Address of the Prime Minister of the Slovak Republic, H. E. Robert Fico to the OECD Council, April 11, 2013
Dear Secretary General,
It is for me a great pleasure to be here today in the OECD. Especially in time, when we “all need to be on board”, because the economic situation requires to address problems jointly. The consolidation of public finances and austerity measures are much more painful for countries, such as Slovakia, with low salaries and pensions. Besides determination and political courage, we must have our citizens on board, because it´s about people: their jobs, their equal opportunities and their trust, and it is about responsibility of the politicians and hard work of the national governments.
In this context I very much welcome the OECD´s work on new approaches to economic thinking which could become, for all of us, especially politicians, good guidance how to address the current economic challenges. I also think that current debate what you have in the OECD on accession of new countries is a necessary one. The enlargement would contribute to higher relevancy of the organization and to the respecting of OECD standards by more economies in the world.
During a very constructive and inspiring discussion with Secretary General and the OECD team, I expressed the interest in further deepening of our cooperation, particularly in the areas, where Slovakia faces a major challenge in the coming years: education, jobs, public administration and the exploitation of the EU funds in the next Multiannual Financial Framework 2014-2020.
Popular discussion on relationship between growth and consolidation reminds me commonly known dilemma - which came first, the chicken or the egg? That is good subject for academic debate, but to be honest, I am politician and I am obliged to conduct “better policies for better lives” of Slovak citizens.
This year Slovakia celebrates the 20th anniversary of independence. The peaceful split of Czechoslovakia has been a start of our success story, even with some obstacles at the beginning. In late 90´s main political parties reached the consensus on the long-term country strategic priorities - to join the EU, NATO and OECD as the cornerstones of our security and prosperity. In 2004 we became member of the EU and NATO, but 4 years before we had already enjoyed the privilege of being a member of the OECD – more than half century after the first offer to participate in the Marshall plan (being a part of Czechoslovakia by then). We are very proud, after 20 years of economic transformation and integration, of having capacity today to provide the development and humanitarian assistance to those who need it. I consider it our moral obligation to “pay back” what we had received during all those years.
Having opportunity to address, as the first Prime Minister of Slovakia the OECD Council, I would like to underline the potential of the OECD for the Member States in providing the overall assessment as well as objective recommendations to improve structural performance and their policies. I highly appreciate the most defining character of the OECD - “speaking truth” to the national governments. I would more welcome also advice how to implement what is recommended, because implementation matters the most.
According to current prognosis Slovakia will be among Eurozone countries with higher than average economic growth in the Eurozone in upcoming years. In this context I would like to draw your attention where Slovak economy is right now.
The smaller countries are becoming bigger when keeping their doors open and that´s Slovak example – export represents 87% of our GDP, and share of EU countries reaches 85% of all export. EU countries share 90% of total foreign direct investments in Slovakia. In 2012 economic performance of our country measured in terms of GDP per capita achieved 74.7% of EU average – comparing to 2004 when Slovakia join the EU, it was 48%. Today, Slovakia is the world’s biggest car producer per capita.
In financial sector we have managed successfully to restructure our banking system. That reform enabled to create stable banking environment– banks in Slovakia stayed stable even during current financial turbulences.
In public finances the ambition of the Slovak Republic is to achieve a balanced state budget in near future and further reduction of public debt. In 2012 Slovakia adopted a law on budgetary responsibility with capping public debt at a level of 60% of the GDP. The public finance deficit for 2013 is set to 2.9% of GDP. For the following years we aim to further reduction – in 2014 to the level of 2.4% of GDP and in 2015 to 1.9% of GDP.
Key measures for successful consolidation in coming years will be efforts to reduce tax evasions and ensure effective collection of taxes; to prepare particular reforms to cut public expenditures and to introduce increase of taxes less harmful to economic growth and relatively low in international standards such as environmental and property taxation. In our understanding responsible government and sustainable public finances are the main prerequisites for healthy business environment and economic growth.
Due to the rapidly changing world we need to be focused on tackling the social consequences of the crisis, fight poverty and social exclusion, exploiting in particular the potential of a green economy to promote growth and competitiveness. We are inspired by the OECD work in all these areas.
We are fully aware on our shortcomings identified by Economic Survey on Slovakia 2012 as well as of other publications of OECD. All OECD reports´ findings and recommendations have been seriously discussed and have always been the valuable source of inspiration in the process of setting the groundwork of our policies in many areas, from fine-tuning of our anti-bribery legislation to the preparation of the Partnership Agreement with EU on the exploitation of the European funds as well as the preparation of strategic measures to boost the economic growth.
The high unemployment rate remains a serious social as well as political issue therefore Slovakia has taken seriously the OECD recommendations into account to formulate the active labor market policies, particularly for young people and those most affected by the crisis. At the end of last year we launched two projects to support the employment of young people aged up to 29, which should create 14 000 jobs. Our measures promoting economic growth are focused on improving the quality and effectiveness of the education system and the needs of the labor market in line with the recommendations of the OECD.
I am glad to acknowledge that in the most rapidly developing business sector over the past decade - technology, the value added in the information and communication technologies as a share of business sector value added has substantially increased, leaving behind some more advanced OECD countries. This might be one of the sectors in which we could see the future for our youngsters.
We welcome the fact that the dialogue with OECD is intensive not only on the official level but also on the expert level. I will further encourage members of the Slovak government more intensively cooperate with individual directorates of the OECD and tap on the organisation’s resources either through directly targeted services of the organisation or participation in working parties and committees meetings as well as participation in special OECD programmes. Thus, at the same time, we wish to be also the contribution to the OECD work. We have lessons learned from the implementation of painful structural reforms during the integration processes.
As a member of the Eurozone and the Schengen zone, Slovakia attained the highest possible degree of integration into the EU. It goes fully in line with the long-term strategic orientations where the EU is at the very heart of our priorities, it is a fundamental framework for all our policies. And it has been recognized by all significant political parties in Slovakia.
Before the current crisis I thought that only in Slovakia we had a tendency to portray the reality in darker colours. It is clear that we are going through a difficult period, but the EU has never been perfect. However the crisis detected our systemic shortcomings. We are being caught up by what we neglected when setting the institutional framework for common currency or the internal market, which still is not completed. There are no simple solutions at our hand. Europe will not be “renewed” overnight. It will be difficult, but in the past EU proved that it is able to address tricky challenges. I have no doubt it will prove it again.
Regardless of problems we are facing today, we should have courage to say that the EU remains attractive as the most successful model of integration: politically; economically (the biggest economy in the world in the terms of the GDP, biggest common market in the world, biggest investor in most parts of world) as well as in terms of human rights protection and living standards. It´s not by chance that dominant majority of the OECD Member States are also Members of the EU. I would only encourage the OECD to benefit from the European experience.
What recently Europe lost, was not economic power, but the trust of the markets. More dangerous is that consecutively we are losing the trust of our citizens. Losing confidence goes fast; to regain it desires much more time and effort. Today's crisis is particularly crisis of confidence in our ability to cope with our duties.
Even the all OECD recommendations, peer reviews, as well as proposed models of fiscal, banking or political union within the EU, will not help us if we are not respecting the rules we agreed upon. I emphasized this approach also during our recent March EU summit.
In my understanding of the prospect of Europe, two principles are crucial: responsibility and solidarity. We all have to fulfil our own commitments, because solidarity can only go hand in hand with individual responsibility.
>> OECD work on the Slovak Republic: www.oecd.org/slovakia