WORLD BANK SUPPORTS PUBLIC FINANCE MANAGEMENT REFORM IN SLOVAKIA

WORLD BANK SUPPORTS PUBLIC FINANCE MANAGEMENT REFORM IN SLOVAKIA

Contacts: Washington - Miriam van Dyck (202) 458-2931– office
mvandyck@worldbank.org

Bratislava – Petra Vehovska - (421-2) 59337-417-office
pvehovska@worldbank.org

WASHINGTON, June 10, 2003— The World Bank today approved a €5 million Public Finance Management Project for Slovakia, which will support the government’s Public Finance Reform Strategy by strengthening the country’s institutional capacity to use public resources more effectively, efficiently and in line with government priorities.

One of the top priorities of the government elected in 2002 was to put in place a coherent and comprehensive system for managing public finances. The Public Finance Management Strategy was formally adopted by the Cabinet in April 2003. Building upon a number of reforms instituted since 1999, the strategy aims to strengthen and link the institutions and decision- making processes used to allocate public resources. The strategy involves redesigning the budget management process so that funds are allocated to policies shown to be most effective and in line with government priorities within a realistic budget envelop. It also aims to move away from a focus on short-term annual budgets to a medium-term approach in line with modern budgetary practices common among members of the European Union.

The public finance management reform is one of the key components of fiscal consolidation, which is considered by Slovak authorities as an essential precondition for fulfilling the Maastricht criteria on a sustainable basis and for Slovakia’s membership in the EU. The reform will enable Slovakia to achieve sustainable and transparent public finances compatible with macroeconomic stability while also providing for high quality and effective public services.

“Public finance reform is not simply a question of having the political will to impose expenditures cuts or raise revenues,” said Sandra Bloemenkamp, head of the World Bank team. “High quality public services and sustainable public finances require proper institutions and decision making processes. Effective management of public finances implies that policy makers in all spheres have the means to take into account available resources and the full implications of policy choices. The reforms that the World Bank is supporting provide mechanisms to allow policy-makers to confront the resulting fiscal choices openly.”

The Public Finance Management Project has four components:

Improving the budgetary process by supporting the effective implementation of program budgeting and moving to multi-year budgeting practices, and improving the allocative and operational efficiency of public expenditures.
Strengthening the macro-economic analysis and forecasting capacity of the Ministry of Finance and linking these forecasts firmly to the budget process.
Supporting the establishment of a professional debt management capacity and helping to implement the new State Treasury system.
Supporting the effective coordination of the overall reform process.

Systems developed under this project will improve resource planning, budgeting and public expenditure management and control the capacity to properly formulate, prioritize and execute fiscal policies. The project will also improve political accountability and effectiveness of the use of public resources and enable more efficient debt and liquidity management.

The World Bank loan has a maturity of 5 years with a grace period of 1 year. The Public Finance Management Reform Project will be implemented over the next 3 years and will be completed in 2006.

For more information about the World Bank in Slovakia visit
http://www.worldbank.sk

For more information about this project visit
http://www.worldbank.sk/projects.htm