SUSTAINABLE ECONOMIC DEVELOPMENT

Factors of economic development

The developments outside Slovakia have been exceptionally turbulent since 2008, which makes the need to provide certainty for our citizens ever more pressing.

The Government, asa government of certainties for citizens, will guarantee sound and sustainable economic growth through a competitive real economy in the global context, which:
-      is not based predominately on cheap labour, uncertainty in industrial relations, impaired health and safety at work, agency work, speculation and fraud,
-      derives its global competitiveness from employees who are able to work with state-of-the-art international technologies, methods and techniques and are capable of using them flexibly and improving them further,
-      cooperates with an efficient public administration that creates the basic framework for a stable business environment,
-      develops a modern and competitive infrastructure capable of communicating with the outside world,
-      operates in a stable legal framework which is respected and enforceable,
-      is further enhanced through open and equal social dialogue.

The Government is convinced that the economic prosperity of Slovakia and its sustainable economic growth can be achieved through a full convergence of our economy with the economies of advanced EU Member States, while preserving a sufficient level of socio-economic cohesion. The Slovak Republic must, however, meet these conditions:
-      stability,
-      favourable business environment,
-      growing competitiveness.

The economic crisis has already consumed significant resources which have been deployed to alleviate its negative impacts; however, it has also unveiled certain deficits that have been hidden so far. Future economic development requires an increased efficiency of the public sector, while preserving the fundamental values of solidarity and cohesion.

In particular, the development of economic growth, public finances and unemployment indicate that the impact of the global crisis will be reflected in higher costs to achieve stable economic growth and preserve the necessary socio-economic cohesion. This will require a more efficient fiscal performance and better effectiveness of economic policy measures within the framework of consolidated and sustainable public finances. The fiscal and economic policies focusing on those aspects of public finances and the real economy that shape up the future development will be the main instruments in achieving a balanced and sustainable development of Slovakia’s national economy. These policies will be drafted in a manner strengthening Slovakia’s orientation on the values enshrined in the Constitution - sustainable social market economy, environmentally-friendly economic development, and enhancement of life’s certainties for the people.

The Government will keep the general government deficit and gross government debt at levels agreed to with the European Union. It will send out a clear signal towards the financial markets about its consolidation efforts in line with the Fiscal Responsibility Act and will increase transparency in public finances.

The Government will take measures to improve the databases used to support the administration of public finances.

In order to make the management of public finances more efficient, the Government will implement changes designed to increase the efficiency of public spending. The improvement in the overall management of public finances will be achieved through improved programme-based budgeting, maximum flow of additional public funds through the State Treasury system, and introduction of more sophisticated instruments to manage the general government debt. These measures will improve the projections of costs associated with the government debt service, make the audit of public funds more rigorous, and ensure a more robust flow of funds through the single government account, thereby increasing the amount of liquidity available for debt service.

The Government will honour its commitments towards the European Union and support enhanced cooperation within the monetary union.

The Government will oversee the planned and actual financial performance of companies with capital participation of the state in order to fully use their potential in consolidating public finances on the revenue side in the form of dividends, as well as on the expenditure side through the cost of services provided in public interest.

Fiscal policy

In the absence of domestic monetary policy, the Government will focus on improving the efficiency of fiscal-policy instruments in socio-economic development, as well as in achieving consolidation and long-term sustainability of public finances.

In line with the above-mentioned objectives, this will involve a balanced and market-conform approach designed to strengthen and enhance the efficiency of the state in performing the allocating, distributing, incentivising and stabilising functions of public finances through systemic development and efficient use of budgetary and taxation policy instruments. The objective is to gradually create conditions conducive to the development of a knowledge-based society while strengthening macro-economic stability and supporting business development, with particular attention to job creation. The Government will give priority to such financial support of healthcare and social services that would enhance their efficiency and quality.

In the years to come, the Government will give political priority to productive areas, with particular emphasis on education, research and transport infrastructure.

The Government will take steps to remove distortions in the system of tax and social contributions. In order to increase public revenue, the Government will review the current setup of bank levies. The revenue side of the budget will also profit from a higher tax on gambling and a more efficient financial performance of companies with capital participation of the state, yielding higher dividends for the state budget. With the aim of enhancing the motivation of the private sector to invest in research, development and innovation, the Government will consider possibilities of granting special tax benefits to businesses undertaking their own research and development.

The Government will take steps in order to ensure the financial and social sustainability of the retirement pension system as a whole, i.e., all three of its pillars. The Government expects further savings after the reform and audit of the state and public administrations aimed at reducing expenditure and improving the quality and availability of their services through centralised procurement or by establishing a state real estate agency.

Through its fiscal and tax policies and considerable improvements in the management of state financial assets, the Government will open new possibilities to make additional funds available for the business sector and public services. The Government will coordinate the use of public funds by ensuring timely and efficient uptake of EU funds. Target-oriented and systemic tax policy will ensure sustainable socio-economic growth in the long run. The Government will introduce long-term strategic planning with the aim of enhancing the efficiency and social justice of the taxation system and, at the same time, supporting business.

For the medium-term consolidation targets to be achieved, it will be necessary to increase the share of public revenues in GDP so as to avoid cuts in public services for citizens. The Government will also strive to redistribute expenditures across the public sector in order to react in a more focused manner to the current and future needs of citizens.

The Government rejects the idea that taxes on consumption represent the only source of raising public revenue in order to achieve the deficit-reduction target. Emphasis will be placed on such taxes that have the least impact on the disposable income of citizens in low-income groups or on economic activity, or on taxes that are relatively low compared with other countries. The tax rates will be raised on a progressive basis for natural persons with above-standard income, as well as for legal persons. The Government will consider an increase in property tax and will take into account such factors as luxury or negative environmental impacts.

The Government will take steps towards spreading the tax and contribution burden between capital and labour more evenly. Taking into account the experience in neighbouring countries, the Government will consider the introduction of a financial transaction tax.

The Government will complete the tax administration reform through the UNITAS programme, which will provide additional budgetary funds by unifying the collection of taxes, customs duties and social contributions and by suppressing tax evasion.

Combating tax fraud

One of the key tasks of the Government is to combat tax fraud in an uncompromising, strategic and systematic manner in line with the principles of a just and stable society and in the interest of consolidating public finances in a sustainable manner. The Government will draft an Action Plan to combat tax fraud with a detailed timetable of introducing individual measures and incentives for the involvement of the general public in this process. These measures will comprehensively address tax fraud, including customs duty fraud, both in direct and indirect taxation, through efficient legislation, but also through a set of operative instruments. The Government will adopt measures preventing fraudulent conduct in the dissolution of companies. These measures will increase the liability of the persons who act as statutory representatives of companies in the time leading to their dissolution. The Government will analyse possibilities to put in place appropriate legislative and institutional frameworks to interlink the commercial, tax and criminal laws. It will evaluate the efficiency of the currently applicable Criminal Code and the Code of Criminal Procedure and analyse a possibility of defining new crimes related to tax fraud.

Consolidation of public finances

Consistent consolidation of public finances is a precondition for sustainable development of Slovakia, not only at times of uncertainty on financial markets. Reducing the general government deficit below 3% of GDP by 2013 is the primary target in this area. It is necessary to implement measures on both the revenue and expenditure side of the government budget. The Government will focus on measures which, in an effort to reduce the deficit, will not stall economic activity and growth and will not have a disproportionate impact on the most vulnerable parts of society.

On the expenditure side, the Government will continue to exert pressure on making the functioning of the state more cost-efficient not only in the area of public procurement, but also in the setup of state institutions. It will review the current structure of state administration in order to enhance the efficiency of its work and reduce the cost of operation.

The Government will use the constitutional Fiscal Responsibility Act to strengthen long-term sustainability of the government fiscal performance in order to guarantee social and economic cohesion in society and solidarity between the current and future generations. In its budgetary policy, the Government will thoroughly apply the rules laid down in international treaties and instruments.

Audit and control

The current economic crisis underscores the necessity of focusing on better quality in the provision of public services, but also on increased responsibility and better governance in the structures of public administration. A need has arisen to improve mechanisms for the early detection of hidden systemic risk within the financial management of public administration. One of the Government’s goals is to create such a system of internal audit and control which provides assurance that public funds are spent wisely, efficiently, effectively and usefully. A correct and efficient setup of the system of internal audit and control is one of the important tools the Government can use to detect hidden systemic risks and prevent crime and fraud.

Corruption is a phenomenon in society that is perceived as one of the greatest threats to the stability of a democratic state governed by the rule of law, market economy, and social and economic progress. Combating corruption requires a fundamental systemic approach by which the Government reduces room for corruption across all sectors of public administration and thereby improves the efficiency of public asset management at all levels (central government, public institutions and local governments), of government subsidies, EU funds, and public procurement.

The Government will press for the cost-efficient use of public funds and will set up an effective system of sanctions. It will enact effective sanction mechanisms focusing, in particular, on breaches in the procedures and conditions applicable to public procurement, and on non-economical spending of public funds. It will make the drawing of EU funds more flexible and thus facilitate and accelerate their overall absorption in order minimise the risk of abuse. It will create conditions for the application of the Act on Obligation to Prove the Origin of Assets.

The Government will act more decisively against continuing threats resulting from the large volume of the shadow and undeclared economic activity. It will adopt legislative and institutional provisions enabling effective fight against tax fraud, mainly by interlinking the commercial, tax and criminal laws, both in procedural and substantive terms. The objective of these measures is to facilitate the prosecution of tax fraud and, at the same time, eliminate money laundering and terrorism financing.

The Government appreciates that, in line with the Lisbon Treaty, the EU strives to achieve sustainable development in Europe based on balanced economic growth and price stability. It will therefore support the price stability of goods, services and utilities within the boundaries of EU legislation. In cases where self-regulatory market mechanisms fail, it will adopt appropriate measures, in line with EU legislation, in order to avert undesirable price developments.

In cooperation with other EU Member States, the Government will support the adoption of an effective regulation and transparent policy in the financial sector, mainly the uniform oversight rules in EU Member States.

Financial market and protection of market participants

The Government will review and, in cooperation with the National Bank of Slovakia, propose and implement an effective and appropriate scheme for the protection of consumers on financial markets. The aim will be to ensure comprehensive protection of the rights of all non-professional investors and depositors against the potential failure of financial market entities, as well as to strengthen prevention in this area. The Government will support a long-term financial-market education scheme for the general public.

The Government will create conditions to eradicate unfair practices in the financial markets by enhancing the efficiency of regulation relating to consumer credits.

Economic policy

The Government will pursue an economic policy that comprises sectoral and horizontal policies as the main tool to promote the development of the real economy. It will make individual parts of its economic policy mutually consistent and complementary in order to create the maximum possible synergies.

The main task of individual economic policy components is to develop the growth potential of the economy. Particular emphasis will be placed on providing appropriate support to promising business opportunities in the knowledge-based economy. It is of key importance for the Government to revive industrial research and development primarily in these areas: nanotechnologies, digital industry technology and innovative technologies in the food industry, and innovative medicine. To this end, the Government will promote the establishment of technological platforms and their more efficient involvement in the European Research Area. In order to make a better use of the R&D potential in practice, the Government will introduce a more incentivising mechanism of acknowledging those authors whose ideas are successfully implemented. It will consider possibilities to motivate the private sector to invest in research, development and innovation.

The Government will carefully consider bringing the ongoing privatisation process to an end and dissolving the National Property Fund in an efficient manner so as to avoid additional impact on the state budget and eliminate any economic, legal and commercial risks.

The Government will reassess the number of national holidays and bank holidays and, subject to unanimous agreement of social partners, will propose appropriate reduction in their number.

Higher profitability of state assets and improved business function of the state

The main goal of the policy focused on increasing the profitability of state assets and improving the quality of the business function of the state is:
-      to strengthen public finances through growth in non-tax revenues;
-      to improve competitive environment;
-      to consolidate the stability of the national economy;
-      to foster employment.

The strengthening of public finances through increased profitability of state assets and improved quality of the state’s business function is of particular importance these days, when the government’s cost of supporting economic growth has risen as a consequence of the global economic downturn. This requires additional revenue in the government budget to an extent that neither hampers the dynamism of economic growth nor impairs the quality of the business environment. The success in achieving this objective will largely depend on appropriate legislation, providing a transparent setup of the legislative and systemic frameworks for the state as the owner, which will foster efficiency and minimise opportunities for cronyism and fraud.

Business environment

The creation of a stable environment conducive to doing business is a key task for the Government, since such an environment creates conditions for economic growth. Any non-systemic changes introduced as a result of lobbying by small groups of businesses must be avoided. The stability of the business environment will mainly be based on reduced administrative burden, effective enforceability of the law, and a consistent legislative framework which is easy to apply. In addition to simplifying the tax and social contribution rules, this will also require a new approach to granting financial and non-financial support to those businesses that provide employment in regions, as well as cooperation with large foreign investors in the areas of certification and logistics support and in the training of a qualified workforce.

In the pursuit of its economic policy, the state will influence the business environment also by enhancing its “organisational” function through the development of individual policies and, in particular, through their efficient and effective coordination. Apart from economic measures, the Government will also support legislative initiatives aimed at facilitating doing business. The Government will continue fine-tuning the rules and conditions designed to streamline and speed up the setting up of businesses. It will support the activity of integrated one-stop-shops which provide businesses with a single interface in their dealings with public administration.

The Government will facilitate doing business by streamlining the tax and social contribution requirements. It will speed up and streamline the enforcement of law in business relations. The Government will create conditions enabling the temporary swap of overdue taxes and social contributions for an equity stake as one of the ways of overcoming the momentary insolvency of otherwise promising businesses. The Government will seek to improve bankruptcy and liquidation proceedings.

The Government will focus on unifying the rules and contractual terms and conditions, taking into account European standards and practice in advanced EU Member States, and will implement Directive 2011/7/EU on combating late payment in commercial transactions.

In order to improve the quality of the legislative process, the Legislative Council of the Slovak Government will expand to include representatives of the social partners.

Small and medium enterprises

Fostering small and medium enterprises (SMEs) is a key precondition for the creation of jobs in the regional context. Development of transport infrastructure and accessibility are essential in terms of ensuring commuter mobility of workers. At the same time, promoting professional and territorial mobility is one way to foster regional employment.

SMEs have to be more involved in the manufacturing networks of supranational corporations. The state will create a stable business environment, including incentives for SMEs to successfully participate in global network structures. The Government will extend the application of EU principles for the development of small and medium enterprises (SBA – Small Business Act). SMEs must be the backbone of development in regional employment and will mainly utilise local natural resources.

As part of its economic policy, the Government will improve the economic, fiscal and institutional frameworks in order to speed up the development SMEs in all industries of the national economy as a key factor to boosting employment. The Government will support the business environment by reducing the administrative burden through systemic regulations related to the scope of statutory accounting, financial statements and annual reports.

In order to ensure proper administration, obtain reliable information on the actual situation and future trends in the business sector, and also to increase employment, the Government will devise a comprehensive analytical system. The system will focus mainly on the micro-monitoring of the business environment, evaluation of legislative changes, monitoring of undesired imports and their impact on the economy, and efficient public spending on job creation and regional development.

Reviving investment activities

The Government will create conditions for an attractive investment climate for local and foreign investors. The Government will propose a reduction in the minimum eligible amount of investment specified in the Investment Aid Act and, concurrently, evaluate the threat of new investment to local manufacturers. As for the inbound foreign investments, the economic policy will mainly focus on supporting investors already present in the country in expanding their activities in Slovakia through post-investment services and their more intensive involvement in industrial research and development. The Government will promote those investments that entail the best available technologies with a minimum environmental impact. The Investment Agency will be converted into an inter-institutional entity that will intensify the search for new high-quality investors in all areas. These areas will include the manufacturing of materials, logistics, energy, tourism and services, but mainly support to local R&D units of supranational corporations.

Employment

The economic policy of the Government in the area of employment is based on the fact that the labour market may not be regarded solely as a system behaving flexibly and reacting quickly to the changes on the market with goods and services. The strategy of job creation and future employment relations must create such an internal and external environment that will be able to continuously reinstate the balance between the economic needs of businesses and society on the one hand and the capacity and efficient motivation of employees on the other. Strategies of businesses have to be based on their capacity to weather short-term cyclical fluctuations in the sale of labour, goods and services. This can be achieved mainly by applying flexible technological and management processes, along with the ability to anticipate changes in a global environment and to react strategically.

High-quality jobs are created in the process of improving human work. That is another reason why the employment policy of the Government will focus on creating such conditions, using market-conform instruments, which allow the economy to not only use labour efficiently but also to enhance its quality. This is related to sustainable growth in the quality of workers’ life, based not only on short-term but also on long-term certainty. The main short-term objective of the Government is to reduce high unemployment, with a particular focus on youth unemployment and unemployment of new graduates, as well as addressing long-term unemployment. Unemployment has to be reduced through an economic policy based on long-term integrated policies aimed at job creation. To this end, the Government will draft separate programmes within the framework of its economic policy:

-      Employment of young people, their preparation for a smooth entry into the job market, including a better correlation between the needs of the economy and the education of graduates. Reallocated funds from the EU structural funds will be used to this end in order to promptly turn around the negative situation in youth unemployment;

-      Solutions to long-term unemployment using a structure of active labour market policy instruments, mainly increasing their efficiency for certain specific target groups;

-      Enhancing the monitoring of the labour market accompanied by a systematic evaluation of the effectiveness of programmes adopted while improving the participation of social partners in their drafting and implementation;
-      Targeted support of life-long learning in order to develop human and social capital at the level of companies, especially in small and medium enterprises;

-      Reducing the administrative burden on the business sector, including a simplification in the tax and social contributions system;

-      More regionally-differentiated support to small and medium enterprises;

-      Creating green jobs in the areas of water and waste management, construction, the energy sector and in research, development and innovation, in environmentally-friendly technologies and production processes;

-      Expanding the production of Slovak companies supplying their output to strategic manufacturers in Slovakia, in the V4 countries and in Austria.

The implementation, audit and development of these programmes will be a dominant task of the newly established Solidarity and Development Council of the Government of the Slovak Republic and of the partners in social dialogue.

Industry

The growth of industrial production is and will remain a dominant factor of economic growth in Slovakia. It is of key importance in terms of ensuring certainty for the people and stability for Slovak society. The goal of the Government’s economic policy is to ensure that the manufacturing sector develops at a pace necessary to bolster the convergence of the Slovak economy with the advanced EU Member States both in terms of speed and quality. The Government will strive to enhance the competitiveness of the manufacturing sector by supporting innovation and encouraging investment in state-of-the-art technologies with high added value. The manufacturing sector must get involved in the global economy through its own activities, supported by the state, not only through multinational monopolies operating in our country.

In order to achieve this goal in the most efficient way, the Government will mainly focus on:
-      gradually reducing the vulnerability of Slovak industry to the fluctuations of the global economy by supporting state-of-the-art and promising manufacturing sectors with high added value, for instance mechanical engineering for the energy sector;
-      supporting goods and services with high added value by increasing the innovation potential of the science and research sector and its better integration with the industry based on a comprehensive research strategy for the industry;
-      reducing the energy and raw-material consumption of the economy;
-      creating conditions for efficient, rational and sustainable use of local non-renewable resources such as magnesite;
-      minimising negative environmental impacts of manufacturing.

Energy

In the energy sector, the Government will follow up on the Energy security strategy of 2008. This is a key factor influencing all sectors of the national economy and the functioning of the entire society. Energy security constitutes an integral part of strategic security.

The Government regards sufficient energy security for the economy and an undisrupted life in households as one of the critical elements of the security of the state. The Government will thus foster the development of a new energy architecture based on the single energy policy of the EU. The Government will create conditions for self-sufficiency and export capacities in electricity production, an optimal energy mix, with emphasis on low-carbon technologies and increased energy efficiency. Given its geographic location, the Slovak Republic could become an important link in providing energy stability not only in its territory, but also for the EU. The Government will speed up the preparations for the construction of a new nuclear site in the area of Jaslovské Bohunice and will use all possibilities to speed up the completion of the 3rd and 4th unit of the nuclear power plant in Mochovce. The main priority of the Government (in the nuclear energy sector) will be to attain high security standards for all nuclear facilities.

The Government will enhance the security of supplies and independence from a sole supplier, thus improving the competitive environment by intensively developing links with gas networks, including the use of LNG and links with electric grids in the neighbouring countries.

It will further strive to improve the quality of energy services and supplied goods in order for every customer to be provided with electricity, gas and water as requested and at fair prices.

When implementing measures from the EU’s Third Energy Package, the Government will first and foremost take into account the economic interests of the Slovak Republic, the protection of vulnerable customers, and the fight against energy poverty. Furthermore, it will update the state energy policy with emphasis on cross-border cooperation in the Central European area.

In the sector of energy and network industries, the Government will mitigate the negative impact of opaque and misguided privatisation in order for natural monopolies to have less room to abuse their dominant position. The implementation of the liberalisation measures within the Third Energy Package will significantly extend the powers of the state in overseeing regulated entities, in addition to fostering the development of competition and transparency of the energy market in Slovakia.

The Government will create conditions to ensure a stable, predictable and transparent regulatory framework in order to maintain competitiveness of industry and preserve manufacturing production and employment. At the same time, it will create conditions for the Regulatory Office for Network Industries to have the relevant tools to review the cost structures of regulated entities and guarantee fair regulation and reductions in network fees.

In the area of renewable energy, the Government will optimise the energy mix and increase the use of local energy potential, including the construction of hydro power plants and biomass power plants, in order to create new jobs and attain positive synergies in regional development, agriculture, energy security and environmental impacts. As regards the use of renewable energy resources, the Government will take into account their impact on the end-user price of electricity, as well as on the security and stability of the electricity grid.

The Government will support a rational use of local energy raw materials in order to reduce dependence on imports. It will create incentives to save energy.

Construction sector

In the construction sector, the economic policy of the Government will focus on supporting economic development by means of a timely and high-quality preparation of construction projects, especially in transport infrastructure, housing construction, environmental infrastructure, and in repair and renovation of the housing stock.

The Government deems it necessary to create conditions for the construction sector to attain such standards that will make Slovak companies competitive both locally and on EU markets. As the construction sector develops, the overall volume of housing construction will grow in order to improve citizens’ access to adequate housing. The Government will support the construction of national and regional transport and technical infrastructure. In order to spend public funds more efficiently, and to implement the most important strategic projects smoothly and rationally, the Government will ensure continuity between the preparation and implementation phases of projects.

The Government will create conditions for the entry of private capital into the construction of rental apartments. It will consider the possibility of supporting affordable and energy efficient buildings and housing. It will focus on revitalising housing estates, improving the housing environment and enhancing the quality of life in cities and villages.

The new building and construction law, which the Government will propose, will significantly reduce and simplify the administrative requirements for the approval of construction plans and projects and will set deadlines for competent authorities of state administration to issue decisions in the building and land-use permit proceedings. This will prevent arbitrary deferral of decisions and the cumbersome handling of builders’ requests by the building authorities. The Government will propose stricter sanctioning mechanisms for breaches of the law, in particular in relation to unauthorised buildings, and will prohibit their ex-post approval if they are in breach of the zoning plan.
The conditions for the drawing up of zoning plans will include the principle of flood prevention, landslides and other undesired geodynamic processes.

The Government will create conditions for the use of local raw materials in construction projects, will support “green” mining, recycling of gravel, and production of “green” construction products (“green” buildings).
The Government will propose long-term energy saving targets and their regular evaluation, taking into account the economic capacities of the Slovak Republic.

Agriculture

The Government will support rural development and improvement in the living conditions of the rural population. Agriculture is a comprehensive system with a joint state strategy for agriculture, food industry, forestry and the downstream wood-processing industry. It is equally important from the perspective of economic and social policies. The support of rural development and efficient landscape management requires the integration of all critical activities into one functioning system. The Government will also focus on the support of all other positive externalities in the agro-food sector, including the maintenance of cultural landscape, protection and development of the environment, and acceleration of the development of rural economy.

The Government will respect the programming documents of the EU, focusing on the promotion of economic growth and economic performance in agriculture and forestry while respecting the principle of balance between economic and environmentally-friendly farming. This is a precondition for the sustainable development of a social market economy in rural areas.

When negotiating the reform of the EU Common Agricultural Policyfor the period of 2014-2020, the Government will do its utmost in the decision-making process of EU bodies to achieve non-discriminatory conditions for our farmers in terms of support funds and other instruments available within the framework of support to farmers.

In this respect, the Government will push for the simplification of the cross-compliance rules and an overall simplification of the Common Agricultural Policy. The Government will adopt only such national rules and regulations applicable to local producers of basic foodstuffs that do not go beyond the framework of harmonised EU legislation.

In accordance with the rules of the Common Agricultural Policy, the Government will intensify its support to sectors that may create jobs, in particular animal husbandry, fruit and vegetable farming, and viticulture, but also the food industry. Particular support will be provided to livestock farming and sheep farming in less favoured mountainous and submontane areas.

The Government will support the drafting of measures related to the adaptation of farming to climate change, using such farming methods that increase water retention in the countryside, and prepare an effective policy to maintain and develop hydro-melioration facilities (irrigation and drainage).

The Government will support economical use of farmland resources, create conditions to protect farmland against unjustified use for non-farming purposes, and consider the use of appropriate mechanisms for the purchase of land for farmers.

The Government will create conditions to speed up the settlement and consolidation of land ownership rights in order to guarantee efficient use of farmland and forest land by the respective owners. It will speed up the process of settling restitution claims.

Among the measures adopted to enhance Slovakia’s self-sufficiency in terms of basic foodstuffs and food security, the Government will support the renewal and modernisation of the local food industry, where primary producers may hold a stake, significantly contributing to employment, creation of added value and an increased share of local products in shops. At the same time, it will support higher standards and better organisation of inspection authorities in the food sector in order to thoroughly apply and inspect the application of the national and European standards applicable to agricultural and food production.

In agricultural and food production, the Government will promote the pre-processing and final processing of products of local origin, also by means of better promotion and sales support for local foodstuffs. It will use all available economic and legal instruments to support the final processing of products on farms and the sale of fresh foodstuffs by these holdings directly to the end consumer.

The support for sustainable forest management will increase the competitiveness of forestry. The Government will create legal and economic conditions in order to compensate owners and managers of forest assets for environmental services provided in general interest. In increasing employment in the poorest regions of Slovakia that are predominantly covered by forests, the Government will deploy various economic and legislative instruments to support the development of the non-state forestry sector as a strategic partner of the state. The Government considers forests to be strategic state assets and thus guarantees that they may not be privatised.

The Government will develop mechanisms for the completion of the system of forest management, including a continued funding of forest management programme development, and will adopt systemic measures related to the institutional setup for these activities.

The Government will support the reforestation of land not used in farming and other degraded non-forest areas, with a priority to reforesting land exposed to an extreme risk of water erosion and slope deformations. The goal is to protect land against floods and create new jobs in rural areas.

The Government will focus on the development of wood-processing capacities, for wood is the most important local, environmentally-friendly and renewable resource for end-products. The goal will be to create new jobs in rural areas and increase the added value of goods made of wood. Equal attention will be given to developing an environmentally-friendly economy in order to make a more efficient use of local renewable resources, contribute to reducing the environmental burden by reducing greenhouse gas emissions and improve social standards of the population by enhancing the quality of the environment and by creating jobs. The Government will support the development of biological resources production in agriculture, forestry and water management for the traditional processing sectors of the food and wood processing industry, but also for new sectors of biotechnology, energy and chemical industry.

In the relevant science and research sector, the Government will support public-private partnerships focused mainly on innovation in agriculture, food industry, and forestry.

Transport, post and telecommunications

The Government, asa government of certainties for citizens, will secure the development of quality, accessible and integrated transport infrastructure, competitive transportation services that are user- and environmentally-friendly, energy efficient and safe. Its efforts will primarily focus on the more robust development of the motorway network, compared to the current situation, with the Government seeking to provide balanced tender conditions in order to avoid any unfinished sections and devastation of an entire chain of business entities. The well -proven form of PPP projects will be used for this purpose. A motorway connection between Bratislava and Košice remains a prerequisite to removing regional disparities. The Government will strengthen the role of inland waterways as part of the transport infrastructure.

As regards the operation and development of a 1st class road network, the Government will concentrate on accident-prone areas, critical states of bridges, and constructing city municipality bypasses in order to reroute transit and address the insufficient transport performance at selected crossroads. Technical conditions of 1st class roads will be improved through financing their cyclical maintenance and repairs to meet the required standards, primarily on roads of international importance (E-roads) used in transit which do not run along the existing motorways and expressways.

The Government will support construction and development of intelligent transport systems and enhancing transport and traffic safety.

With respect to the fact that EU funds to be used for transport development, as currently set, will probably not be spent in full by 2015, the Government will introduce mechanisms to ensure that these funds are used to the greatest possible extent.

Discontinued construction of motorways goes hand-in-hand with discontinuing the preparation of motorway construction projects. The Government will therefore make the necessary effort to provide construction permits with the aim of creating a sufficient pool of projects. If necessary, the Government will reconsider adoption of a special regulation in compliance with a finding of the Constitutional Court in order to speed up this vital process.

Delays in crucial motorway and expressway construction projects and railway system modernisation projects are caused by extremely fragmented land ownership in Slovakia. The Government will explore solutions used in other EU countries and seek to find a definite solution on how to substantially simplify the settlement of ownership titles to land for the construction of transport infrastructure both for the state and the affected landowners.

Other Government priorities in this area include stabilisation of the share of railway transport in the transport market and preferential treatment of public transport through maintaining payments for transport services provided in the public interest. The Government will reconcile passenger railway transport and bus transport services by increasing their competitiveness, culture of travel and safe operation of passenger railway transport and intelligent transport system solutions. It will also seek to reduce the number of uncontrolled railway crossings and promote development of combined freight transport. The Government will analyse the possibilities of bringing in a strategic partner to the state-owned freight rail transport operator in order to reinforce its market position, improve its business opportunities through synergies, and acquire additional funds for its further development.

For the sake of sustainable development of air transport services in compliance with the European transportation policy and international commitments, the Government will encourage safety and security improvements in air transport and safety and protection of civil aviation. The Government will create a system to support air transport services provided in the public interest. Further development of the Bratislava airport as the most important air transport hub in Slovakia, and the development of regional airports as tools to enhance and facilitate regional development and tourism, are also important aspects of air transport development in Slovakia.

The Government will also encourage development of non-motorised, especially bicycle, transport.

The main ways to ensure the fulfilment of the aforementioned priorities will involve effective spending of funds in the transport sector, multi-source funding of transport infrastructure, symmetrical development of individual types of transport, and protection of Slovakia’s interests in drafting relevant EU legislation. The Government thus intends to build up quality and accessible transport infrastructure that will facilitate social inclusion by connecting less advanced regions and reinforce Slovakia’s international competitive advantage by utilisation of its geographical potential as a transit country.

The Government will ensure the drafting of a sectoral strategy on transport infrastructure development until 2030. In the context of cohesion policy beyond 2013, the Government will ensure the preparation of a sectoral operational programme for the years 2014-2020 which will reflect national priorities defined under the transport infrastructure development strategy.

The Government will create conditions to merge and integrate independent regulatory authorities in road, rail, air and water transport, as well as in the construction, post and telecommunications sectors. This will significantly reduce the number of budget-funded organisations in the transport sector and the size of administrative staff, which will result in considerable savings in budgetary costs.

Other objectives under economic policy in the area of transport, post and telecommunications will primarily include:
-           liberalisation and enhanced functioning of the postal market through balanced market and business conditions in the sector of postal services;
-           balanced competition in the electronic communications market and development of accessible high-speed networks;
-           extra attention paid to environmental impacts of the transport sector in strategic decision-making.

Trade

In trade, the economic policy will concentrate on:
-      implementation of all instruments under the common trade policy; promotion of Slovakia’s interests in the EU and the World Trade Organization (WTO); market protection in compliance with applicable rules; and measures to reinforce competitive production in the territory of the Slovak Republic;
-      aligning Slovakia’s national legislation with that of the European Union applicable in the area of consumer protection and the mechanism for collective enforcement of consumer rights;
-      advocating measures at the European level to prevent the abuse of the economic power of chain store operators;
-      improving coordination of market surveillance and assessment of the situation on the internal market, including price monitoring;
-      consumer education and awareness-raising;
-      preparation of a Consumer Code to remove fragmentation of the existing consumer protection laws.

Tourism industry

The economic policy objective in tourism will involve increasing the competitiveness of the tourism industry while fully utilising its potential in order to remove regional disparities and generate new job opportunities. To achieve this objective, it will be necessary to:
-      review institutional structures in the management and coordination of activities performed by entities responsible for the development of tourism at all levels;
-      prepare a new strategy to revive the tourism industry, improve its quality and boost competitiveness;
-      encourage better utilisation of Slovakia’s potential in tourism;
-      increase the effectiveness and transparency in the use of public funds to support development of the tourism industry, including through a more effective use of EU funds;
-      insist consistently on the observance of moral and ethical principles in the area of trade policy;
-      consider introducing active tourism support programmes for airports and air carriers in order to provide direct support to the development of air transport and facilitate aviation industry development also as part of the tourism industry.

Services

Under its economic policy, the Government will create conditions to step up the development of services as an important sector to generate new jobs. Its goal is to extend, considerably improve and make affordable the entire portfolio of services for the wider population, older people in particular.

The Government will promote formation of the so-called silver economy as a segment of the national economy that serves the needs of older people, or that part of this segment which produces assets and services intended primarily for older age groups - seniors.

The Government will increase the share of education-related services, as well as that of healthcare and social services, through appropriate organisation and management of the entire system of the provision of services and through efficient division of labour between public and private service providers.

The Government will encourage creating conditions for the development of knowledge-intensive services for enterprises.

Boosting economic development using resources from European Union funds

In connection with the fulfilment of strategic objectives under the cohesion policy, the Government desires to achieve a higher degree of convergence towards the EU-15 in terms of economic performance. It will concentrate on the implementation of changes to enhance Slovakia’s competitiveness and improve the quality of life. It considers crucial to accomplish the strategic objective set under the National Strategic Reference Framework of the Slovak Republic for 2007-2013, with key areas in this respect including the objectives laid down for infrastructure development and accessibility to regions, a knowledge-based economy and human resources.

As regards the implementation of assistance and support from EU funds, the Government will create all the necessary conditions to facilitate more effective coordination of cohesion and agricultural policies, with a focus on the use of interventions in support of employment sustainability and generation of new jobs. It will design measures that will contribute to mitigating the adverse effects of the global economic crisis on employment.

The Government will ensure processes and procedures towards a real and efficient use of funds allocated under operational programmes by the end of the 2007-2013 programming period, in compliance with their objectives and priority areas. It will promote the common line of action defined under the EU Cohesion Policy beyond 2013. The main priority areas with respect to sustainable growth and employment in the implementation of the Europe 2020 strategy will include creating measurable values by basing growth on knowledge and innovation, empowering people in inclusive societies with high employment, and creating a competitive and greener economy that uses resources in an effective and sustainable manner. In this context, the Government will provide conditions to draw up the next generation of operational programmes complying with the conditions and gaols of the Common Strategic Framework 2014-2020, building on the experience of all aid recipients in the previous programming periods.

Environmental protection

The Government considers achieving and maintaining high quality of the environment, with the protection and rational utilisation of natural resources while respecting the principles of sustainable development to be of utmost national concern to the Slovak Republic.

A crucial and decisive instrument to ensure sustainable development is to concentrate economic efforts on consistent production which is in balance with social as well as environmental demands of society. The Government will pay special attention to the utilisation of available work force in regions with underdeveloped environmental infrastructure.

The underlying priorities of the Government’s environmental policy will include implementation of programmes to prevent climate change and mitigate its consequence as part of the measures adopted under the climate energy package by providing necessary organisational, economic, legislative and institutional conditions.

In order to preserve the indispensable asset of the Slovak Republic in the form of its high-quality sources of water, and to minimise the risk of flooding in the upper sections of water courses, the Government will create conditions to enable the granting of financial support from EU funds to municipalities with populations of less than 2,000. Increased attention will also be given to municipalities located in protected water management areas and measures to protect water sources will be introduced. In the area of flood prevention, the Government will encourage consistent implementation of efficient flood-prevention measures and programmes to reinforce the landscape’s ability to retain water by all available ecological and technical means, including through construction of hydropower plants as an integral part of water course management.

Increased attention will be given to the protection of and improvements in the quality of water, their optimum utilisation and protection against their harmful effects. Equally so, attention will be paid to the protection and rational utilisation of mineral, healing and geothermal groundwater.

The Government will concentrate on optimising the spatial arrangement and functional use of the landscape, as well as on the protection of natural and cultural heritage. For this purpose, it will propose a new landscape management system. It will support the development of a uniform environmental monitoring and information system, environmental awareness-raising among the people, and provision of information about the environmental situation.

An emphasis will also be placed on ensuring the sufficient quantity and quality of water for public and environmental services and business activities.

The Government will support rehabilitation of landslides and prevention of geological hazards. It will take measures to remove environmental burdens and to encourage the purposeful use of reclaimed lands with an emphasis placed on the reduction of uptakes of agricultural land.

In order to reduce the volume of air pollutants, the Government will introduce supporting instruments to reduce the volume of emissions produced by the industry and energy sectors and mobile sources, and to encourage the use of low-emission motor vehicles.

The Government will adjust the rules applicable to waste management, including by encouraging separate waste collection to also include textile wastes, and development of waste processing capacities, in particular those that use the best available waste recycling technologies to produce finished goods. It will adopt measures to encourage the promotion of goods made of recycled materials.

The Government will pay special attention to the rational use of domestic raw materials and the support to enterprises which mine and process minerals using the best available technologies with a minimum impact on the environment. A prerequisite to eliminating environmental risks will be the supervision and monitoring of environmental safety and environmental condition of buildings, facilities and products. The Government will promote an environment-friendly use of the landscape.

The Government will prepare new rules on the environmental protection and reassess the existing network of protected areas in compliance with international commitments, and will restore and ensure the zoning of protected areas in order to complete a uniform national and international system of protected areas at various levels while respecting the current conditions and demands on sustainable regional development, including national parks and the European Natura 2000 network of protected areas. The Government will prepare a package of instruments to address compensation for restrictions faced by the owners of land in protected areas under the applicable nature protection rules, as well as due to the implementation of programmes of care of protected areas with respect to all aspects of human activities.

The development of social and economic activities must respect and support preservation of the existing historical, cultural and natural values as a key prerequisite to the development of ecotourism and ecotravel. The Government will promote the development of an environmental awareness-raising and regulated tourism industry, which will require further development in infrastructure taking into account the protection of nature and landscape, extension of the network of educational trails, geoparks, information and training facilities.

The Government will more considerably encourage activities by municipalities, business operators and non-governmental organisations towards the recovery and rehabilitation of the damaged environment and the protection and revitalisation of ecosystems in areas exposed to environmental burdens, as well as in protected areas, in order to improve the provision of ecosystem services as non-productive functions of agricultural, forestry and urban landscape. It will also speed up the implementation of a programme favouring residential housing construction and amenities development in built-up urban areas and manufacturing facilities built on reclaimed sites in order to gradually integrate them into a well-arranged, valuable, aesthetic and cultural urban and rural landscape, along with completion of environmental infrastructure.

In consultations with the representatives of towns and municipalities, and in cooperation with the Association of Towns and Communities of Slovakia (ZMOS) and other partners, the Government will reconsider the fulfilment of the commitments the Slovak Republic undertook under the Treaty of Accession to the EU (2003), especially in the area of environmental infrastructure and completion of communal waste water drainage and purification facilities, in order to considerably reduce the current high rate of construction works in progress.
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