2012年-CEPS欧洲政策研究中心_Slovakias_Courageous_Gimmick_2页_98kb

Slovakia's Courageous Gimmick Summary

Core Content

Slovakia, a small Central European country with a population of 5 million, has adopted an innovative and controversial approach to address its growing government debt and budget deficit. The country gained independence in 1993 and has been known for its unorthodox economic policies. In response to a budget deficit that reached 7.9% of GDP in 2009 and was expected to remain similar in 2010, the new government introduced a consolidation package aimed at reducing the deficit to below 5% of GDP in 2011 and below 3% by 2013, as required by the European Union.

Main Points

• Unprecedented Debt Levels: Both the U.S. and Europe face high government debt and budget deficits, making Slovakia's approach a notable example of fiscal reform.
• Slovakia's Unorthodox Policies: The country has long implemented unique policies, such as a flat 19% super-tax on sales and income, and a transparent system for public contracts to prevent corruption.
• Fiscal Consolidation Package: The new government introduced measures to reduce the budget deficit, targeting EU-mandated thresholds.
• Innovative Salary Link to Fiscal Deficit: A key innovation is a law that ties the salaries of top government officials to the fiscal deficit, with automatic cuts if the deficit exceeds the EU threshold of 3% of GDP.

Key Information

• Fiscal Rules and Fiscal Council: Slovakia plans to introduce constitutionally protected fiscal rules and a Fiscal Council to monitor them, similar to a Congressional Budget Office but with more authority.
• Salary Adjustment Mechanism: The law establishes a "deficit deduction" system where salaries of senior officials are reduced by a percentage tied to the size of the deficit. For example, if the deficit is 7% of GDP, salaries are cut by 15%.
• Public Perception and Political Messaging: The law is seen as a "gimmick" by some, but it serves two important political purposes: it signals the political elite's commitment to fiscal responsibility and focuses the attention of all senior officials on maintaining a balanced budget.
• Comparison to EU Stability and Growth Pact: Slovakia's internal fiscal rules are a more direct and enforceable version of the EU Stability and Growth Pact, which has been criticized for being ineffective.

Conclusion

Slovakia's approach to fiscal consolidation, particularly the link between top officials' salaries and the fiscal deficit, represents a bold and unconventional strategy. While the law may be viewed as a gimmick, it effectively communicates political commitment to fiscal discipline and incentivizes senior officials to prioritize economic stability. This internal mechanism could serve as a model for other countries seeking to enforce fiscal responsibility in a more direct and personal manner. The success of this approach will be closely watched, especially in comparison to the EU's less effective Stability and Growth Pact.