The team of the International Monetary Fund (IMF) recommends Slovakia not cut on its VAT rate back to 19 percent, but retain the current level of 20 percent. Head of the IMF mission in Slovakia James John stated this claiming that if Slovakia resorted to cuts in VAT, this could result in losses to state coffers of some 0.3 percent of GDP.
The country would then be forced to compensate for these losses either by searching for other resources or by cutting its expenditures. However, the Slovak legislation states that the VAT rate should be reduced automatically when the public-finance deficit falls below 3 percent of GDP. Finance Minister Peter Kažimír stated that the Government still hasn’t decided how it will act on this but for now is waiting for official notification on the country’s economy from Eurostat. Furthermore, the IMF advises Slovakia to increase expenditures on infrastructure, boost employment and lower bank levy.
