Stav ekonomiky v Slovenskej republike _zhodnotenie z pohľadu

National Programme for the Adoption of the Acquis 2001 Economic Criteria Economic Criteria CURRENT ECONOMIC SITUATION IN THE SLOVAK REPUBLIC The priority for the Slovak Government after it assumed power in October 1998 was to stabilise the economy of the country and to create conditions for sustainable economic growth. As a result of several measures adopted by the Government mainly towards the close of 1998 and during 1999, the year 2000 saw the stabilisation of macroeconomic situation. A positive mention should be made in particular of the reduction of current account and public finance deficits that were becoming unmanageable. The Government succeeded in stabilising the economy in a relatively short time without going through a recession stage. The Slovak economy started to display clear signals of recovery already in the second half of 2000. Successful continuation of economic reform in 2001, besides being an inevitable prerequisite for early accession of Slovakia to the European Union, is above all a necessary precondition for launching dynamic and sustainable economic growth and improvements in the standard of living of the population of Slovakia. The chief objective of Government's economic policy in 2001 is to maintain macroeconomic stability and to continue implementing structural reforms with a view to improving business environment in Slovakia and attaining sustainable economic growth. The Slovak Government expects a 3.2% growth of GDP in 2001 and its gradual acceleration in subsequent years. Following a sharp decline in the current account deficit which climbed to more than 10% of GDP/year in the 1996-1998 period, the Government expects the 2001 deficit to moderately grow in connection with the anticipated recovery of domestic consumption and investment growth in 2001. According to preliminary data, the 2000 current account deficit was approx. SKK 32.9 billion, i.e. 3.7% of GDP (further decrease from the previous year's deficit of 5.8% of GDP), and is expected to be around 4% in 2001. This represents a substantial improvement in comparison with the second half of the 1990s. The main difference is, however, that the 2001 deficit will be financed from a substantially higher inflow of foreign investment. The Government expects that following a significant increase in the inflation rate in 2000, caused primarily by decisive liberalisation of regulated prices, the growth of consumer prices in 2001 will be slightly slower. Because of a new significant increase in regulated prices in February 2001, the 2001 inflation rate is expected to reach around 6.7-8.2%. Core inflation, which does not reflect changes in regulated prices and indirect taxes, is expected to be in the range of 3.7 – 5.3% at the end of 2001. Another key precondition for continued sound economic development in 2001 is the ability to maintain public finance within an acceptable range. Public finance deficit, which amounted to 5.2% and 5% of GDP in 1997 and 1998, respectively, was reduced to 3.6% of GDP in 1999 and 2000 even in spite of substantially lower economic growth and sharp rise in unemployment. The year 2001 will be exceptionally complicated in the public finance area because of the accumulation of several measures having negative short-term implications in the fiscal area. These measures include mainly reduced corporate income tax rate and abolition of import surcharge on the revenue side. Increased expenditures can be expected in connection with the culmination of the process of Slovakia's integration into NATO and the EU. Notwithstanding, the Government is determined to keep the 2001 public finance deficit at the level of 3.9% of GDP. 27 National Programme for the Adoption of the Acquis 2001 Economic Criteria ENVISAGED MEASURES FOR THE FULFILMENT OF COPENHAGEN CRITERIA To be able to fulfil the Copenhagen criteria of accession to the European Union, the Slovak Republic must have a functioning market economy and the Slovak economy must be able to cope with the competitive pressures and market forces within the Union. Regular Report from the Commission on Slovakia's Progress towards Accession published on 8 November 2000 notes for the first time that "the Slovak Republic can be regarded as a functioning market economy and should be able to cope with competitive pressures and market forces within the EU in medium term". This assessment is in full agreement with the objective of the Slovak Republic to enter the European Union on 1 January 2004. The representatives of the Slovak government and of the European Commission signed a "Joint Assessment of Medium-term Priorities of Economic Policy" in February 2000. This document sets out economic policy measures that must be taken to complete the transformation of the economy and to prepare it for entry to the EU. In harmony with Accession Partnership, the Slovak Republic has started to carry out the preaccession fiscal surveillance procedure in 2001. This procedure includes notification about public debt and fiscal deficit, and pre-accession economic programmes. Under the preaccession fiscal surveillance procedure the Slovak Republic will, until the time it enters the EU, submit annual public debt and fiscal deficit notifications and pre-accession economic programmes with focus on public finance and structural reforms. Structural reforms continue; their implementation in 2001-2002 will be monitored by the International Monetary Fund. On 13 September 2000 the Government decided to ask the International Monetary Fund for a softer form of cooperation – the Staff-Monitored Programme (SMP). For the SMP purposes, a Memorandum on Economic and Financial Policy of Slovakia was prepared at the beginning of 2001 and approved by the Government on 28 March 2001. The document gives a detailed quantification of the objectives in the area of economic structural reforms and the timetable for their fulfilment. Current situation regarding all key macroeconomic indicators except for unemployment rate confirms the soundness of adopted measures. Sound economic policy found its expression also in the accession of the Slovak Republic to the Organisation for Economic Cooperation and Development as its 30th member in December 2000. Achievements in the area of structural reform are also attested by gradual improvements in the rating of the Slovak Republic by renowned rating agencies1. Public finance management reform and its significance for the European integration process The on-going public finance reform is of special significance also for the process of European integration, because its successful implementation has direct relevance for individual negotiating positions, namely chapter 28 Financial Control and chapter 29 Financial and Budgetary Provisions. 1 Two major rating agencies (Moodys Investor Service and Standard and Poors) changed the rating outlook of the Slovak Republic towards the end of 2000 from stable to positive, and the Slovak Republic can be realistically expected to be shifted among investment-grade countries in the short time. 28 National Programme for the Adoption of the Acquis 2001 Economic Criteria The Commission's Regular Report of 8 November 2000 paid a very close attention to the issue of public finance and fiscal policy. The Commission pointed out in particular to the need to maintain fiscal discipline and to reduce budget deficit, and stressed the need to include into the budgetary process also the medium-term outlook so as to better provide for future effects of today's measures, and to ensure sustainability of budget consolidation. Just as the passage of the amendment to the Constitution was considered important for the assessment of political criteria, continuation and completion of the reform of public finance management are important for the fulfilment of economic criteria. Through Resolution No. 72/2001 of 24 January 2001 the Government approved "Suggested Approaches to Preparing the Draft State Budget for 2002". The budget preparation timetable has changed in comparison with the past, the main thrust of work being on the first half of 2001. The first draft of the state budget, prepared according to the new timetable, will be submitted to the Slovak Government as early as June 2001. From the public finance reform perspective, it is important that the expenditure part of the budget will have the form of programmes and that the budget includes a medium-term outlook. A more detailed description of the reform of public finance management is given in Chapter 29 on Financial and Budgetary Provisions. Price regulation Three major rounds of price deregulation have taken place since the beginning of 2000. The deregulation of housing and energy prices is not yet completed. Resulting price increases represent a decisive step in the direction of making the regulated prices reflect economically justified costs and reasonable profits for business entities that provide products and services falling under the regime of regulated prices. Most regulated prices have been increased to a level where any future changes should mirror inflation rate developments. It is assumed that, as a result of price corrections, year-on-year increases in consumer prices will amount to approx. 10.4% in 2000 and to 6.7 - 8.2% in 2001. The 2002 inflation is expected to reach 5 to 6%. Year-on-year inflation rates in the subsequent years should drop to around 4%. Labour market and unemployment policy The Ministry of Labour, Social Affairs and Family is conducting a Joint Assessment of Employment Strategy in cooperation with the European Commission, expected to be completed in May 2001. A significant impact on reducing the current level of unemployment should be made by the introduction of a set of measures for increasing labour market flexibility and for restricting illegal work. The analysis of the current high unemployment and possible remedial actions has resulted in the identification of short-term and medium-term measures and the need to accelerate ongoing structural reforms of the economy: - restructuring of the banking sector and, in parallel, financial restructuring of the corporate sector, - increasing the effectiveness of the legal system so as to improve enforcement of laws and to strengthen the position of creditors in corporate sector restructuring in bankruptcy proceedings. 29 National Programme for the Adoption of the Acquis 2001 Economic Criteria The National Labour Office has launched a short-term programme in May 2000 of promoting employment of young persons aged 18 to 26, implemented in selected districts as a pilot project. Because of positive results of the pilot phase, the project will be implemented in 2001 in the entire territory of the country. The programme of promoting employment of long-term unemployed in publicly beneficial jobs, created with the support of state budget funds, was launched in August 2000. 65,626 publicly beneficial jobs for long-term unemployed were created under the programme by the end of 2000. The creation of around 35,000 jobs for long-term registered unemployed is envisaged in 2001. Labour market flexibility is fostered by means of retraining programmes and linking and harmonising the system of training with the needs of the labour market. The priority area of labour market policy in 2000 was the retraining combined with the promotion of foreign investment. Several developments have taken place in the labour law area – prohibition of discrimination, introduction of the notification obligation for employers, obligation to adopt measures for facilitating access to part-time work. Employers are obliged to grant equal treatment to their employees regardless of whether they have a fixed-term contract or a contract of indeterminate duration. An effective system of the protection of employee rights in the event of insolvency of their employers was put in place through the establishment of a guarantee fund, and legislation on collective redundancies was adopted. Under the newly adopted Labour Inspection Law, supervisory activities in the labour law area, legal and other provisions relating to work safety and health, wage regulations and commitments resulting from collective agreements were integrated under the competence of labour inspection bodies. Restructuring and privatisation process Sector of financial services Pre-privatisation restructuring and subsequent privatisation of selected banks are among the most important structural reforms launched by the current Slovak Government. The plan of bank restructuring consisted of two parts – increase in registered capital of selected banks and subsequent transfer of non-performing loans to a specialised agency. In the first part of restructuring, the Ministry of Finance increased the registered capital of the General Credit Bank (VUB) by SKK 8.9 billion, registered capital of the Slovak Savings Bank (SLSP) by SKK 4.3 billion and registered capital of the Investment and Development Bank (IRB) by SKK 5.7 billion. The first stage of transferring non-performing loans to the Slovak Consolidation Agency took place in December 1999. The amount of SKK 44.9 billion was allocated from the General Credit Bank (VUB), SKK 22.8 billion from the Slovak Savings Bank (SLSP), and SKK 6.4 billion from the Investment and Development Bank (IRB). Non-performing loans were mostly put in the newly created Slovak Consolidation Agency (SKK 62.7 billion), and the remainder was allocated to the Bratislava Consolidation Bank (SKK 11.4 billion). To cover the costs of the transfer, parent banks extended state-guaranteed loans to the Slovak Consolidation Agency and to the Bratislava Consolidation Bank. The existing provisions and reserves were used to create provisions for the remainder of the clasified loan portfolio. The objective of stage one of bank restructuring was to cleanse bank portfolios of clasified debts 30 National Programme for the Adoption of the Acquis 2001 Economic Criteria and to increase bank capital adequacy ratio to the required minimum standard level of 8%, to ensure liquidity and increase profitability and the value of banks prior to their privatisation. The second stage involved the transfer in June 2000 of non-performing loans, amounting to SKK 34.2 billion, exclusively to the Slovak Consolidation Agency.2 The compensation for the allocation of these classified loans (SKK 30.9 billion) was less than was the minimum value of these loans, because account was taken of the value of provisions and reserves. Assets were allocated at stage two in accordance with the results of diagnostic audits performed in individual banks and with the recommendations of financial privatisation advisor. As a result of restructuring, capital adequacy ratio of banks was brought to approximately 10%, measured according to international accounting standards, the share of classified loans was reduced to less than 20%, and adequate liquidity was ensured. Stage two marked the end of preprivatisation restructuring of banks - the Government does not envisage any further cleansing of portfolios of banks undergoing privatisation. The restructuring of banks was an inevitable step before their privatisation. Privatisation of three state-controlled banks - Slovak Savings Bank (SLSP), General Credit Bank (VUB) and Investment and Development Bank (IRB) – takes place in conformity with Act No. 92/1991 Coll. on the conditions of transfer of state property to other persons as amended and with Government Resolutions No. 418 of 19 May 1999 and No. 93 of 16 February 2000. Thus, in conformity with the aforesaid documents, the amount of registered capital earmarked for privatisation in the Slovak Savings Bank (SLSP) is 87.18% of total registered capital, 84.54% of registered capital in the General Credit Bank (VUB) and 69.56% of registered capital in the Investment and Development Bank (IRB). The agreement on the purchase of shares of the Slovak Savings Bank (SLSP) was signed on 11 January 2001 between the National Property Fund and the Austrian bank Erste Bank Der Oesterrreichischen Sparkassen AG Wien. Privatisation of General Credit Bank (VUB), Investment and Development Bank (IRB) and of a smaller bank - Banka Slovakia of Banská Bystrica – proceeds according to the Governmentapproved timetable and has currently entered its implementation phase. A different procedure has been used in the case of General Credit Bank (VUB). Two strategic investors that entered this Slovak bank in February 2001 - the European Bank for Reconstruction and Development and the International Finance Corporation - acquired a 25% stake in the registered capital of the bank. This stake represents the shares that had been held by the National Property Fund (15.96%) and the Slovak Consolidation Agency (9.04%). The remaining stake of the state (exactly 68.58%) will be acquired by another strategic investor. The entire process of privatisation of General Credit Bank (VUB) is to be completed by 30 June 2001. Other state-owned companies Successful process of on-going restructuring and privatisation involves, in particular, the following companies: Transpetrol, Slovak bus transport companies, electricity utilities, water and sewerage utilities, Slovak Gas Industry, Slovak Insurance Agency, health care facilities and Slovak Railways. 2 The decision to transfer the major part of non-performing loans to a non-banking institution was taken in order to enable this institution to create its organisational structure and work procedures in harmony with its main mission – i.e. dealing with the non-performing loans it has taken over. 31 National Programme for the Adoption of the Acquis 2001 Economic Criteria The process of transformation, restructuring and privatisation of the electricity sector will be completed in 2002. Moreover, the Government approved in October 2000 the project of transformation and restructuring of Slovak Railways. In stage one, public transport infrastructure (transport routes) is to be carved out from commercial activities in passenger and freight transport and continue to receive state guarantees, with possible privatisation in the next stage, including the sale of parts of the company not related directly to railway transport. Table 1. Major privatisation projects and further steps in individual projects Company name General Credit Bank (VUB) Bratislava Anticipated date of the completion of privatisation/proposal for further action* Registered capital of the bank is SKK 12.98 billion, of which 68.58% is earmarked for privatisation (i.e. the entire stake of the state). Privatisation is to be completed by the end of June 2001. Investment and Development Bank (IRB) Registered capital of the bank is SKK 8.7 Bratislava billion, of which 69.56% is earmarked for privatisation (i.e. the entire stake of the state). Privatisation is to be completed by the end of August 2001. Slovak Insurance Company Bratislava Registered capital of the bank is SKK 3.5 billion, of which 78.81% is earmarked for privatisation (i.e. the entire stake of the state). Privatisation is to be completed at the beginning of 2002. Registered capital of the bank is SKK 756.9 million, of which 60.07% is earmarked for privatisation (i.e. the entire stake of the state). Privatisation is to be completed by the end of July 2001. Registered capital of the company is SKK 57.51 billion. 49% of the stake of the state in the company will be privatised after its transformation to a joint-stock company – the Government will offer 49% of company shares for sale by October 2001. Registered capital of the company is SKK 41.9 billion. The focus will be laid in 2001 on the restructuring of the company. By 30 June 2001, the Ministry of Economy in cooperation with the National Property Fund and the Ministry for Administration and Privatisation of National Property will prepare a Proposal for the Restructuring and Transformation of Slovak 32 Banka Slovakia Banská Bystrica Slovak Gas Industry (SPP) Bratislava Slovak Electricity Company Bratislava National Programme for the Adoption of the Acquis 2001 Economic Criteria Electricity Company. Transpetrol, a.s. Bratislava Registered capital of the company is SKK 6.9 billion and earmarked for privatisation is a 49% share of the state's stake in the company. By the end of October 2001 the Government is to decide on the sale of 49% of shares of the company. Registered capital of approx. SKK 4 billion (17 state-owned plants of Slovak Bus Transport Company). 49% of shares will be put up for privatisation (after transformation into jointstock companies). Anticipated date of privatisation is December 2001. Registered capital of the company is SKK 37.9 billion. The proposed privatisation method is to transform the utilities into joint-stock companies and to subsequently transfer them under municipal ownership without compensation. The transformation process is to be completed by 30 June 2002. The book value of company assets is SKK 10.6 billion. 49% of the stake of the state in the company will be privatised after its transformation to a joint-stock company. The government will take the decision on the sale of shares by the end of 2001. The book value of company assets is SKK 12.7 billion. 49% of the stake of the state in the company will be privatised after its transformation to a joint-stock company. The Government will take the decision on the sale of shares by the end of 2001. The book value of company assets is SKK 5.2 billion. 49% of the stake of the state in the company will be privatised after its transformation to a joint-stock company. The Government will take the decision on the sale of shares by the end of 2001. Slovak Bus Transport Company State water and sewerage utilities West Slovakia Power Plant Bratislava Central Slovakia Power Plant Bratislava East Slovakia Power Plant Košice * - book value of the assets as of 31 December 1999 Encouraging foreign direct investment Measures adopted by the Government to foster foreign investment include the definition of the status of large foreign investors, tax incentives, contributions for newly created jobs, advantages granted to newly established entities, and construction of industrial zones and 33 National Programme for the Adoption of the Acquis 2001 Economic Criteria parks. An overall improvement in the business environment is to be attained through measures designed to improve legal and regulatory framework encouraging business and investment activities. An important instrument for promoting the inflow of foreign investment is the system of incentives for the building of industrial parks. Of crucial importance for supporting large foreign investment in this area is the determination of the principles and criteria for the creation of industrial parks (industrial zones). The preparedness of these parks to accommodate large strategic investors is an important criterion for the investors' decisions on the placement of investment. The significance of industrial parks is connected with their strong developmental impact on other parts of the regions in which they are situated. There are currently three projects of industrial parks and economic zones. One of them is the industrial park of Záhorie oriented on microelectronics and electrical goods envisaged for the Malacky area. Another industrial park is to be the Jarovce – Kittse Industrial Park. This is the first industrial park pilot project in the Slovak Republic which is to have the form of a dutyfree zone. The Silicate Economic Zone offering favourable conditions for processing silicate ores is to be built in the vicinity of Lučenec. Among the aims of this project is to promote product and technological innovation on the basis of domestic resources, and to improve the working environment and increase employment in this region of Slovakia. Through fostering effective business environment, conditions will be created for encouraging domestic investment and for increasing the inflow of foreign direct investment. In harmony with the recommendations of the European Commission's experts, a comprehensive legislative framework will be created for granting investment incentives to investors in compliance with the criteria laid down by EC Directives and in harmony with Act No. 231/1999 Coll. on State Aid. Draft Act on Investment Incentives and draft amendment to the Act No. 231/1999 Coll. on State Aid are currently in legislative process and on 16 May 2001 were both approved by the Government. By the amendment the Act on State Aid will become fully compatible with the respective acquis. The draft Act on Investment Incentives is in close relation with draft amendment to the Act on State Aid. The draft Act on Investment Incentives regulates the conditions for providing state aid for development of regions. Incentives will take form of corporate income taxes deduction, contribution to the requalification of employees and contribution to the newly created working vacancies. The rules in the Act on Investment Incentives are not going to take place in case the Act on State Aid stipulates other rules concerning regional development. The proposed legislative norms are aimed at regulation of the rules in the area of state aid in compliance with rules valid in the EU member states. This will improve the business environment for domestic and foreign investors. Act on Investment Incentives should enter into force on 1 August 2001 and amendment to the Act on State Aid will enter into force on 1 January 2002. Other relevant measures include amendments to the employment law and to the income tax law. Administrative and tax barriers to doing business will be further reduced by means of other systemic measures designed to promote business and investment by domestic and foreign investors, taken in conjunction with relevant economic sectors. The basic objective of 34 National Programme for the Adoption of the Acquis 2001 Economic Criteria the revision of the tax system is to create a fair, simple and stable tax system guaranteeing favourable business and investment environment with low tax burden and equal rules applied to all. Moreover, anticipated amendment to the Commercial Code, Section 30 paragraph 3, will abolish the obligation of citizens from the EU and OECD countries to possess long-term residence permits in order to be entered into the Commercial Register. Through the approval of projects for other industrial parks under the currently drafted law on industrial parks, favourable situation will be created for implementing structural changes and for fulfilling the Slovak economy's development objectives with active participation of foreign capital. The most substantial development in connection with the creation of the institutional framework fostering investment and exports has been the establishment of the Slovak Investment and Trade Development Agency (SARIO), created on the basis of the Slovak National Agency for Foreign Investment and Development. SARIO has become the vehicle for Government's activities aimed at promoting investment and foreign trade. Regional development The Slovak Republic is characterised by deep regional disparities, including those in the economic sphere. This makes it necessary to adopt such regional policy in both the economic and social fields that will reduce the gaps in the standard of living between individual regions. In this regard, regional policy is one of the pillars of the strategy applied by Slovakia in the process of its integration into the European Union. Already at the pre-accession stage, Slovakia will have to be ready to make effective use of the support offered through EU Programmes PHARE, ISPA and SAPARD. The policy of economic and social cohesion is used as an important instrument for increasing Slovakia's competitiveness and for strengthening less developed regions through investment, mainly into small and mediumsized businesses, human resource development, infrastructure and the environment. Equal opportunities for individual regions will have to be ensured in parallel, while making full use of their demographic, economic and natural potential. The first document adopted with a view to promoting regional development in Slovakia was the "Integrated Plan of Regional and Social Development of the Slovak Republic", approved by the Government in 1999, and the related medium-term programming document the "National Plan of Regional Development of the Slovak Republic" (NPRD SR hereinafter), approved by the Government on 15 March 2001 by Resolution No. 240/2001. The aim of the NPRD SR is to analyse the development of Slovakia and its regions, to identify the strengths, weaknesses, opportunities and threats in respect of individual regions and sectors, to propose the strategy of their further development including identification of priorities and proposal of financial framework. The NPRD SR plays a key role in the allocation of financial means from pre-accession funds and, after the integration of Slovakia into the EU, from the structural funds of the EU. The state regional policy is mainly aimed at supporting structurally affected regions (industrial areas with declining traditional productions and growing unemployment), economically weak regions (regions with poor economic performance and lower standards of living) and specially designated regions (areas with high unemployment, low population density, rural areas, etc.). 35 National Programme for the Adoption of the Acquis 2001 Economic Criteria In June 2000 the Government approved the document entitled the "Programme of Financial Support for the Development of Districts with High Levels of Unemployment" and "Criteria for Granting Financial Assistance for the Development of Districts with High Levels of Unemployment", involving the support for affected regions through subsidies, especially to promote creation and development of small companies, change and expand operations of small companies, increase the production of small companies with a view to creating new jobs and changing economic structure of the district. In August 2000, the Government approved the legislative objective of the law on regional development, stressing the need to harmonise the newly prepared law with the laws linked to public administration reform. In harmony with "Priority Tasks of Slovakia's Government pursuant to the Regular Report from the European Commission", the aforesaid law is expected to take effect as of 1 December 2001. The draft law will be submitted for legislative processing by the end of May 2001. With the approval of the "Principles of Regional Policy of the Slovak Republic" in September 2000 the Government created prerequisites for harmonising Slovakia's regional policy with that of the EU. The document points to the need to concentrate regional policy instruments on dealing with problem regions, lays emphasis on decentralisation in decision-making and accountability, and on the cooperation among individual bodies in addressing the regional development issues. In September 2000 the Government approved the creation of an integrated network of regional development agencies. The tasks of newly established agencies in the regions are mainly to encourage foster the development of underdeveloped and to ensure integrated and effective use of funds provided by the state, local government and the EU. Small and medium-sized companies The development of small and medium-sized businesses faces a number of specific problems, including insufficient financial and capital resources, inadequate institutional support system, and lack of experience in the areas of investment, management, technology and marketing. Moreover, SMEs do not pay the necessary attention to the environmental impact of their activities and are not adequately prepared to deal with the new conditions brought about in connection with their entry on the European market. The policy of promoting small and medium-sized enterprise is focused on the following areas: a) Improvements in the administrative and regulatory framework: Small and medium-sized enterprises perceive administrative burden as excessive. In this regard, SMEs should receive assistance through the simplification of reporting requirements (vis-à-vis tax offices, the Social Insurance Agency, the National Labour Office, health insurance companies, the Statistical Office, etc.) and through the modification of certain administrative procedures applicable to SMEs. To reduce the legislative and regulatory burden on SMEs, it will be necessary to: conduct periodical audits with a view to eliminating unnecessary and ineffective legislation and regulation, and/or removing the duplication of legislative and regulatory requirements, introduce the obligation of the drafters of new legislative or regulatory measures to make the estimate of the financial impact of such measures for business entities. - 36 National Programme for the Adoption of the Acquis 2001 Economic Criteria b) The key problem for SMEs is, besides administrative barriers, access to affordable loans. Public funds currently allocated for supporting SMEs are mainly used to provide "soft loans" and guarantees, and to help SMEs to repay their loans from commercial banks. However, this kind of assistance does not help to finance the operation of small and brandnew companies in the initial phase of their development. c) more effective and innovative financial instruments will be introduced in an effort at reducing the risks and transaction costs for SMEs. One of these instruments, increasingly used also in other countries, is "venture capital". The support for SMEs must be enhanced with new elements, namely: the determination of measurable objectives (of a long-term nature, but also for individual years), based on quantitative and qualitative indicators, the setting up of a permanent monitoring system that will enable the comparison between the results obtained and the initial objectives; this comparison will serve as the basis for assessing the effectiveness of individual forms of support and, if needed, for the revision of individual approaches. The Government annually reviews the situation in the development of small and mediumenterprises and evaluates the implementation of financial assistance programmes for SMEs in six-months intervals. The approved Contributory START 2000 Programme sets out conditions for granting nonreturnable financial contributions to small start-up entrepreneurs, to be used for the payment of bank interest. The aim of the Programme is to support development projects of small starting entrepreneurs and to enable them to use progressive technologies. The following state programmes for the development of small and medium-sized enterprises were approved for the 2000 – 2005 period: - technology transfer programme, - programme of advising small and medium-sized entrepreneurs, - programme for implementing quality management system - QUALITY, - programme for supporting international cooperation - SUBCONTRACTING, - participation of the Slovak Republic in the "3rd Multi-annual Programme for Small and Medium-sized EU Companies for 2000", - support loan programme, - micro-loan programme, - programme of education and training for small and medium-sized enterprises, - programme on "Monitoring and Research in the SME Area", - education, training and consultancy programme for selected group of persons intending to set up a business and for starting entrepreneurs. The Slovak Republic as a member state of the WTO, the OECD and associated country of the EU is bound by agreements that stress environmental protection and related support for innovative and environmentally friendly technologies. This obligation entails the necessity to deal with scientific and technical problems and to introduce environmentally friendly technologies in Slovakia. Two state environmental programmes mentioned above - the 37 National Programme for the Adoption of the Acquis 2001 Economic Criteria "technology transfer programme" and the "QUALITY programme" – are designed to meet this requirement. Other programmes involving environmental protection include: - "Credit Programme ECOLOGY", - guarantee programme for fostering environmental protection through the provision of guarantees, - contributory programme for supporting economic activities which encourage efficient use of energies and of imported raw materials, - contributory programme for reducing energy consumption in residential buildings and flats, - contributory programme for promoting energy savings and the use of alternative energy resources, - contributory programme for supporting gradual elimination of the use of ozone-depleting substances ("OZONE" Programme). A network of information centres has been built in Slovakia with the aim of offering assistance to SMEs since 1992. The centres receive financial support for SME promotion from foreign funds, including from the PHARE programme. Regional advisory and information centres (RAIC) provide comprehensive advisory and information services to small and medium-sized start-up entrepreneurs, and help the already established small and medium-sized enterprises to achieve their entrepreneurial objectives. Twelve RAICs are currently in operation in Slovakia. Business Information Centres (BIC) are designed for small and mediums-sized enterprises that have innovative business ideas. These Centres provide long-term (2 - 3 years) advisory and material support to these enterprises, and serve also as incubators for small innovative firms. Through the European Network of Innovation Centres (EBN) they put them in contact with other enterprises in the network. Five BICs are operational to date in Slovakia; two of them (the Bratislava and Prievidza Centres) are members of the EBN. The role of both types of centres is to secure the transfer of information on appropriate technologies, to implement supporting programmes and to provide relevant advice. They also organise training courses for entrepreneurs including, inter alia, courses designed to strengthen environmental awareness of businesses. SELECTED SHORT-TERM PRIORITIES OF ECONOMIC POLICY OF SLOVAKIA (IN HARMONY WITH THE SMP PROGRAMME)  any future privatisation receipts will be used for "development programmes" only if the 2001 fiscal deficit is maintained at the level of 3.9 % of GDP Date: continuous - 2001  adopt the Law on State Debt and State Guarantees (the law should provide that any future receipts from privatisation will be used exclusively to reduce state debt and to finance pension reform; moreover, the volume of state guarantees in the forthcoming years is to be reduced) Date: 1 January 2002  of the existing 12 state funds, the following funds are to be abolished and included into the state budget: 38 National Programme for the Adoption of the Acquis 2001 Economic Criteria - 8 funds, i.e. state fund for the protection and improvement of agricultural soil, state fund for forest cultivation, water management state fund, health protection state fund, physical education state fund, Pro Slovakia cultural state fund, road management state fund, state fund for market regulation in agriculture – to be transformed into the intervention agency 2 other funds (state fund for the support of agriculture and food industry, state fund for the environment) Date: September 2001 - Date: December 2001  change the organisational structure of tax administration in harmony with IMF recommendations This task has been fulfilled through the "Decision of the Minister of Finance of the Slovak Republic No. 8/2001 on the Internal Structure of the Central Tax Directorate of the Slovak Republic" of 28 February 2001. Date: March 2002    set up a tax office for large taxpayers in Bratislava Date: December 2001 adopt a decision on the institutional framework for banking supervision Date: May 2001 adopt a comprehensive set of measures for increasing labour market flexibility and restricting illegal work Date: June 2001  introduce a comprehensive model of the three-pillar pension insurance system. Date: March 2002 39