From the 1990s to the beginning of the 2000s, Slovakia underwent a profound political and economic transformation – from a single-party state-socialist regime to a pluralist participatory democracy, and from a centrally-planned to an open-market economy. Extensive and profound reforms were needed to accomplish this transition, and increasing the effectiveness of public finance management was a key component of this process.
Legislative, institutional and procedural changes had to be made across public administration. Central and local government relations and competences were rearranged through the process of fiscal decentralisation. Public finance transparency and accountability has improved, the accuracy and quality of public finance reporting has increased, and cash accounting has been complemented by an accrual-based approach.
Special institutions, such as the State Treasury, and the Agency for Debt and Liquidity Management were set up. The strategic allocation of resources was strengthened through a results-focused modernized budgeting.
The Macroeconomic and Fiscal Forecasting Unit was established at the MF SR to prepare a realistic medium-term fiscal framework. The tax system was simplified, and tax collection has improved. The fight against tax evasion and avoidance has also been stepped up. Slovakia succeeded in rationalizing institutional structures, enhancing personnel skills, and streamlining procedures and decision-making mechanisms.
Public finance reform is regarded as one of the most successful areas in Slovakia’s economic transition. It had a direct influence over the country´s fiscal consolidation, macroeconomic stability and economic growth. This is proven by the ease with which Slovakia was able to meet the Maastricht public deficit and debt criteria for its entry into the Euro Area – January 2009. In fact, the vision of Slovakia joining the European Union was one of the driving forces of the transformation.
Slovakia helps from 2009
Today, as a member of the European Union, and the Eurozone, Slovakia continues to further improve its Public Financial Management processes. Given the successful and ongoing experience in this field, and as a responsible international partner, Slovakia has made Public Financial Management one of the key areas of its development assistance – using accumulated know-how to help other countries.
In 2009, the Slovak Ministry of Finance in partnership with the UNDP, launched the Public Finance for Development programme. It focuses on providing technical assistance to Eastern Europe and Western Balkans countries that are going through transformation processes and have an ambition to comply with the EU accession agenda. The programme directly contributes to fulfilling the sustainable development goals through the strengthening of their PFM systems.