br>4 <br>|
|~~**4.Social policy and action**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~**12**~~<br>12<br>|~~**14**~~<br>15<br>|~~0 ~~<br>0 <br>|~~2 ~~<br>2 <br>|~~**28**~~<br>29<br>|
|~~**5.Agriculture**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~**93**~~<br>93<br>|~~**44·**~~<br>46<br>|~~**53**~~<br>62<br>|~~2 ~~<br>2 <br>|~~**192**~~<br>203<br>|
|~~**6.Transport**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~**19**~~<br>19<br>|~~**14**~~<br>15<br>|~~6 ~~<br>8 <br>|~~**13**~~<br>13<br>|~~**52**~~<br>_55_<br>|
|~~7 ~~~~**.Audiovisual**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~1 ~~<br>I <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~1 ~~<br>I <br>|
|~~**8.Environmen t**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~**16**~~<br>31<br>|~~7 ~~<br>7 <br>|~~6 ~~<br>7 <br>|~~0 ~~<br>0 <br>|~~**29**~~<br>45<br>|
|~~**9.Telecommunication**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~9 ~~<br>9 <br>|~~2 ~~<br>7 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~11~~<br>16<br>|
|~~**10.Direct Taxation**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br>~~**11.Free movementofgoods**~~<br>~~SlovakRep.~~<br>NumberofWhite Paperme<1.iures<br><br>|~~2 ~~<br>2 <br>|~~2 ~~<br>2 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~4 ~~<br>4 <br>|
|~~**10.Direct Taxation**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br>~~**11.Free movementofgoods**~~<br>~~SlovakRep.~~<br>NumberofWhite Paperme<1.iures<br><br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|
|~~**12.Public Procurement**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~5 ~~<br>_5 _<br>|~~**1 **~~<br>I <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~6 ~~<br>6 <br>|
|~~**13.Financial services**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~**12**~~<br>13<br>|~~6 ~~<br>8 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~**18**~~<br>21<br>|
|~~**14.Protectionofpersonal data**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~0 ~~<br>0 <br>|~~0 ~~<br>2 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>2 <br>|
|~~**15.Company Law**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~2-~~<br>2 <br>|~~3 ~~<br>3 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>I <br>|~~5 ~~<br>6 <br>|
|~~**16.Accountancy**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~3 ~~<br>3 <br>|~~2 ~~<br>2 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~5 ~~<br>_5 _<br>|
|~~**17.Civil law**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~**1 **~~<br>I <br>|~~0 ~~<br>I <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~**1 **~~<br>2 <br>|
|~~**18.Mutual rec.ofprof. Qual.**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~2 ~~<br>2 <br>|~~**16**~~<br>16<br>|~~0 ~~<br>0 <br>|~~0 ~~<br>0 <br>|~~**18**~~<br>**18**<br>|
|~~**19.Intellectual property**~~<br>~~SlovakRep.~~<br>NumberofWhitePapermeasures<br><br>|~~5 ~~<br>_5 _<br>|~~2 ~~<br>3 <br>|~~0 ~~<br>0 <br>|~~0 ~~<br>3 <br>|~~7 ~~<br>JI<br>|
|~~**20.Energy**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~3 ~~<br>JO<br>|~~2 ~~<br>2 <br>|~~3 ~~<br>3 <br>|~~0 ~~<br>0 <br>|~~**8 **~~<br>15<br>|
|~~**21.Customs law**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~0 ~~<br>2 <br>|~~0 ~~<br>I <br>|~~**14**~~<br>14<br>|~~**38**~~<br>184<br>|~~52~~<br>201<br>|
|~~**22.lndirect Taxation**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~**15**~~<br>15<br>|~~**34**~~<br>54<br>|~~0 ~~<br>0 <br>|~~6 ~~<br>6 <br>|~~55~~<br>75<br>|
|~~**23.Consumer Protection**~~<br>~~SlovakRep.~~<br>NumberofWhite Paper measures<br><br>|~~8 ~~<br>8 <br>|~~3 ~~<br>3 <br>|~~0 ~~<br>·O<br>|~~0 ~~<br>0 <br>|~~11~~<br>II<br>|
|~~**Total**~~<br>~~SlovakRep.~~<br>NumberofWhitePapermeasures|~~**263**~~<br>295|~~253~~<br>293|~~**86**~~<br>99|~~62~~<br>212|~~664~~<br>899|

STATISTICAL DATA

If not explicitly stated otherwise, data contained in this annex are collected from,,Statistical Office of the
Slovak Republic (ST A TISTICKY URAD SLOVENSKEJ REPUBLIKY)" with whom Eurostat and Member
States' statistical offices are co-operating since several years in the framework of the Phare programme.
Regular data collection and dissemination are part of this co-operation process with the aim to enable the
application of EU laws and practices in statistics. The dafa presented below have been compiled as far as
possible using EU definitions and standards which in some cases differ from national practices. This may
occasionally give rise to differences between the data presented here and those shown elsewhere in the opinion,
which are generally based on the individual applicant countries' updated replies to the questionnaire sent to
them in April 1996. The exact compatibility with EU standards on statistics and thus th~ comparability with
EU figures can still not be guaranteed, particularly those statistics that have not been supplied through Eutostat,
but have been delivered directly by the countries concerned. Wherever available, methodological notes are
given describing content and particularities of statistical data presented in this annex. Data correspond to the
infonnation available as of May 1997.

|BASIC DATA|1990|1992|1993|1994|1995|
|---|---|---|---|---|---|
|**TotalArea**<br>Population ( end of the period)<br>-Total<br>- Females<br>- Males<br>**Population density**<br>**UrbanPopulation**<br>**Deaths rate**<br>**Births·rate**<br>**IncomeandGDPpercapita**<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>**Structureofproduction: shareofbranchGVA **<br>-agriculture<br>-industry<br>-construction<br>-services|~~**1990**~~|~~**1992**~~|~~**1993**~~<br>|~~**1994**~~<br>~~-~~|~~**1995**~~|
|**TotalArea**<br>Population ( end of the period)<br>-Total<br>- Females<br>- Males<br>**Population density**<br>**UrbanPopulation**<br>**Deaths rate**<br>**Births·rate**<br>**IncomeandGDPpercapita**<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>**Structureofproduction: shareofbranchGVA **<br>-agriculture<br>-industry<br>-construction<br>-services|~~I ~~~~**000hectares**~~<br>~~-~~<br><br>|~~I ~~~~**000hectares**~~<br>~~-~~<br><br>|~~I ~~~~**000hectares**~~<br>~~-~~<br><br>|~~I ~~~~**000hectares**~~<br>~~-~~<br><br>|~~I ~~~~**000hectares**~~<br>~~-~~<br><br>|
|**TotalArea**<br>Population ( end of the period)<br>-Total<br>- Females<br>- Males<br>**Population density**<br>**UrbanPopulation**<br>**Deaths rate**<br>**Births·rate**<br>**IncomeandGDPpercapita**<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>**Structureofproduction: shareofbranchGVA **<br>-agriculture<br>-industry<br>-construction<br>-services|||~~4904~~<br>|~~**4904**~~||
|**TotalArea**<br>Population ( end of the period)<br>-Total<br>- Females<br>- Males<br>**Population density**<br>**UrbanPopulation**<br>**Deaths rate**<br>**Births·rate**<br>**IncomeandGDPpercapita**<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>**Structureofproduction: shareofbranchGVA **<br>-agriculture<br>-industry<br>-construction<br>-services|~~in1000~~<br><br><br><br>|~~in1000~~<br><br><br><br>|~~in1000~~<br><br><br><br>|~~in1000~~<br><br><br><br>|~~in1000~~<br><br><br><br>|
|**TotalArea**<br>Population ( end of the period)<br>-Total<br>- Females<br>- Males<br>**Population density**<br>**UrbanPopulation**<br>**Deaths rate**<br>**Births·rate**<br>**IncomeandGDPpercapita**<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>**Structureofproduction: shareofbranchGVA **<br>-agriculture<br>-industry<br>-construction<br>-services||~~5314~~|~~5336~~<br>2737.4<br>2598.6<br>|~~5356~~<br><br>2747.6<br><br>2608.4|~~5368~~<br><br>2753.8<br><br>2614.2|
|**TotalArea**<br>Population ( end of the period)<br>-Total<br>- Females<br>- Males<br>**Population density**<br>**UrbanPopulation**<br>**Deaths rate**<br>**Births·rate**<br>**IncomeandGDPpercapita**<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>**Structureofproduction: shareofbranchGVA **<br>-agriculture<br>-industry<br>-construction<br>-services|~~**per**I km2~~<br><br><br><br>|~~**per**I km2~~<br><br><br><br>|~~**per**I km2~~<br><br><br><br>|~~**per**I km2~~<br><br><br><br>|~~**per**I km2~~<br><br><br><br>|
|**TotalArea**<br>Population ( end of the period)<br>-Total<br>- Females<br>- Males<br>**Population density**<br>**UrbanPopulation**<br>**Deaths rate**<br>**Births·rate**<br>**IncomeandGDPpercapita**<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>**Structureofproduction: shareofbranchGVA **<br>-agriculture<br>-industry<br>-construction<br>-services||~~108~~<br>|~~108~~<br>|~~109~~<br>|~~109~~|
|**TotalArea**<br>Population ( end of the period)<br>-Total<br>- Females<br>- Males<br>**Population density**<br>**UrbanPopulation**<br>**Deaths rate**<br>**Births·rate**<br>**IncomeandGDPpercapita**<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>**Structureofproduction: shareofbranchGVA **<br>-agriculture<br>-industry<br>-construction<br>-services|~~in¾ oftotal population~~<br><br><br><br>|~~in¾ oftotal population~~<br><br><br><br>|~~in¾ oftotal population~~<br><br><br><br>|~~in¾ oftotal population~~<br><br><br><br>|~~in¾ oftotal population~~<br><br><br><br>|
|**TotalArea**<br>Population ( end of the period)<br>-Total<br>- Females<br>- Males<br>**Population density**<br>**UrbanPopulation**<br>**Deaths rate**<br>**Births·rate**<br>**IncomeandGDPpercapita**<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>**Structureofproduction: shareofbranchGVA **<br>-agriculture<br>-industry<br>-construction<br>-services||~~57.2~~<br>|~~56.9~~<br>|~~57~~<br>|~~57~~|
|**TotalArea**<br>Population ( end of the period)<br>-Total<br>- Females<br>- Males<br>**Population density**<br>**UrbanPopulation**<br>**Deaths rate**<br>**Births·rate**<br>**IncomeandGDPpercapita**<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>**Structureofproduction: shareofbranchGVA **<br>-agriculture<br>-industry<br>-construction<br>-services|~~per I 000ofpopulation~~<br><br><br><br>|~~per I 000ofpopulation~~<br><br><br><br>|~~per I 000ofpopulation~~<br><br><br><br>|~~per I 000ofpopulation~~<br><br><br><br>|~~per I 000ofpopulation~~<br><br><br><br>|
|**TotalArea**<br>Population ( end of the period)<br>-Total<br>- Females<br>- Males<br>**Population density**<br>**UrbanPopulation**<br>**Deaths rate**<br>**Births·rate**<br>**IncomeandGDPpercapita**<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>**Structureofproduction: shareofbranchGVA **<br>-agriculture<br>-industry<br>-construction<br>-services||~~IO.I~~<br>**14.l**<br>|~~8.9~~<br>13.8<br>|~~9.6~~<br><br>12.4<br>|~~9.8~~<br><br>11.5|
|**TotalArea**<br>Population ( end of the period)<br>-Total<br>- Females<br>- Males<br>**Population density**<br>**UrbanPopulation**<br>**Deaths rate**<br>**Births·rate**<br>**IncomeandGDPpercapita**<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>**Structureofproduction: shareofbranchGVA **<br>-agriculture<br>-industry<br>-construction<br>-services|~~European Currency Unit~~|~~European Currency Unit~~|~~European Currency Unit~~|~~European Currency Unit~~|~~European Currency Unit~~|
|**TotalArea**<br>Population ( end of the period)<br>-Total<br>- Females<br>- Males<br>**Population density**<br>**UrbanPopulation**<br>**Deaths rate**<br>**Births·rate**<br>**IncomeandGDPpercapita**<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>**Structureofproduction: shareofbranchGVA **<br>-agriculture<br>-industry<br>-construction<br>-services|||||2467|
|**TotalArea**<br>Population ( end of the period)<br>-Total<br>- Females<br>- Males<br>**Population density**<br>**UrbanPopulation**<br>**Deaths rate**<br>**Births·rate**<br>**IncomeandGDPpercapita**<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>**Structureofproduction: shareofbranchGVA **<br>-agriculture<br>-industry<br>-construction<br>-services|~~in"loofTotal Gross Value Added~~<br>|~~in"loofTotal Gross Value Added~~<br>|~~in"loofTotal Gross Value Added~~<br>|~~in"loofTotal Gross Value Added~~<br>|~~in"loofTotal Gross Value Added~~<br>|
|**TotalArea**<br>Population ( end of the period)<br>-Total<br>- Females<br>- Males<br>**Population density**<br>**UrbanPopulation**<br>**Deaths rate**<br>**Births·rate**<br>**IncomeandGDPpercapita**<br>-Average monthly wage and salary per employee<br>-GDP per capita<br>**Structureofproduction: shareofbranchGVA **<br>-agriculture<br>-industry<br>-construction<br>-services|~~7.4~~<br>49.9<br>9.2<br>33.5|<br>|||~~6.3~~<br>31.9<br>5.1<br>57.2|

share of branch GVA in 1995

~~•~~ -agriculture

11 -industry

               - -construction

Cl -services

           - - Others

share of branch GVA in 1990

.o.o
.7.4

~~•~~ -agriculture

057.2

6149.9

Bl -industry

- -construction

- -services

- - Others

NATIONAL ACCOUNTS

|Col1|1990|1991|1992|1993|1994|1995|
|---|---|---|---|---|---|---|
|Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct<br>Gross DomesticProduct<br>**Final**consumption**expenditure**<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoodsandservices<br>Importsofgoodsandservices<br>Final consumptionexpenditure<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoods and services<br>Importsofgoodsandservices|~~inMillionsorNationalCurrency~~<br><br><br><br><br><br>|~~inMillionsorNationalCurrency~~<br><br><br><br><br><br>|~~inMillionsorNationalCurrency~~<br><br><br><br><br><br>|~~inMillionsorNationalCurrency~~<br><br><br><br><br><br>|~~inMillionsorNationalCurrency~~<br><br><br><br><br><br>|~~inMillionsorNationalCurrency~~<br><br><br><br><br><br>|
|Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct<br>Gross DomesticProduct<br>**Final**consumption**expenditure**<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoodsandservices<br>Importsofgoodsandservices<br>Final consumptionexpenditure<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoods and services<br>Importsofgoodsandservices|~~278020~~|~~319689~~|~~3322S7~~<br>|~~369900~~<br>|~~441300~~|~~S18000~~|
|Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct<br>Gross DomesticProduct<br>**Final**consumption**expenditure**<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoodsandservices<br>Importsofgoodsandservices<br>Final consumptionexpenditure<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoods and services<br>Importsofgoodsandservices|~~in~~~~**Billions**ofECU~~<br><br><br>|~~in~~~~**Billions**ofECU~~<br><br><br>|~~in~~~~**Billions**ofECU~~<br><br><br>|~~in~~~~**Billions**ofECU~~<br><br><br>|~~in~~~~**Billions**ofECU~~<br><br><br>|~~in~~~~**Billions**ofECU~~<br><br><br>|
|Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct<br>Gross DomesticProduct<br>**Final**consumption**expenditure**<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoodsandservices<br>Importsofgoodsandservices<br>Final consumptionexpenditure<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoods and services<br>Importsofgoodsandservices||||~~10.3~~<br>|~~11.6~~|~~13.3~~|
|Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct<br>Gross DomesticProduct<br>**Final**consumption**expenditure**<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoodsandservices<br>Importsofgoodsandservices<br>Final consumptionexpenditure<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoods and services<br>Importsofgoodsandservices|~~inPurchasingPowerStandardpercapita~~<br><br><br>|~~inPurchasingPowerStandardpercapita~~<br><br><br>|~~inPurchasingPowerStandardpercapita~~<br><br><br>|~~inPurchasingPowerStandardpercapita~~<br><br><br>|~~inPurchasingPowerStandardpercapita~~<br><br><br>|~~inPurchasingPowerStandardpercapita~~<br><br><br>|
|Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct<br>Gross DomesticProduct<br>**Final**consumption**expenditure**<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoodsandservices<br>Importsofgoodsandservices<br>Final consumptionexpenditure<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoods and services<br>Importsofgoodsandservices||||~~S870.S~~<br>|~~6384.3~~|~~7117.4~~|
|Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct<br>Gross DomesticProduct<br>**Final**consumption**expenditure**<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoodsandservices<br>Importsofgoodsandservices<br>Final consumptionexpenditure<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoods and services<br>Importsofgoodsandservices|~~% change overthepreviousyear~~<br><br><br><br>|~~% change overthepreviousyear~~<br><br><br><br>|~~% change overthepreviousyear~~<br><br><br><br>|~~% change overthepreviousyear~~<br><br><br><br>|~~% change overthepreviousyear~~<br><br><br><br>|~~% change overthepreviousyear~~<br><br><br><br>|
|Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct<br>Gross DomesticProduct<br>**Final**consumption**expenditure**<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoodsandservices<br>Importsofgoodsandservices<br>Final consumptionexpenditure<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoods and services<br>Importsofgoodsandservices||~~-14.6~~<br>-2S.6<br>-28.3<br>-17.8<br>-2S.2<br>33.4<br>-14.7|~~_-6.S_~~<br><br>-1.7<br>-6.4<br>9.9<br>_-4.S_<br><br>47.5<br>47.1<br>|~~-3.9~~<br>-1.7<br>-1.8<br><br>-2.2<br>-4.2<br>-0.2<br>-0.7<br>|~~4.9~~<br>-3.4<br>0.0<br>-10.S<br>-S.l<br>14.l<br>-3.5|~~6.8~~<br><br>2.9<br><br>3.4<br>1.6<br>5.8<br>3.5<br>9.6|
|Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct<br>Gross DomesticProduct<br>**Final**consumption**expenditure**<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoodsandservices<br>Importsofgoodsandservices<br>Final consumptionexpenditure<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoods and services<br>Importsofgoodsandservices|~~in% ofGrossDomestic Product -~~<br><br><br><br><br><br>|~~in% ofGrossDomestic Product -~~<br><br><br><br><br><br>|~~in% ofGrossDomestic Product -~~<br><br><br><br><br><br>|~~in% ofGrossDomestic Product -~~<br><br><br><br><br><br>|~~in% ofGrossDomestic Product -~~<br><br><br><br><br><br>|~~in% ofGrossDomestic Product -~~<br><br><br><br><br><br>|
|Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct(CurrentPrices)<br>Gross DomesticProduct<br>Gross DomesticProduct<br>**Final**consumption**expenditure**<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoodsandservices<br>Importsofgoodsandservices<br>Final consumptionexpenditure<br>-ofhouseholds andNPISH<br>-ofgeneral government<br>Gross fixed**capital**formation<br>Exportsofgoods and services<br>Importsofgoodsandservices|~~75.8~~<br>53.9<br>21.9<br>34.3<br>26.5<br>35.6|~~71.8~~<br><br>51.2<br><br>20.6<br>28.3<br>46.3<br><br>49.3|~~78.0~~<br>49.5<br><br>25.6<br>32.9<br>70.3<br>74.3|~~78.2~~<br>53.2<br>25.0<br>32.4<br>61.7<br>67.2|~~72.3~~<br>50.4<br>21.8<br>29.5<br>65.2<br>59.7|~~69.2~~<br>49.0<br>20.2<br>29.2<br>63.2<br>61.4|

GDP (% Change over the previous year)

10.0

5.0

0.0

-5.0

-10.0

-15.0

MAIN ECONOMIC INDICATORS

|Col1|1990|1991|1991|1993|1994|1995|1996|
|---|---|---|---|---|---|---|---|
|Inflation**rate**<br>Industrialproductionvolumeindices<br>Gross**agricultural**productionvolumeindices<br>Unemployment**rate**(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>**Gross Foreign debt**<br>**Balanceofpayments**<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets|~~**penientapchanaeoverthepreviousyear**~~<br><br><br><br><br><br>|~~**penientapchanaeoverthepreviousyear**~~<br><br><br><br><br><br>|~~**penientapchanaeoverthepreviousyear**~~<br><br><br><br><br><br>|~~**penientapchanaeoverthepreviousyear**~~<br><br><br><br><br><br>|~~**penientapchanaeoverthepreviousyear**~~<br><br><br><br><br><br>|~~**penientapchanaeoverthepreviousyear**~~<br><br><br><br><br><br>|~~**penientapchanaeoverthepreviousyear**~~<br><br><br><br><br><br>|
|Inflation**rate**<br>Industrialproductionvolumeindices<br>Gross**agricultural**productionvolumeindices<br>Unemployment**rate**(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>**Gross Foreign debt**<br>**Balanceofpayments**<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets|~~10.4~~|~~61.2~~|~~10~~<br>|~~23.2~~<br>|~~13.4~~<br>|~~9.9 ~~|~~· 5.8~~|
|Inflation**rate**<br>Industrialproductionvolumeindices<br>Gross**agricultural**productionvolumeindices<br>Unemployment**rate**(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>**Gross Foreign debt**<br>**Balanceofpayments**<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets|~~**previousyear**• I ~~~~**00**~~<br><br><br>|~~**previousyear**• I ~~~~**00**~~<br><br><br>|~~**previousyear**• I ~~~~**00**~~<br><br><br>|~~**previousyear**• I ~~~~**00**~~<br><br><br>|~~**previousyear**• I ~~~~**00**~~<br><br><br>|~~**previousyear**• I ~~~~**00**~~<br><br><br>|~~**previousyear**• I ~~~~**00**~~<br><br><br>|
|Inflation**rate**<br>Industrialproductionvolumeindices<br>Gross**agricultural**productionvolumeindices<br>Unemployment**rate**(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>**Gross Foreign debt**<br>**Balanceofpayments**<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets||||~~96.2~~<br>92.0<br>|~~104.8~~<br><br>102.6<br>|~~108.3~~<br><br>JOO.I|~~102.5~~|
|Inflation**rate**<br>Industrialproductionvolumeindices<br>Gross**agricultural**productionvolumeindices<br>Unemployment**rate**(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>**Gross Foreign debt**<br>**Balanceofpayments**<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets|~~**in**% labourforce~~<br><br><br>|~~**in**% labourforce~~<br><br><br>|~~**in**% labourforce~~<br><br><br>|~~**in**% labourforce~~<br><br><br>|~~**in**% labourforce~~<br><br><br>|~~**in**% labourforce~~<br><br><br>|~~**in**% labourforce~~<br><br><br>|
|Inflation**rate**<br>Industrialproductionvolumeindices<br>Gross**agricultural**productionvolumeindices<br>Unemployment**rate**(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>**Gross Foreign debt**<br>**Balanceofpayments**<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets||||~~12.2~~<br>|~~13.3~~<br>26.2<br>10.6<br>|~~12.8~~<br><br>23.5<br><br>10.5|~~1.0.9~~<br>19.8<br>9.1|
|Inflation**rate**<br>Industrialproductionvolumeindices<br>Gross**agricultural**productionvolumeindices<br>Unemployment**rate**(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>**Gross Foreign debt**<br>**Balanceofpayments**<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets|~~**inBillionsofUSO**~~<br><br>|~~**inBillionsofUSO**~~<br><br>|~~**inBillionsofUSO**~~<br><br>|~~**inBillionsofUSO**~~<br><br>|~~**inBillionsofUSO**~~<br><br>|~~**inBillionsofUSO**~~<br><br>|~~**inBillionsofUSO**~~<br><br>|
|Inflation**rate**<br>Industrialproductionvolumeindices<br>Gross**agricultural**productionvolumeindices<br>Unemployment**rate**(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>**Gross Foreign debt**<br>**Balanceofpayments**<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets||||~~1.317~~<br>|~~l.916~~<br>|||
|Inflation**rate**<br>Industrialproductionvolumeindices<br>Gross**agricultural**productionvolumeindices<br>Unemployment**rate**(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>**Gross Foreign debt**<br>**Balanceofpayments**<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets|~~**inmillionsofUSO**~~<br><br><br><br>|~~**inmillionsofUSO**~~<br><br><br><br>|~~**inmillionsofUSO**~~<br><br><br><br>|~~**inmillionsofUSO**~~<br><br><br><br>|~~**inmillionsofUSO**~~<br><br><br><br>|~~**inmillionsofUSO**~~<br><br><br><br>|~~**inmillionsofUSO**~~<br><br><br><br>|
|Inflation**rate**<br>Industrialproductionvolumeindices<br>Gross**agricultural**productionvolumeindices<br>Unemployment**rate**(ILOmethodology)<br>-Total<br>- less then 25 years<br>- 25 years and more<br>**Gross Foreign debt**<br>**Balanceofpayments**<br>-Exportsofgoods<br>-Importsofgoods<br>-Trade balance<br>-Services, net<br>-Income, net<br>-Current account balance<br>-Capital and fin. acc.(excl. reserves)<br>-Reserve assets||||~~5447~~<br>-6379<br>-932<br>267<br>-38<br>-601<br>548<br>-55|~~6691~~<br><br>· -6632<br><br>--<br>59<br><br>657<br><br>-119<br>665<br><br>129<br>-1290|~~8579~~<br><br>-8807<br><br>-228<br><br>540<br><br>-14<br><br>391<br><br>993<br><br>-1579|~~8830~~<br>-10936<br>-2106<br>7 <br>-45<br>-1941<br>2098<br>-237|

**Inflation rate:** Percentage change of yearly average over the previous year - all items index (data are based on nation'al CPis which are
not strictly comparable).

**Industrial production volume indices:** Industrial production covers mining and quarrying, manufacturing and electricity, gas and water
supply (according to the NACE Classification Sections C,D,E). The data cover total industrial production including estimates for
enterprises up to 24 employees and for tradesmen. Indices for branches, however, cover only enterprises with 25 or more employees.

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 constant prices of 1989.

Unemployment **rate** (by ILO methodology): -Percentage of the unemployed in labour force. This rate is derived from LFSS (Labor Force
Survey) observing the following ILO definitions and recommendations where:
_Labor 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.
In the Slovak Republic, for practical reasons, the quarters do not correspond to calendar ones, but they are shifted one month ahead.
The persons on compulsory military service are excluded from the employed. On the other hand, women on additional child-care

leave are included.

Gross foreign debt: Debt is extracted form the OECD's External Debt Statistics.

Balance of payments: Data is derived from IMF database, their comparability with respective EU statistics can not be guaranteed, but
balance of payments is compiled mainly in accordance to IMF standards. Balance in trade of goods in accordance with balance
of payments principles. Exports and imports are both in f.o.b. values. Net income includes direct, portfolio and other investment
income, compensation of employees. Current account balance by definition of IMF 5th Manual, capital transfers are excluded.
Reserve assets: it means changes in reserve assets during the year;(+) signifies an increase,(-) a decrease in reserve assets.

FOREIGN TRADE

|Col1|1992|1993|1994|1995|1996|
|---|---|---|---|---|---|
|~~Importsandexports(eurrentprices)~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StruetureofImportbySITC (eurrent prices)**<br>- (O+I)food and live animals, beverage and tobacco<br>- 2crude materials, inedible<br>- 3mineral fuels and lubricants<br>- 4animal and veget~ble oils etc.<br>- 5chemicals and related products<br>- 6manufactured goods classified chiefly by material<br>- 7machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>- 9goods not elsewhere classified<br>**StructureofExportbySITC (eurrent prices)**<br>- (0+l)food and live animals, beverage and tobacco<br>- 2crude materials, inedible<br>- 3mineral fuels and lubricants<br>- 4animal and vegetable oils etc.<br>- 5chemicals and related products<br>- 6manufactured goods classified chiefly by-01aterial<br>- 7machinery and transport equipment<br>- 8miscellaneous manufactured articles<br>- 9goods not elsewhere classified<br>**External trade price indices**<br>- Imports<br>- Exports|~~**inmillionsofUSD**~~<br><br><br><br>|~~**inmillionsofUSD**~~<br><br><br><br>|~~**inmillionsofUSD**~~<br><br><br><br>|~~**inmillionsofUSD**~~<br><br><br><br>|~~**inmillionsofUSD**~~<br><br><br><br>|
|~~Importsandexports(eurrentprices)~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StruetureofImportbySITC (eurrent prices)**<br>- (O+I)food and live animals, beverage and tobacco<br>- 2crude materials, inedible<br>- 3mineral fuels and lubricants<br>- 4animal and veget~ble oils etc.<br>- 5chemicals and related products<br>- 6manufactured goods classified chiefly by material<br>- 7machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>- 9goods not elsewhere classified<br>**StructureofExportbySITC (eurrent prices)**<br>- (0+l)food and live animals, beverage and tobacco<br>- 2crude materials, inedible<br>- 3mineral fuels and lubricants<br>- 4animal and vegetable oils etc.<br>- 5chemicals and related products<br>- 6manufactured goods classified chiefly by-01aterial<br>- 7machinery and transport equipment<br>- 8miscellaneous manufactured articles<br>- 9goods not elsewhere classified<br>**External trade price indices**<br>- Imports<br>- Exports||~~6337~~<br>**_S4S0_**<br>**-887**|<br>~~**6611**~~<br>~~**8770**~~<br> <br>**6691**<br>_8S79_<br> <br>**80**<br>-191<br><br>~~10936~~<br>**8831**<br>-2105|<br>~~**6611**~~<br>~~**8770**~~<br> <br>**6691**<br>_8S79_<br> <br>**80**<br>-191<br><br>~~10936~~<br>**8831**<br>-2105|<br>~~**6611**~~<br>~~**8770**~~<br> <br>**6691**<br>_8S79_<br> <br>**80**<br>-191<br><br>~~10936~~<br>**8831**<br>-2105|
|~~Importsandexports(eurrentprices)~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StruetureofImportbySITC (eurrent prices)**<br>- (O+I)food and live animals, beverage and tobacco<br>- 2crude materials, inedible<br>- 3mineral fuels and lubricants<br>- 4animal and veget~ble oils etc.<br>- 5chemicals and related products<br>- 6manufactured goods classified chiefly by material<br>- 7machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>- 9goods not elsewhere classified<br>**StructureofExportbySITC (eurrent prices)**<br>- (0+l)food and live animals, beverage and tobacco<br>- 2crude materials, inedible<br>- 3mineral fuels and lubricants<br>- 4animal and vegetable oils etc.<br>- 5chemicals and related products<br>- 6manufactured goods classified chiefly by-01aterial<br>- 7machinery and transport equipment<br>- 8miscellaneous manufactured articles<br>- 9goods not elsewhere classified<br>**External trade price indices**<br>- Imports<br>- Exports|~~**previousyear•100**~~|~~**previousyear•100**~~|~~**previousyear•100**~~|~~**previousyear•100**~~|~~**previousyear•100**~~|
|~~Importsandexports(eurrentprices)~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StruetureofImportbySITC (eurrent prices)**<br>- (O+I)food and live animals, beverage and tobacco<br>- 2crude materials, inedible<br>- 3mineral fuels and lubricants<br>- 4animal and veget~ble oils etc.<br>- 5chemicals and related products<br>- 6manufactured goods classified chiefly by material<br>- 7machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>- 9goods not elsewhere classified<br>**StructureofExportbySITC (eurrent prices)**<br>- (0+l)food and live animals, beverage and tobacco<br>- 2crude materials, inedible<br>- 3mineral fuels and lubricants<br>- 4animal and vegetable oils etc.<br>- 5chemicals and related products<br>- 6manufactured goods classified chiefly by-01aterial<br>- 7machinery and transport equipment<br>- 8miscellaneous manufactured articles<br>- 9goods not elsewhere classified<br>**External trade price indices**<br>- Imports<br>- Exports||||||
|~~Importsandexports(eurrentprices)~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StruetureofImportbySITC (eurrent prices)**<br>- (O+I)food and live animals, beverage and tobacco<br>- 2crude materials, inedible<br>- 3mineral fuels and lubricants<br>- 4animal and veget~ble oils etc.<br>- 5chemicals and related products<br>- 6manufactured goods classified chiefly by material<br>- 7machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>- 9goods not elsewhere classified<br>**StructureofExportbySITC (eurrent prices)**<br>- (0+l)food and live animals, beverage and tobacco<br>- 2crude materials, inedible<br>- 3mineral fuels and lubricants<br>- 4animal and vegetable oils etc.<br>- 5chemicals and related products<br>- 6manufactured goods classified chiefly by-01aterial<br>- 7machinery and transport equipment<br>- 8miscellaneous manufactured articles<br>- 9goods not elsewhere classified<br>**External trade price indices**<br>- Imports<br>- Exports|~~5.2~~<br>7<br>0.1<br>9.8<br>33<br>p|<br>~~**8.8**~~<br> <br>5.2<br>20.9<br>0.2<br><br>11.3<br>IS. I<br><br>29.3<br>9<br>0.2<br>|<br>~~**8.2**~~<br> <br>5.3<br> <br>19.3<br> <br>0.3<br><br>13.2<br><br>16.8<br><br>--<br>27.7<br> <br>9.1<br> <br>|<br>~~8~~<br> <br>6<br> <br>17.5<br> <br>0.2<br> <br>13.6<br> <br>17.8<br> <br>28.9<br>8<br>|<br>~~8~~<br> <br>6<br> <br>17.5<br> <br>0.2<br> <br>13.6<br> <br>17.8<br> <br>28.9<br>8<br>|
|~~Importsandexports(eurrentprices)~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StruetureofImportbySITC (eurrent prices)**<br>- (O+I)food and live animals, beverage and tobacco<br>- 2crude materials, inedible<br>- 3mineral fuels and lubricants<br>- 4animal and veget~ble oils etc.<br>- 5chemicals and related products<br>- 6manufactured goods classified chiefly by material<br>- 7machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>- 9goods not elsewhere classified<br>**StructureofExportbySITC (eurrent prices)**<br>- (0+l)food and live animals, beverage and tobacco<br>- 2crude materials, inedible<br>- 3mineral fuels and lubricants<br>- 4animal and vegetable oils etc.<br>- 5chemicals and related products<br>- 6manufactured goods classified chiefly by-01aterial<br>- 7machinery and transport equipment<br>- 8miscellaneous manufactured articles<br>- 9goods not elsewhere classified<br>**External trade price indices**<br>- Imports<br>- Exports|~~in% oftotalExpon~~<br><br><br><br>|~~in% oftotalExpon~~<br><br><br><br>|~~in% oftotalExpon~~<br><br><br><br>|~~in% oftotalExpon~~<br><br><br><br>|~~in% oftotalExpon~~<br><br><br><br>|
|~~Importsandexports(eurrentprices)~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StruetureofImportbySITC (eurrent prices)**<br>- (O+I)food and live animals, beverage and tobacco<br>- 2crude materials, inedible<br>- 3mineral fuels and lubricants<br>- 4animal and veget~ble oils etc.<br>- 5chemicals and related products<br>- 6manufactured goods classified chiefly by material<br>- 7machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>- 9goods not elsewhere classified<br>**StructureofExportbySITC (eurrent prices)**<br>- (0+l)food and live animals, beverage and tobacco<br>- 2crude materials, inedible<br>- 3mineral fuels and lubricants<br>- 4animal and vegetable oils etc.<br>- 5chemicals and related products<br>- 6manufactured goods classified chiefly by-01aterial<br>- 7machinery and transport equipment<br>- 8miscellaneous manufactured articles<br>- 9goods not elsewhere classified<br>**External trade price indices**<br>- Imports<br>- Exports|~~7.9~~<br>_S.5_<br>0.1<br>11.2<br>17.4<br>15.2|~~6.4~~<br>4.9<br>4.9<br>0.1<br><br>12<br>38.8<br>19.4<br>13.4<br>0.1<br>|~~5.5~~<br><br>5.1<br><br>4.6<br>0.1<br><br>12.9<br><br>39.4<br><br>19<br><br>13.4<br>|~~5.9~~<br>5.1<br><br>4.2<br>0.1<br><br>13.2<br><br>40.4<br><br>18.8<br><br>12.2<br>|~~4.5~~<br>4.5<br>4.9<br>0.1<br>12.4<br>38.3<br>23.2<br>12.l|
|~~Importsandexports(eurrentprices)~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StruetureofImportbySITC (eurrent prices)**<br>- (O+I)food and live animals, beverage and tobacco<br>- 2crude materials, inedible<br>- 3mineral fuels and lubricants<br>- 4animal and veget~ble oils etc.<br>- 5chemicals and related products<br>- 6manufactured goods classified chiefly by material<br>- 7machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>- 9goods not elsewhere classified<br>**StructureofExportbySITC (eurrent prices)**<br>- (0+l)food and live animals, beverage and tobacco<br>- 2crude materials, inedible<br>- 3mineral fuels and lubricants<br>- 4animal and vegetable oils etc.<br>- 5chemicals and related products<br>- 6manufactured goods classified chiefly by-01aterial<br>- 7machinery and transport equipment<br>- 8miscellaneous manufactured articles<br>- 9goods not elsewhere classified<br>**External trade price indices**<br>- Imports<br>- Exports|~~previous~~~~**year•**100~~|~~previous~~~~**year•**100~~|~~previous~~~~**year•**100~~|~~previous~~~~**year•**100~~|~~previous~~~~**year•**100~~|
|~~Importsandexports(eurrentprices)~~<br>- Imports<br>- Exports<br>- Balanceoftrade<br>**External trade volume indices**<br>- Imports<br>- Exports<br>**StruetureofImportbySITC (eurrent prices)**<br>- (O+I)food and live animals, beverage and tobacco<br>- 2crude materials, inedible<br>- 3mineral fuels and lubricants<br>- 4animal and veget~ble oils etc.<br>- 5chemicals and related products<br>- 6manufactured goods classified chiefly by material<br>- 7machinery and transport equipment<br>- 8 miscellaneous manufactured articles<br>- 9goods not elsewhere classified<br>**StructureofExportbySITC (eurrent prices)**<br>- (0+l)food and live animals, beverage and tobacco<br>- 2crude materials, inedible<br>- 3mineral fuels and lubricants<br>- 4animal and vegetable oils etc.<br>- 5chemicals and related products<br>- 6manufactured goods classified chiefly by-01aterial<br>- 7machinery and transport equipment<br>- 8miscellaneous manufactured articles<br>- 9goods not elsewhere classified<br>**External trade price indices**<br>- Imports<br>- Exports||||||

**Imports and exports (current prices) and Structure** **of** **external trade** **by** **SITC (current prices):** Trade data exclude direct re-exports,
trade in services and trade with customs free zones as well as licenses, know-how and patents. The data are based upon the special
trade system. _Trade Classifications_     - Slovak Republic is using the commodity classification according to the _Combined_
_Nomenclature. Imports_ are recorded on _FOB_ 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 customs statistics is utilized for monitoring of foreign trade data. Eurostat has converted National Currencies to the US dollar
by applying the International Monetary Fund annual average exchange rates.

FOREIGN TRADE

|Col1|1992|Col3|1993|Col5|1994|Col7|199S|Col9|1996|Col11|
|---|---|---|---|---|---|---|---|---|---|---|
|~~Structureofimportsbymaincountries(currentprices)~~<br>1st partner<br>2ndpartner<br>3rdpartner<br>4thpartner<br>5th partner<br>others<br>Structureofexportsbymaincountries(currentprices)<br>1st partner<br>2ndpartner<br>3rd partner<br>4th partner<br>5th partner<br>others|~~in%~~**o(totaf**~~imports~~<br><br><br><br><br>|~~in%~~**o(totaf**~~imports~~<br><br><br><br><br>|~~in%~~**o(totaf**~~imports~~<br><br><br><br><br>|~~in%~~**o(totaf**~~imports~~<br><br><br><br><br>|~~in%~~**o(totaf**~~imports~~<br><br><br><br><br>|~~in%~~**o(totaf**~~imports~~<br><br><br><br><br>|~~in%~~**o(totaf**~~imports~~<br><br><br><br><br>|~~in%~~**o(totaf**~~imports~~<br><br><br><br><br>|~~in%~~**o(totaf**~~imports~~<br><br><br><br><br>|~~in%~~**o(totaf**~~imports~~<br><br><br><br><br>|
|~~Structureofimportsbymaincountries(currentprices)~~<br>1st partner<br>2ndpartner<br>3rdpartner<br>4thpartner<br>5th partner<br>others<br>Structureofexportsbymaincountries(currentprices)<br>1st partner<br>2ndpartner<br>3rd partner<br>4th partner<br>5th partner<br>others|~~RU~~<br>DE<br>**AT**<br>IT<br>**PL**|~~35~~<br>21<br>10.2<br>5.7<br>3.2<br>24.9|~~CZ~~<br>RU<br>**DE**<br>**AT**<br>IT|~~35.9~~<br>19.5<br>11.4<br>6.2<br>3 <br>24|~~CZ~~<br>**RU**<br>DE<br>**AT**<br>IT<br><br>|~~29.6~~<br>18<br>13.4<br>5.8<br>4.4<br>28.8<br>|~~CZ~~<br><br>RU<br>DE<br>**AT**<br><br>IT<br><br>|~~27.7~~<br>16.6<br>14.3<br>5.1<br>4.6<br>31.7|~~CZ~~<br>RU<br>DE<br>AT<br><br>IT<br>|~~24.5~~<br>17.7<br>14.5<br>4.7<br>_5.9_<br>32.6|
|~~Structureofimportsbymaincountries(currentprices)~~<br>1st partner<br>2ndpartner<br>3rdpartner<br>4thpartner<br>5th partner<br>others<br>Structureofexportsbymaincountries(currentprices)<br>1st partner<br>2ndpartner<br>3rd partner<br>4th partner<br>5th partner<br>others|~~**in%oftotal"exports**~~<br><br><br><br><br>|~~**in%oftotal"exports**~~<br><br><br><br><br>|~~**in%oftotal"exports**~~<br><br><br><br><br>|~~**in%oftotal"exports**~~<br><br><br><br><br>|~~**in%oftotal"exports**~~<br><br><br><br><br>|~~**in%oftotal"exports**~~<br><br><br><br><br>|~~**in%oftotal"exports**~~<br><br><br><br><br>|~~**in%oftotal"exports**~~<br><br><br><br><br>|~~**in%oftotal"exports**~~<br><br><br><br><br>|~~**in%oftotal"exports**~~<br><br><br><br><br>|
|~~Structureofimportsbymaincountries(currentprices)~~<br>1st partner<br>2ndpartner<br>3rdpartner<br>4thpartner<br>5th partner<br>others<br>Structureofexportsbymaincountries(currentprices)<br>1st partner<br>2ndpartner<br>3rd partner<br>4th partner<br>5th partner<br>others|~~DE~~<br>RU<br>AT<br>HU<br>IT|~~24.4~~<br>16.8<br>7.4<br>6.9<br>5.5<br>39|~~CZ~~<br>DE<br>AT<br>**RU**<br>**HU**|~~42.4~~<br>15.2<br>5 <br>4.7<br>4.5<br>28.2|~~CZ~~<br>DE<br>**AT**<br><br>IT<br><br>**RU**<br>|~~37.4~~<br>17.1<br>5.3<br>4.3<br>4.1<br>31.8|~~CZ~~<br>DE<br>**AT**<br>IT<br>**PL**<br>|~~34.5~~<br>18.4<br>4.9<br>4.7<br>4.3<br>33.3|~~CZ~~<br>DE<br><br>**AT**<br><br>**JT**<br><br>**PL**<br>|~~31~~<br>21.2<br>6 <br>4.9<br>4.8<br>32|

Structure of export by main p0rtners

in 1996

CZ

6.0%

Italy

Poland

Russian Federation

Structure **efimport** by mai~ partners

in 1996

CZ

4.7% DE
14.5%

AT

CZ

DE

HU

Austria IT

Czech Republic PL

Gennany RU

Hungary

|SOCIAL INDICATORS|1991|1992|1993|1994|199S|
|---|---|---|---|---|---|
||~~1991~~|~~1992~~|~~1993~~<br>|~~1994~~|~~199S~~|
|~~Population onl January~~<br>Proportionofpopulation by age IJanuary1995<br>y0_14<br>y15_24<br>y25_44<br>y45_64<br>y6S_max<br>**Livebirths**<br>**Deaths**<br>**Infantdeaths**<br>- Less than I year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>Crude marriage**rate**<br>Crude divorce rate<br>Natural growth rate<br>Net migration rate<br>Total population growth rate<br>Total fertility rate<br>Infant mortality rate<br>Late foetal mortality rate<br>Life expectancy<br>- Males<br>- Females<br>Life expectancy<br>- Males<br>- Females|~~thousand~~<br><br><br><br><br>|~~thousand~~<br><br><br><br><br>|~~thousand~~<br><br><br><br><br>|~~thousand~~<br><br><br><br><br>|~~thousand~~<br><br><br><br><br>|
|~~Population onl January~~<br>Proportionofpopulation by age IJanuary1995<br>y0_14<br>y15_24<br>y25_44<br>y45_64<br>y6S_max<br>**Livebirths**<br>**Deaths**<br>**Infantdeaths**<br>- Less than I year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>Crude marriage**rate**<br>Crude divorce rate<br>Natural growth rate<br>Net migration rate<br>Total population growth rate<br>Total fertility rate<br>Infant mortality rate<br>Late foetal mortality rate<br>Life expectancy<br>- Males<br>- Females<br>Life expectancy<br>- Males<br>- Females|~~5271.71~~|~~5295.88~~<br>|~~5314.15~~<br>|~~5336.5~~<br>|~~5356~~|
|~~Population onl January~~<br>Proportionofpopulation by age IJanuary1995<br>y0_14<br>y15_24<br>y25_44<br>y45_64<br>y6S_max<br>**Livebirths**<br>**Deaths**<br>**Infantdeaths**<br>- Less than I year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>Crude marriage**rate**<br>Crude divorce rate<br>Natural growth rate<br>Net migration rate<br>Total population growth rate<br>Total fertility rate<br>Infant mortality rate<br>Late foetal mortality rate<br>Life expectancy<br>- Males<br>- Females<br>Life expectancy<br>- Males<br>- Females|~~in% ~~~~**oftotalpopulation**~~<br>|~~in% ~~~~**oftotalpopulation**~~<br>|~~in% ~~~~**oftotalpopulation**~~<br>|~~in% ~~~~**oftotalpopulation**~~<br>|~~in% ~~~~**oftotalpopulation**~~<br>|
|~~Population onl January~~<br>Proportionofpopulation by age IJanuary1995<br>y0_14<br>y15_24<br>y25_44<br>y45_64<br>y6S_max<br>**Livebirths**<br>**Deaths**<br>**Infantdeaths**<br>- Less than I year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>Crude marriage**rate**<br>Crude divorce rate<br>Natural growth rate<br>Net migration rate<br>Total population growth rate<br>Total fertility rate<br>Infant mortality rate<br>Late foetal mortality rate<br>Life expectancy<br>- Males<br>- Females<br>Life expectancy<br>- Males<br>- Females|||||~~22.9~~<br>16.7<br>29.9<br>19.7<br>10.8|
|~~Population onl January~~<br>Proportionofpopulation by age IJanuary1995<br>y0_14<br>y15_24<br>y25_44<br>y45_64<br>y6S_max<br>**Livebirths**<br>**Deaths**<br>**Infantdeaths**<br>- Less than I year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>Crude marriage**rate**<br>Crude divorce rate<br>Natural growth rate<br>Net migration rate<br>Total population growth rate<br>Total fertility rate<br>Infant mortality rate<br>Late foetal mortality rate<br>Life expectancy<br>- Males<br>- Females<br>Life expectancy<br>- Males<br>- Females|~~**totalnumber**~~<br><br><br><br>|~~**totalnumber**~~<br><br><br><br>|~~**totalnumber**~~<br><br><br><br>|~~**totalnumber**~~<br><br><br><br>|~~**totalnumber**~~<br><br><br><br>|
|~~Population onl January~~<br>Proportionofpopulation by age IJanuary1995<br>y0_14<br>y15_24<br>y25_44<br>y45_64<br>y6S_max<br>**Livebirths**<br>**Deaths**<br>**Infantdeaths**<br>- Less than I year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>Crude marriage**rate**<br>Crude divorce rate<br>Natural growth rate<br>Net migration rate<br>Total population growth rate<br>Total fertility rate<br>Infant mortality rate<br>Late foetal mortality rate<br>Life expectancy<br>- Males<br>- Females<br>Life expectancy<br>- Males<br>- Females|~~78570~~<br>54621<br>1041<br>381<br>32714<br>7893|~~74640~~<br>53423<br>939<br>357<br><br>33880<br>8057<br>|~~73256~~<br>52707<br><br>779<br>327<br><br>30771<br><br>8143<br>|~~66370~~<br><br>S1386<br><br>743<br>274<br>281S5<br>8666<br>||
|~~Population onl January~~<br>Proportionofpopulation by age IJanuary1995<br>y0_14<br>y15_24<br>y25_44<br>y45_64<br>y6S_max<br>**Livebirths**<br>**Deaths**<br>**Infantdeaths**<br>- Less than I year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>Crude marriage**rate**<br>Crude divorce rate<br>Natural growth rate<br>Net migration rate<br>Total population growth rate<br>Total fertility rate<br>Infant mortality rate<br>Late foetal mortality rate<br>Life expectancy<br>- Males<br>- Females<br>Life expectancy<br>- Males<br>- Females|~~per1000 ofpopulatiort-~~<br><br><br><br><br>|~~per1000 ofpopulatiort-~~<br><br><br><br><br>|~~per1000 ofpopulatiort-~~<br><br><br><br><br>|~~per1000 ofpopulatiort-~~<br><br><br><br><br>|~~per1000 ofpopulatiort-~~<br><br><br><br><br>|
|~~Population onl January~~<br>Proportionofpopulation by age IJanuary1995<br>y0_14<br>y15_24<br>y25_44<br>y45_64<br>y6S_max<br>**Livebirths**<br>**Deaths**<br>**Infantdeaths**<br>- Less than I year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>Crude marriage**rate**<br>Crude divorce rate<br>Natural growth rate<br>Net migration rate<br>Total population growth rate<br>Total fertility rate<br>Infant mortality rate<br>Late foetal mortality rate<br>Life expectancy<br>- Males<br>- Females<br>Life expectancy<br>- Males<br>- Females|~~6.2~~<br>1.49<br>4.5<br>0.04<br>4.6<br>2.05<br>13.25<br>4.83|~~6.4~~<br><br>1.52<br><br>4 <br><br>-0.5<br><br>3.4<br>1.98<br>12.58<br>4.76|~~5.8~~<br><br>1.53<br><br>3.9<br>0.3<br><br>4.2<br>1.92<br>10.63<br><br>4.44<br>|~~5.3~~<br>1.6<br><br>2.8<br>0.9<br><br>3.7<br>1.66<br>11.19<br><br>4.11|~~5.1~~<br>1.7<br><br><br><br><br><br>11.0|
|~~Population onl January~~<br>Proportionofpopulation by age IJanuary1995<br>y0_14<br>y15_24<br>y25_44<br>y45_64<br>y6S_max<br>**Livebirths**<br>**Deaths**<br>**Infantdeaths**<br>- Less than I year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>Crude marriage**rate**<br>Crude divorce rate<br>Natural growth rate<br>Net migration rate<br>Total population growth rate<br>Total fertility rate<br>Infant mortality rate<br>Late foetal mortality rate<br>Life expectancy<br>- Males<br>- Females<br>Life expectancy<br>- Males<br>- Females|11~~binh~~<br><br><br><br>|11~~binh~~<br><br><br><br>|11~~binh~~<br><br><br><br>|11~~binh~~<br><br><br><br>|11~~binh~~<br><br><br><br>|
|~~Population onl January~~<br>Proportionofpopulation by age IJanuary1995<br>y0_14<br>y15_24<br>y25_44<br>y45_64<br>y6S_max<br>**Livebirths**<br>**Deaths**<br>**Infantdeaths**<br>- Less than I year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>Crude marriage**rate**<br>Crude divorce rate<br>Natural growth rate<br>Net migration rate<br>Total population growth rate<br>Total fertility rate<br>Infant mortality rate<br>Late foetal mortality rate<br>Life expectancy<br>- Males<br>- Females<br>Life expectancy<br>- Males<br>- Females||~~66.6~~<br>75.4|~~68.4~~<br><br>76.7<br>|~~68.3~~<br>76.5|~~68.4~~<br>76.3|
|~~Population onl January~~<br>Proportionofpopulation by age IJanuary1995<br>y0_14<br>y15_24<br>y25_44<br>y45_64<br>y6S_max<br>**Livebirths**<br>**Deaths**<br>**Infantdeaths**<br>- Less than I year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>Crude marriage**rate**<br>Crude divorce rate<br>Natural growth rate<br>Net migration rate<br>Total population growth rate<br>Total fertility rate<br>Infant mortality rate<br>Late foetal mortality rate<br>Life expectancy<br>- Males<br>- Females<br>Life expectancy<br>- Males<br>- Females|~~at65years~~<br>|~~at65years~~<br>|~~at65years~~<br>|~~at65years~~<br>|~~at65years~~<br>|
|~~Population onl January~~<br>Proportionofpopulation by age IJanuary1995<br>y0_14<br>y15_24<br>y25_44<br>y45_64<br>y6S_max<br>**Livebirths**<br>**Deaths**<br>**Infantdeaths**<br>- Less than I year<br>- Still birth<br>**Marriages**<br>**Divorces**<br>Crude marriage**rate**<br>Crude divorce rate<br>Natural growth rate<br>Net migration rate<br>Total population growth rate<br>Total fertility rate<br>Infant mortality rate<br>Late foetal mortality rate<br>Life expectancy<br>- Males<br>- Females<br>Life expectancy<br>- Males<br>- Females|||||~~12.7~~<br>16.1|

Net Migration: Including statistical discrepancies.

|LABOUR MARKET|1993|1994|1995|1996|
|---|---|---|---|---|
||~~1993~~|~~1994~~<br>|~~1995~~<br>|~~1996~~|
|~~EconomicActivityRate(ILOmethodology)~~<br>**Average employment**<br>Unemployment**rate by age (ILO methodology)**<br>- total<br>- less then 25 years<br>- 25 years and more<br>**Registered unemployment (endofperiod)**|~~inpercentofpopulationaae+IS~~<br><br><br><br>|~~inpercentofpopulationaae+IS~~<br><br><br><br>|~~inpercentofpopulationaae+IS~~<br><br><br><br>|~~inpercentofpopulationaae+IS~~<br><br><br><br>|
|~~EconomicActivityRate(ILOmethodology)~~<br>**Average employment**<br>Unemployment**rate by age (ILO methodology)**<br>- total<br>- less then 25 years<br>- 25 years and more<br>**Registered unemployment (endofperiod)**|~~62.1~~|~~61.7~~<br>|~~**61.6**~~<br>|~~61.4~~|
|~~EconomicActivityRate(ILOmethodology)~~<br>**Average employment**<br>Unemployment**rate by age (ILO methodology)**<br>- total<br>- less then 25 years<br>- 25 years and more<br>**Registered unemployment (endofperiod)**|~~**inthousand**~~<br><br><br><br>|~~**inthousand**~~<br><br><br><br>|~~**inthousand**~~<br><br><br><br>|~~**inthousand**~~<br><br><br><br>|
|~~EconomicActivityRate(ILOmethodology)~~<br>**Average employment**<br>Unemployment**rate by age (ILO methodology)**<br>- total<br>- less then 25 years<br>- 25 years and more<br>**Registered unemployment (endofperiod)**|~~2012~~|~~1977~~<br>|~~2020~~<br>|~~2036~~|
|~~EconomicActivityRate(ILOmethodology)~~<br>**Average employment**<br>Unemployment**rate by age (ILO methodology)**<br>- total<br>- less then 25 years<br>- 25 years and more<br>**Registered unemployment (endofperiod)**|~~**in**% ~~~~**oflabourforce**~~<br><br><br><br>|~~**in**% ~~~~**oflabourforce**~~<br><br><br><br>|~~**in**% ~~~~**oflabourforce**~~<br><br><br><br>|~~**in**% ~~~~**oflabourforce**~~<br><br><br><br>|
|~~EconomicActivityRate(ILOmethodology)~~<br>**Average employment**<br>Unemployment**rate by age (ILO methodology)**<br>- total<br>- less then 25 years<br>- 25 years and more<br>**Registered unemployment (endofperiod)**|~~12.2~~<br>|~~13.3~~<br>26.2<br>10·.6<br>|~~**12.8**~~<br><br>23.S<br><br>10.S<br>|~~10.9~~<br>19.8<br>9.1<br>|
|~~EconomicActivityRate(ILOmethodology)~~<br>**Average employment**<br>Unemployment**rate by age (ILO methodology)**<br>- total<br>- less then 25 years<br>- 25 years and more<br>**Registered unemployment (endofperiod)**|~~in% ofeconomically~~~~**activepopulation**~~<br>~~14.4~~<br>~~14.8~~<br>~~13.1~~<br>~~12.8~~|~~in% ofeconomically~~~~**activepopulation**~~<br>~~14.4~~<br>~~14.8~~<br>~~13.1~~<br>~~12.8~~|~~in% ofeconomically~~~~**activepopulation**~~<br>~~14.4~~<br>~~14.8~~<br>~~13.1~~<br>~~12.8~~|~~in% ofeconomically~~~~**activepopulation**~~<br>~~14.4~~<br>~~14.8~~<br>~~13.1~~<br>~~12.8~~|
|~~EconomicActivityRate(ILOmethodology)~~<br>**Average employment**<br>Unemployment**rate by age (ILO methodology)**<br>- total<br>- less then 25 years<br>- 25 years and more<br>**Registered unemployment (endofperiod)**|~~14.4~~|~~14.8~~|~~13.1~~|~~13.1~~|

|Average paid employment indices by NACE classes<br>- Agriculture, hunting, forestry and fishing<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distribution of electricity, gas and water<br>- Construction<br>- Transport, storage and communication<br>Monthly nominal wages and salaries indices by NACE classes<br>- Agriculture, hunting, forestry and fishing<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distribution of electricity, gas and water<br>- Construction<br>- Transport, storage and communication<br>Monthly wages and salaries indices<br>- nominal<br>· - real|1993|1994|1995|1996|
|---|---|---|---|---|
|A~~veragepaidemploymentindices byNACEclasses~~<br>- Agriculture, hunting, forestry and fishing<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofelectricity, gas and water<br>- Construction<br>- Transport, storage and communication<br>Monthlynominalwagesandsalariesindices byNACEclasses<br>- Agriculture, hunting, forestry and fishing<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofelectricity, gas and water<br>- Construction<br>- Transport, storage and communication<br>Monthlywagesandsalariesindices<br>- nominal<br>· - real|~~**Previousyear**- I~~~~**00**~~<br><br><br><br>|~~**Previousyear**- I~~~~**00**~~<br><br><br><br>|~~**Previousyear**- I~~~~**00**~~<br><br><br><br>|~~**Previousyear**- I~~~~**00**~~<br><br><br><br>|
|A~~veragepaidemploymentindices byNACEclasses~~<br>- Agriculture, hunting, forestry and fishing<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofelectricity, gas and water<br>- Construction<br>- Transport, storage and communication<br>Monthlynominalwagesandsalariesindices byNACEclasses<br>- Agriculture, hunting, forestry and fishing<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofelectricity, gas and water<br>- Construction<br>- Transport, storage and communication<br>Monthlywagesandsalariesindices<br>- nominal<br>· - real|~~85.1~~<br>81<br>109.8<br>118.8<br>119.8<br>129.3<br>119.8<br>123.5<br>118.4<br>96.4|~~87.7~~<br>**88.6**<br>94.3<br>99.6<br>87.3<br>96.7<br><br>113.9<br><br>113.9<br><br>118.3<br><br>112.9<br><br>117.5<br><br>121.3<br><br>117<br><br>103|~~93.2~~<br><br>95.6<br>--<br><br>101.4<br><br>98.1<br><br>95.2<br><br>97.5<br><br>112.4<br><br>116.8<br><br>116.2<br><br>113<br><br>115.2<br><br>116.7<br><br>114.3<br><br>104.4|~~91.8~~<br>103.9<br>98<br>101.2<br>97.4<br>98.2<br>112.7<br>108.8<br>114.4<br>l IO.I<br>116.5<br>113.8<br>I 13.3<br>107.2|

Economic activity rate (ILO Methodology): - Percentage of labor force in the total population aged 15+. This rate is derivated of LFSS
(Labor Force Survey) observing the following ILO definitions and recommendations where:
_Labor 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.
In the Slovak Republic, LFSS excludes persons on compulsory military service and persons living in non-private households (socalled institutional population).

Unemployment rate (by ILO methodology): -Percentage of the unemployed in labour force. This rate is derived from LFSS (Labor Force
Survey) observing the following ILO definitions and recommendations (see ILO definitions above).
In the Slovak Republic, for practical reasons, the quarters do not correspond to calendar ones, but they are shifted one month ahead.
The persons on compulsory military service are excluded from the employed. On the other hand, women on additional child-care

leave are included.

Average employment and Average paid employment indices by NACE classes: The data for entrepreneurial sphere cover all
organisations (including organisations up to 24 employees and estimates for tradesmen and their employees). The data cover also all
budgetary, subsidised organisations and persons with secondary job are included. Armed forces, apprentices, employees on child-care
and additional child-care leaves are excluded.

Registered unemployment (end of period): Registered unemployment in per cent - percentage of unemployed registered in civil
economically active population, based on Labour force sample survey (LFSS). The unemployment rate was calculated for 1994 on
economically active persons covered by the balance of labour force for 1992 year. Since 1995 it is based on economically active
persons (LFSS) for previous year and numbers of unemployed registered by Labour Offices.

Monthly wages and salaries indices: Monthly _real_ wages and salaries indices are derived from _gross_ nominal wages and salaries indices
divided by cost of living index. The data for entrepreneurial sphere cover organizations up to 24 employees and estimates for
tradesmen, including estimation for workers employed by tradesman (less entrepreneurial incomes). The data cover also all
budgetary, subsidised organisations and persons with secondary job are included. Armed forces, apprentices, employees on child-care
and additional child-care leaves are excluded.

FINANCIAL SECTOR

|Col1|1990 1991 1992 1993 1994 1995 1996|
|---|---|
|~~Monetaryaggregates~~<br>~~Billions (10"9)ofUSDollan~~<br>- Monetary aggregate M 1<br>~~3.50~~<br>~~4.12~~<br>~~5.02~~<br>- Quasi money<br>4.12<br>5.48<br>7.06<br>Totalreserves( gold excluded,endofperiod)<br>~~**Millions**(10"6)ofUSDollan~~<br>~~416~~<br>~~1691~~<br>~~3364~~<br>Averageshortterminterestrates<br>~~% perannum~~<br>- lending rate<br>~~14.41~~<br>~~14.56~~<br>~~15.64~~<br>- deposit rate<br>8.02<br>9.32<br>9.01<br>Officialdiscount**rate**( endofperiod)<br>12.00<br>9.75<br>USD**exchange rates**<br>~~I USD•...SKK~~<br>Averageofperiod<br>~~30.77~~<br>~~32.045~~<br>~~29.713~~<br>Endofperiod<br>33.202<br>31.277<br>29.569<br>ECU**exchange rates**<br>~~I ECU•~~~~**...SKK**~~<br>Averageofperiod<br>~~36.032~~<br>~~38.118~~<br>~~38.865~~<br>Endofperiod<br>37.043<br>38.472<br>38.861<br>~~5.45~~<br>7.62<br>~~3419~~<br>13.22<br>6.18<br>8.80<br>~~30.654~~<br>31.895<br>~~40.097~~<br>39.964|~~Billions (10"9)ofUSDollan~~<br><br><br>|
|~~Monetaryaggregates~~<br>~~Billions (10"9)ofUSDollan~~<br>- Monetary aggregate M 1<br>~~3.50~~<br>~~4.12~~<br>~~5.02~~<br>- Quasi money<br>4.12<br>5.48<br>7.06<br>Totalreserves( gold excluded,endofperiod)<br>~~**Millions**(10"6)ofUSDollan~~<br>~~416~~<br>~~1691~~<br>~~3364~~<br>Averageshortterminterestrates<br>~~% perannum~~<br>- lending rate<br>~~14.41~~<br>~~14.56~~<br>~~15.64~~<br>- deposit rate<br>8.02<br>9.32<br>9.01<br>Officialdiscount**rate**( endofperiod)<br>12.00<br>9.75<br>USD**exchange rates**<br>~~I USD•...SKK~~<br>Averageofperiod<br>~~30.77~~<br>~~32.045~~<br>~~29.713~~<br>Endofperiod<br>33.202<br>31.277<br>29.569<br>ECU**exchange rates**<br>~~I ECU•~~~~**...SKK**~~<br>Averageofperiod<br>~~36.032~~<br>~~38.118~~<br>~~38.865~~<br>Endofperiod<br>37.043<br>38.472<br>38.861<br>~~5.45~~<br>7.62<br>~~3419~~<br>13.22<br>6.18<br>8.80<br>~~30.654~~<br>31.895<br>~~40.097~~<br>39.964|~~3.50~~<br>~~4.12~~<br>~~5.02~~<br>4.12<br>5.48<br>7.06<br><br>~~5.45~~<br>7.62|
|~~Monetaryaggregates~~<br>~~Billions (10"9)ofUSDollan~~<br>- Monetary aggregate M 1<br>~~3.50~~<br>~~4.12~~<br>~~5.02~~<br>- Quasi money<br>4.12<br>5.48<br>7.06<br>Totalreserves( gold excluded,endofperiod)<br>~~**Millions**(10"6)ofUSDollan~~<br>~~416~~<br>~~1691~~<br>~~3364~~<br>Averageshortterminterestrates<br>~~% perannum~~<br>- lending rate<br>~~14.41~~<br>~~14.56~~<br>~~15.64~~<br>- deposit rate<br>8.02<br>9.32<br>9.01<br>Officialdiscount**rate**( endofperiod)<br>12.00<br>9.75<br>USD**exchange rates**<br>~~I USD•...SKK~~<br>Averageofperiod<br>~~30.77~~<br>~~32.045~~<br>~~29.713~~<br>Endofperiod<br>33.202<br>31.277<br>29.569<br>ECU**exchange rates**<br>~~I ECU•~~~~**...SKK**~~<br>Averageofperiod<br>~~36.032~~<br>~~38.118~~<br>~~38.865~~<br>Endofperiod<br>37.043<br>38.472<br>38.861<br>~~5.45~~<br>7.62<br>~~3419~~<br>13.22<br>6.18<br>8.80<br>~~30.654~~<br>31.895<br>~~40.097~~<br>39.964|~~**Millions**(10"6)ofUSDollan~~<br><br><br>|
|~~Monetaryaggregates~~<br>~~Billions (10"9)ofUSDollan~~<br>- Monetary aggregate M 1<br>~~3.50~~<br>~~4.12~~<br>~~5.02~~<br>- Quasi money<br>4.12<br>5.48<br>7.06<br>Totalreserves( gold excluded,endofperiod)<br>~~**Millions**(10"6)ofUSDollan~~<br>~~416~~<br>~~1691~~<br>~~3364~~<br>Averageshortterminterestrates<br>~~% perannum~~<br>- lending rate<br>~~14.41~~<br>~~14.56~~<br>~~15.64~~<br>- deposit rate<br>8.02<br>9.32<br>9.01<br>Officialdiscount**rate**( endofperiod)<br>12.00<br>9.75<br>USD**exchange rates**<br>~~I USD•...SKK~~<br>Averageofperiod<br>~~30.77~~<br>~~32.045~~<br>~~29.713~~<br>Endofperiod<br>33.202<br>31.277<br>29.569<br>ECU**exchange rates**<br>~~I ECU•~~~~**...SKK**~~<br>Averageofperiod<br>~~36.032~~<br>~~38.118~~<br>~~38.865~~<br>Endofperiod<br>37.043<br>38.472<br>38.861<br>~~5.45~~<br>7.62<br>~~3419~~<br>13.22<br>6.18<br>8.80<br>~~30.654~~<br>31.895<br>~~40.097~~<br>39.964|~~416~~<br>~~1691~~<br>~~3364~~<br>~~% perannum~~<br>~~14.41~~<br>~~14.56~~<br>~~15.64~~<br>8.02<br>9.32<br>9.01<br>12.00<br>9.75<br>~~I USD•...SKK~~<br><br><br><br>~~3419~~<br>13.22<br>6.18<br>8.80|
|~~Monetaryaggregates~~<br>~~Billions (10"9)ofUSDollan~~<br>- Monetary aggregate M 1<br>~~3.50~~<br>~~4.12~~<br>~~5.02~~<br>- Quasi money<br>4.12<br>5.48<br>7.06<br>Totalreserves( gold excluded,endofperiod)<br>~~**Millions**(10"6)ofUSDollan~~<br>~~416~~<br>~~1691~~<br>~~3364~~<br>Averageshortterminterestrates<br>~~% perannum~~<br>- lending rate<br>~~14.41~~<br>~~14.56~~<br>~~15.64~~<br>- deposit rate<br>8.02<br>9.32<br>9.01<br>Officialdiscount**rate**( endofperiod)<br>12.00<br>9.75<br>USD**exchange rates**<br>~~I USD•...SKK~~<br>Averageofperiod<br>~~30.77~~<br>~~32.045~~<br>~~29.713~~<br>Endofperiod<br>33.202<br>31.277<br>29.569<br>ECU**exchange rates**<br>~~I ECU•~~~~**...SKK**~~<br>Averageofperiod<br>~~36.032~~<br>~~38.118~~<br>~~38.865~~<br>Endofperiod<br>37.043<br>38.472<br>38.861<br>~~5.45~~<br>7.62<br>~~3419~~<br>13.22<br>6.18<br>8.80<br>~~30.654~~<br>31.895<br>~~40.097~~<br>39.964|~~30.77~~<br>~~32.045~~<br>~~29.713~~<br>33.202<br>31.277<br>29.569<br><br>~~30.654~~<br>31.895|
|~~Monetaryaggregates~~<br>~~Billions (10"9)ofUSDollan~~<br>- Monetary aggregate M 1<br>~~3.50~~<br>~~4.12~~<br>~~5.02~~<br>- Quasi money<br>4.12<br>5.48<br>7.06<br>Totalreserves( gold excluded,endofperiod)<br>~~**Millions**(10"6)ofUSDollan~~<br>~~416~~<br>~~1691~~<br>~~3364~~<br>Averageshortterminterestrates<br>~~% perannum~~<br>- lending rate<br>~~14.41~~<br>~~14.56~~<br>~~15.64~~<br>- deposit rate<br>8.02<br>9.32<br>9.01<br>Officialdiscount**rate**( endofperiod)<br>12.00<br>9.75<br>USD**exchange rates**<br>~~I USD•...SKK~~<br>Averageofperiod<br>~~30.77~~<br>~~32.045~~<br>~~29.713~~<br>Endofperiod<br>33.202<br>31.277<br>29.569<br>ECU**exchange rates**<br>~~I ECU•~~~~**...SKK**~~<br>Averageofperiod<br>~~36.032~~<br>~~38.118~~<br>~~38.865~~<br>Endofperiod<br>37.043<br>38.472<br>38.861<br>~~5.45~~<br>7.62<br>~~3419~~<br>13.22<br>6.18<br>8.80<br>~~30.654~~<br>31.895<br>~~40.097~~<br>39.964|~~I ECU•~~~~**...SKK**~~<br><br><br><br>|

Public Finance (Goverment budget) Data are not available.

Monetary Aggregates: _Money (Ml)_ Includes demand deposits and currency outside banks. _Quasi nwney (QM)_ Include time, savings
and foreign currency deposits. Eurostat has converted National Currencies to the US dollar by applying the International Monetary
Fund annual end of period exchange rates.

Total reserves (gold excluded, end of period): The statistics on official foreign reserves are extracted from the IMF's monthly
International Financial Statistics (IFS). Total reserves (gold excluded) are defined as the sum o(central bank holdings of foreign
currencies and other (gross) claims on non-residents; this definition excludes claims on residents denominated in foreign currency.
According to the definition; official foreign reserves are calculated at market exchange rates and prices in force at the end of the
period under consideration. Total reserves (gold excluded) published in IFS may differ from the figures published by the national
authorities. Some factors contributing to possible differences are the valuation of the reserve position in the Fund, and a different

treatment of claims in non-convertible currencies.

Aver·age short term interest rates: Data are extracted from the IMF's monthly International Financial Statistics (IFS). Average short-term
lending and deposit rates relate to period averages. _lending_ _rates_ generally consist of the average interest rate charged on loans
granted by reporting banks. _Deposit_ _rates_ relate to average demand and time deposit rates or average time deposit rates. These rates
may not be strictly comparable across countries to the extent the representative value of the reporting banks and the weighting
schemes vary.

USO exchange rates: International Monetary Fund exchange rates as present in the publication: "Statistiques Financieres

I nternationales".

INFLATION (12 months changes)
Percentage change of the CPls with the current month compared with the corresponding month of the previous year (t/t-12)

|Col1|Jan I Feb I Mar I Apr I May I Jun I Jul I Aug I Sep I Oct I Nov I Dec|
|---|---|
|~~**1993**~~<br>**1994**<br>1995<br>1996|~~17.6~~<br>~~19.4~~<br>~~20.3~~<br>~~21.6~~<br>~~22.0~~<br>~~23.6~~<br>~~23.9~~<br>~~26.0~~<br>~~27.l~~<br>~~26.3~~<br>~~_25.6_~~<br>~~25.0~~<br>16.4<br>15.2<br>14.7<br>13.9<br>13.9<br>13.9<br>13.6<br>12.3<br>12.2<br>12.1<br>11.7<br>11.6<br>11.7<br>11.5<br>11.3<br>11.3<br>11.0<br>10.6<br>10.9<br>9.8<br>8.8<br>7.9<br>7.5<br>7.2<br>_6.5_<br>6.1<br>6.1<br>6.0<br>6.2<br>6.3<br>_5.5_<br>5.6<br>5.1<br>5.3<br>5.3<br>5.4|

Inflation (% change of CPI)

30.0

25.0

20.0

15.0

10.0

5.0

0.0

Inflation (12 months changes): Inflation rates ( 12 months changes) arc percentage changes of the CPls with the current month
compared with the corresponding month of the previous year. Inflation rates are based on national CPls which are not strictly
comparable betv.een candidate countries or with those based on EU HICPs (different methods, concepts, practices in the
calculation of CPls). Data are calculated from CPls supplied by national statistical institutes.

|INDUSTRY|1993|1994|1995|1996|
|---|---|---|---|---|
||~~1993~~|~~1994~~<br>|~~1995~~<br>|~~1996~~|
|~~StructureofGDP by economic activities (NACE, current prices)~~<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofelectricity,gasandwater<br>**Industrial production**volume indicesbyNACE classes<br>-Total<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofelectricity,gas_andwater|~~ine;.ofGrossDomesticProduc:I~~<br><br><br><br>|~~ine;.ofGrossDomesticProduc:I~~<br><br><br><br>|~~ine;.ofGrossDomesticProduc:I~~<br><br><br><br>|~~ine;.ofGrossDomesticProduc:I~~<br><br><br><br>|
|~~StructureofGDP by economic activities (NACE, current prices)~~<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofelectricity,gasandwater<br>**Industrial production**volume indicesbyNACE classes<br>-Total<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofelectricity,gas_andwater|~~I ~~<br>24.6<br>3.6|~~0.9~~<br><br>24.3<br><br>3.5<br>|~~I ~~<br>23.3<br>4.2<br>|~~1~~<br>21.3<br>4|
|~~StructureofGDP by economic activities (NACE, current prices)~~<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofelectricity,gasandwater<br>**Industrial production**volume indicesbyNACE classes<br>-Total<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofelectricity,gas_andwater|~~previousyear• I 00~~<br><br><br>|~~previousyear• I 00~~<br><br><br>|~~previousyear• I 00~~<br><br><br>|~~previousyear• I 00~~<br><br><br>|
|~~StructureofGDP by economic activities (NACE, current prices)~~<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofelectricity,gasandwater<br>**Industrial production**volume indicesbyNACE classes<br>-Total<br>- Mining and quarrying<br>- Manufacturing<br>- Production and distributionofelectricity,gas_andwater|~~96.2~~<br>79.9<br>88<br>121|~~104.9~~<br><br>96.7<br>101.5<br>115.9|~~108.3~~<br>98.5<br>108.7<br>97.5|~~102.S~~<br>106.4<br>102.9<br>105.1|

|1993Ql 1993Q2 1993Q3 1993Q4 1994Ql 1994Ql l994Q3 1994Q4<br>Industrial producJion volume indices by NACE classes c.orresponding period of the previous year • I 00<br>-Total 91 89 90 102 105.7 107.8 107<br>- Mining and quarrying 97 92 91 -99 93.4 106.9 99.5<br>- Manufacturing 81 82 86 99 102.7 £02.3 101.8<br>- Production and distribution of electricity, gas and water 102 90 90 115 110.1 120 117|1993Ql|1993Q2|1993Q3|1993Q4|1994Ql|1994Ql|l994Q3|1994Q4|
|---|---|---|---|---|---|---|---|---|
|~~1993Ql 1993Q2 1993Q3 1993Q4 1994Ql1994Ql~~~~**_l994Q3_**~~<br>I~~ndustrial producJion volume indicesbyNACE classes~~<br>~~**c.orrespondingperiod**of~~~~**thepreviousyear**• I ~~~~**00**~~<br>-Total<br>~~91~~<br>~~89~~<br>~~90~~<br>~~102~~<br>~~105.7~~<br>~~107.8~~<br>- Miningandquarrying<br>97<br>92<br>91<br>-99<br>93.4<br>106.9<br>- Manufacturing<br>81<br>82<br>86<br>99<br>102.7<br>£02.3<br>- Productionanddistributionofelectricity,gasandwater<br>102<br>90<br>90<br>115<br>110.1<br>120<br>~~**1994Q4**~~<br>~~107~~<br>99.5<br>101.8<br>117|~~**c.orrespondingperiod**of~~~~**thepreviousyear**• I ~~~~**00**~~<br><br><br><br><br><br><br>|~~**c.orrespondingperiod**of~~~~**thepreviousyear**• I ~~~~**00**~~<br><br><br><br><br><br><br>|~~**c.orrespondingperiod**of~~~~**thepreviousyear**• I ~~~~**00**~~<br><br><br><br><br><br><br>|~~**c.orrespondingperiod**of~~~~**thepreviousyear**• I ~~~~**00**~~<br><br><br><br><br><br><br>|~~**c.orrespondingperiod**of~~~~**thepreviousyear**• I ~~~~**00**~~<br><br><br><br><br><br><br>|~~**c.orrespondingperiod**of~~~~**thepreviousyear**• I ~~~~**00**~~<br><br><br><br><br><br><br>|~~**c.orrespondingperiod**of~~~~**thepreviousyear**• I ~~~~**00**~~<br><br><br><br><br><br><br>|~~**c.orrespondingperiod**of~~~~**thepreviousyear**• I ~~~~**00**~~<br><br><br><br><br><br><br>|
|~~1993Ql 1993Q2 1993Q3 1993Q4 1994Ql1994Ql~~~~**_l994Q3_**~~<br>I~~ndustrial producJion volume indicesbyNACE classes~~<br>~~**c.orrespondingperiod**of~~~~**thepreviousyear**• I ~~~~**00**~~<br>-Total<br>~~91~~<br>~~89~~<br>~~90~~<br>~~102~~<br>~~105.7~~<br>~~107.8~~<br>- Miningandquarrying<br>97<br>92<br>91<br>-99<br>93.4<br>106.9<br>- Manufacturing<br>81<br>82<br>86<br>99<br>102.7<br>£02.3<br>- Productionanddistributionofelectricity,gasandwater<br>102<br>90<br>90<br>115<br>110.1<br>120<br>~~**1994Q4**~~<br>~~107~~<br>99.5<br>101.8<br>117|~~**c.orrespondingperiod**of~~~~**thepreviousyear**• I ~~~~**00**~~<br><br><br><br><br><br><br>|~~91~~<br>97<br>81<br>102|~~89~~<br>92<br>82<br><br>90|<br>~~90~~<br><br>91<br> <br>86<br> <br>90|~~102~~<br>-99<br><br>99<br><br>115|<br>~~105.7~~<br> <br>93.4<br> <br>102.7<br> <br>110.1|~~107.8~~<br><br>106.9<br><br>£02.3<br>120|~~107~~<br>99.5<br>101.8<br>117|

|1995Ql|199SQ2|1995Q3|1995Q4|1996Ql|1996Q2|1996Q3|1996Q4|
|---|---|---|---|---|---|---|---|
|~~correspondingperiodofthe~~~~**previousyear**• I 00~~<br><br><br><br><br><br><br><br>|~~correspondingperiodofthe~~~~**previousyear**• I 00~~<br><br><br><br><br><br><br><br>|~~correspondingperiodofthe~~~~**previousyear**• I 00~~<br><br><br><br><br><br><br><br>|~~correspondingperiodofthe~~~~**previousyear**• I 00~~<br><br><br><br><br><br><br><br>|~~correspondingperiodofthe~~~~**previousyear**• I 00~~<br><br><br><br><br><br><br><br>|~~correspondingperiodofthe~~~~**previousyear**• I 00~~<br><br><br><br><br><br><br><br>|~~correspondingperiodofthe~~~~**previousyear**• I 00~~<br><br><br><br><br><br><br><br>|~~correspondingperiodofthe~~~~**previousyear**• I 00~~<br><br><br><br><br><br><br><br>|
|~~105.7~~<br>78.8<br>106.7<br>95.7|~~109.4~~<br>103.2<br>107.7<br>95.9|~~109.5~~<br><br>102.2<br>109<br>100.3|~~108.5~~<br> <br>l l l.6<br><br>111.4<br><br>98.3|~~107.1~~<br>112<br>106.4<br>115.9|~~99.8~~<br> <br>105.8<br> <br>100.7<br> <br>99.9|~~101.9~~<br><br>106.9<br>103.1<br>105.8|~~101.6~~<br>102.l<br>101.9<br>98.3|

**Structure** **of** **GDP** **by** economic **activities (NACE,** current prices): The structure of GDP by economic activities (NACE) is calculated
_at/actor costs._ Data for selected kind of activity are expressed by added value indicator. In _,,C'_ and,,E" for enterprises with 25
and more employees only.

Industrial production volume indices by NACE classes: Industrial production covers mining and quarrying, manufacturing and
electricity, gas and water supply (according to the NACE Classification Sections C,D,E). The data cover total industrial production
including estimates for enterprises up to 24 employees and for tradesmen. Indices for branches, however, cover only enterprises with
25 or more employees.

**INFRASTRUCTURE**

|Col1|I I I<br>I<br>1991 1992 1993 1994 1995|
|---|---|
|**Railway**network<br>**Railway**transport<br>- freight transport<br>- passengers transport<br>Numberoftelephone subscribers<br>**Number**of**inhabitants**perpassengercar|~~**inKmper1000Kml**~~<br>|
|**Railway**network<br>**Railway**transport<br>- freight transport<br>- passengers transport<br>Numberoftelephone subscribers<br>**Number**of**inhabitants**perpassengercar|751<br>751<br>751<br>751<br>~~75~~<br>|
|**Railway**network<br>**Railway**transport<br>- freight transport<br>- passengers transport<br>Numberoftelephone subscribers<br>**Number**of**inhabitants**perpassengercar|~~inmilliontonor passenger•km~~<br><br>|
|**Railway**network<br>**Railway**transport<br>- freight transport<br>- passengers transport<br>Numberoftelephone subscribers<br>**Number**of**inhabitants**perpassengercar|~~I I ~~<br>143041<br>122361<br>~~13674~~<br>4569<br>4548<br>4110<br>|
|**Railway**network<br>**Railway**transport<br>- freight transport<br>- passengers transport<br>Numberoftelephone subscribers<br>**Number**of**inhabitants**perpassengercar|~~inI 000ofpopulation~~<br><br><br><br><br>|
|**Railway**network<br>**Railway**transport<br>- freight transport<br>- passengers transport<br>Numberoftelephone subscribers<br>**Number**of**inhabitants**perpassengercar|~~2471~~<br>~~256.61~~<br>~~267.51~~<br>~~2841~~<br>~~301~~<br>|
|**Railway**network<br>**Railway**transport<br>- freight transport<br>- passengers transport<br>Numberoftelephone subscribers<br>**Number**of**inhabitants**perpassengercar|~~inhabitants~~<br><br><br><br><br>|
|**Railway**network<br>**Railway**transport<br>- freight transport<br>- passengers transport<br>Numberoftelephone subscribers<br>**Number**of**inhabitants**perpassengercar|~~5.8f~~<br>~~5.61~~<br>~~5.31~~<br>~~5.41~~<br>~~5.3~~|

AGRICULTURE

|Land area by land-use categories<br>- total<br>- agricultural land<br>- forest<br>- arable land<br>- pennanent meadows and pastures<br>Agricultunl land by legal status .<br>- state enterprise<br>- Cooperatives<br>- others|1992|1993|1994|1995|1996|
|---|---|---|---|---|---|
|~~Land areabyland-use categories~~<br>- total<br>- agriculturalland<br>- forest<br>- arableland<br>- pennanentmeadowsand pastures<br>Agricultunl landbylegal status<br>. <br>- state enterprise<br>- Cooperatives<br>- others|~~_in_1000Hectares~~<br><br><br><br><br>|~~_in_1000Hectares~~<br><br><br><br><br>|~~_in_1000Hectares~~<br><br><br><br><br>|~~_in_1000Hectares~~<br><br><br><br><br>|~~_in_1000Hectares~~<br><br><br><br><br>|
|~~Land areabyland-use categories~~<br>- total<br>- agriculturalland<br>- forest<br>- arableland<br>- pennanentmeadowsand pastures<br>Agricultunl landbylegal status<br>. <br>- state enterprise<br>- Cooperatives<br>- others|~~4904~~<br>2447<br>1990<br>1S09<br>810|~~4904~~<br>2446<br>1991<br>1486<br><br>831<br>|~~4904~~<br><br>2446<br>1992<br><br>1483<br>835<br>|~~4904~~<br>2446<br>1992<br>1483<br>83S<br>|~~4904~~<br><br><br>~ <br>1479<br>839|
|~~Land areabyland-use categories~~<br>- total<br>- agriculturalland<br>- forest<br>- arableland<br>- pennanentmeadowsand pastures<br>Agricultunl landbylegal status<br>. <br>- state enterprise<br>- Cooperatives<br>- others|~~**in**% or~~~~**aariculturalland**~~<br><br>|~~**in**% or~~~~**aariculturalland**~~<br><br>|~~**in**% or~~~~**aariculturalland**~~<br><br>|~~**in**% or~~~~**aariculturalland**~~<br><br>|~~**in**% or~~~~**aariculturalland**~~<br><br>|
|~~Land areabyland-use categories~~<br>- total<br>- agriculturalland<br>- forest<br>- arableland<br>- pennanentmeadowsand pastures<br>Agricultunl landbylegal status<br>. <br>- state enterprise<br>- Cooperatives<br>- others||~~_22.S_~~<br>69.S<br>8|~~22.3~~<br>69.2<br><br>8.S|||

|Share of GDP<br>- Agriculture. hunting. forestry and fishing (Nace A+B)<br>Gross agricultural production volume indices<br>Main crops by area<br>- Cereals<br>- of which: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet<br>Main crops by yield<br>-Cereals<br>- of which: wheat<br>- Potatoes<br>-Sugar beet<br>- Fodder beet|1992|1993|1994|199S|1996|
|---|---|---|---|---|---|
|**S**~~**hare**ofGDP~~<br>- Agriculture. hunting. forestry and fishing (Nace A+B)<br>Gross**agricultural**productionvolume indices<br>**Main**cropsby**area**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet<br>**Main**crops by yield<br>-Cereals<br>- ofwhich: wheat<br>- Potatoes<br>-Sugarbeet<br>- Fodder beet|~~in" or~~**Gross**~~**DomesticProduct**~~<br><br><br><br>|~~in" or~~**Gross**~~**DomesticProduct**~~<br><br><br><br>|~~in" or~~**Gross**~~**DomesticProduct**~~<br><br><br><br>|~~in" or~~**Gross**~~**DomesticProduct**~~<br><br><br><br>|~~in" or~~**Gross**~~**DomesticProduct**~~<br><br><br><br>|
|**S**~~**hare**ofGDP~~<br>- Agriculture. hunting. forestry and fishing (Nace A+B)<br>Gross**agricultural**productionvolume indices<br>**Main**cropsby**area**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet<br>**Main**crops by yield<br>-Cereals<br>- ofwhich: wheat<br>- Potatoes<br>-Sugarbeet<br>- Fodder beet||~~_6.6_~~<br>|~~_6.6_~~<br>|~~5.6~~<br>|~~5.2~~<br>|
|**S**~~**hare**ofGDP~~<br>- Agriculture. hunting. forestry and fishing (Nace A+B)<br>Gross**agricultural**productionvolume indices<br>**Main**cropsby**area**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet<br>**Main**crops by yield<br>-Cereals<br>- ofwhich: wheat<br>- Potatoes<br>-Sugarbeet<br>- Fodder beet|~~**Previousyear**• I ~~~~**00**~~<br>~~--~~<br><br><br><br>|~~**Previousyear**• I ~~~~**00**~~<br>~~--~~<br><br><br><br>|~~**Previousyear**• I ~~~~**00**~~<br>~~--~~<br><br><br><br>|~~**Previousyear**• I ~~~~**00**~~<br>~~--~~<br><br><br><br>|~~**Previousyear**• I ~~~~**00**~~<br>~~--~~<br><br><br><br>|
|**S**~~**hare**ofGDP~~<br>- Agriculture. hunting. forestry and fishing (Nace A+B)<br>Gross**agricultural**productionvolume indices<br>**Main**cropsby**area**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet<br>**Main**crops by yield<br>-Cereals<br>- ofwhich: wheat<br>- Potatoes<br>-Sugarbeet<br>- Fodder beet||~~92~~<br>|~~102.6~~<br>|~~100.1~~<br>|~~102~~|
|**S**~~**hare**ofGDP~~<br>- Agriculture. hunting. forestry and fishing (Nace A+B)<br>Gross**agricultural**productionvolume indices<br>**Main**cropsby**area**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet<br>**Main**crops by yield<br>-Cereals<br>- ofwhich: wheat<br>- Potatoes<br>-Sugarbeet<br>- Fodder beet|~~**in**I ~~~~**000Hectares**~~<br><br><br><br><br>|~~**in**I ~~~~**000Hectares**~~<br><br><br><br><br>|~~**in**I ~~~~**000Hectares**~~<br><br><br><br><br>|~~**in**I ~~~~**000Hectares**~~<br><br><br><br><br>|~~**in**I ~~~~**000Hectares**~~<br><br><br><br><br>|
|**S**~~**hare**ofGDP~~<br>- Agriculture. hunting. forestry and fishing (Nace A+B)<br>Gross**agricultural**productionvolume indices<br>**Main**cropsby**area**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet<br>**Main**crops by yield<br>-Cereals<br>- ofwhich: wheat<br>- Potatoes<br>-Sugarbeet<br>- Fodder beet|~~808.6~~<br>354.4<br>51<br>45<br>7|~~844.9~~<br><br>398<br>47<br>33<br><br>7 <br>|~~873.8~~<br><br>442.9<br><br>41<br>34<br><br>7 <br>|~~856.8~~<br><br>437.8<br>41<br><br>35<br><br>7 <br>|~~813.6~~<br><br>417.5<br>41<br>43<br><br>7|
|**S**~~**hare**ofGDP~~<br>- Agriculture. hunting. forestry and fishing (Nace A+B)<br>Gross**agricultural**productionvolume indices<br>**Main**cropsby**area**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet<br>**Main**crops by yield<br>-Cereals<br>- ofwhich: wheat<br>- Potatoes<br>-Sugarbeet<br>- Fodder beet|~~inI ~~~~**00kg/Hectares**~~<br><br><br><br><br>|~~inI ~~~~**00kg/Hectares**~~<br><br><br><br><br>|~~inI ~~~~**00kg/Hectares**~~<br><br><br><br><br>|~~inI ~~~~**00kg/Hectares**~~<br><br><br><br><br>|~~inI ~~~~**00kg/Hectares**~~<br><br><br><br><br>|
|**S**~~**hare**ofGDP~~<br>- Agriculture. hunting. forestry and fishing (Nace A+B)<br>Gross**agricultural**productionvolume indices<br>**Main**cropsby**area**<br>- Cereals<br>- ofwhich: wheat<br>- Potatoes<br>- Sugar beet<br>- Fodder beet<br>**Main**crops by yield<br>-Cereals<br>- ofwhich: wheat<br>- Potatoes<br>-Sugarbeet<br>- Fodder beet|~~44.2~~<br>47.9<br>128<br>294.7<br>379.7|~~37.3~~<br><br>38.4<br><br>182<br><br>338.7<br><br>436.2|~~42.3~~<br><br>48.4<br><br>96.3<br><br>331.9<br><br>382.1|~~40.7~~<br><br>44.3<br>106.7<br><br>336.9<br>409.1|~~41.6~~<br>42.5<br>|

|Col1|1992|1993|1994|1995|1996|
|---|---|---|---|---|---|
|~~Salesorprocurementofanimat forslaughter~~<br>- pigs<br>- cattle<br>- poultry<br>Livestockbreedingintensity(endofperiod)<br>- cattle<br>- ofwhich: cows<br>- sheep<br>- pigs<br>- ofwhich: sows|~~in1000tonsorliveweight~~<br>~~' ~~<br><br><br><br><br>|~~in1000tonsorliveweight~~<br>~~' ~~<br><br><br><br><br>|~~in1000tonsorliveweight~~<br>~~' ~~<br><br><br><br><br>|~~in1000tonsorliveweight~~<br>~~' ~~<br><br><br><br><br>|~~in1000tonsorliveweight~~<br>~~' ~~<br><br><br><br><br>|
|~~Salesorprocurementofanimat forslaughter~~<br>- pigs<br>- cattle<br>- poultry<br>Livestockbreedingintensity(endofperiod)<br>- cattle<br>- ofwhich: cows<br>- sheep<br>- pigs<br>- ofwhich: sows|~~235.1~~<br>172|~~212.2~~<br><br>170.4<br>54<br>|~~205.4~~<br><br>122.1<br><br>59.2<br>|~~202.2~~<br>108.3<br><br>67.8<br>|~~210.2~~<br><br>110.6<br><br>67.9|
|~~Salesorprocurementofanimat forslaughter~~<br>- pigs<br>- cattle<br>- poultry<br>Livestockbreedingintensity(endofperiod)<br>- cattle<br>- ofwhich: cows<br>- sheep<br>- pigs<br>- ofwhich: sows|~~**Headsper**I ~~~~**000Haoragriculturalland**~~<br><br><br><br>|~~**Headsper**I ~~~~**000Haoragriculturalland**~~<br><br><br><br>|~~**Headsper**I ~~~~**000Haoragriculturalland**~~<br><br><br><br>|~~**Headsper**I ~~~~**000Haoragriculturalland**~~<br><br><br><br>|~~**Headsper**I ~~~~**000Haoragriculturalland**~~<br><br><br><br>|
|~~Salesorprocurementofanimat forslaughter~~<br>- pigs<br>- cattle<br>- poultry<br>Livestockbreedingintensity(endofperiod)<br>- cattle<br>- ofwhich: cows<br>- sheep<br>- pigs<br>- ofwhich: sows||~~411~~<br>160<br>170<br>|~~379~~<br> <br>149<br> <br>164<br>|<br>~~384~~<br> <br>147<br><br>177<br>|~~369~~<br><br>139<br><br>173|
|~~Salesorprocurementofanimat forslaughter~~<br>- pigs<br>- cattle<br>- poultry<br>Livestockbreedingintensity(endofperiod)<br>- cattle<br>- ofwhich: cows<br>- sheep<br>- pigs<br>- ofwhich: sows|~~**Headsper**I ~~~~**000Ha**or~~~~**arableland**~~<br><br><br><br>|~~**Headsper**I ~~~~**000Ha**or~~~~**arableland**~~<br><br><br><br>|~~**Headsper**I ~~~~**000Ha**or~~~~**arableland**~~<br><br><br><br>|~~**Headsper**I ~~~~**000Ha**or~~~~**arableland**~~<br><br><br><br>|~~**Headsper**I ~~~~**000Ha**or~~~~**arableland**~~<br><br><br><br>|
|~~Salesorprocurementofanimat forslaughter~~<br>- pigs<br>- cattle<br>- poultry<br>Livestockbreedingintensity(endofperiod)<br>- cattle<br>- ofwhich: cows<br>- sheep<br>- pigs<br>- ofwhich: sows||~~1475~~<br>112|<br>~~1380~~<br> <br>107|<br>~~1400~~<br><br>109|<br>~~1350~~<br>|

Structure of GDP by economic activities (NACE. current prices): The structure of GDP by economic activities (NACE) is calculated
_at/actor_ _costs._ Data for selected kind of activity are expressed by added value indicator.

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 constant prices of 1989.

Sales or procurement of animals for slaughter: The data refer to the _sides_ of principal products of agriculture.

Slovak Republic

1994

_N_ Country boundary
_N_ Main railway llne

_1_ Ferry connection

_N_ Motorway

_N_ National road, Double lane

AV National road

/V Prlnclpal road
_N_ Main navigable waterway

**Infrastructure** **data** **not** **available** for UA

Selected major settlements:
(1 000 Inhabitants)
O 200.; 250

  - 250- 500

 - 500-1000

 - >1000

General Information about the country:
Age groups On years):

c=! <15
Ill 1s- 0s
**1111** >66

Living standard (In 1993): ECU 1 749

**(CID.P** **per** **oaplta)**

Area: 49 036 km•

Administrative regions: 4

Population: 5 356 200

**8lnot** **1111:** **,** **......** **lllrll!wl** **reglone(71** **.....** **)**

**8ourae:......,** **Oflloe** _**of**_ **the** **8lovlk** **Alpl,bllo**
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ISSN 0254-1475

###### **COM(97) 2004 final**

# **DOCUMENTS**

##### EN 11 01 06

Catalogue number CB-C0-97-384-EN-C

ISBN 92-78-22972-5

Office for Official Publications of the European Communities

L-2985 Luxembourg

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