Slovakia's Surge: The New System's Impact on Fiscal Decentralisation

Slovakia's transition history long paralleled that of the Czech Republic, but the former adopted bold new reforms early in this decade. This article is a comparative treatment of fiscal decentralisation since 1993 and more recent reforms of public administration, the two efforts representing the foundation of the New System. Czech experience is invoked simply to provide an appropriate benchmark for the evaluation of Slovakia's New System introduced in 2004, including the 19% ‘flat tax’ and other striking measures in local public finance.

The second focus of the article is on the macroeconomic impact of the New System. It is too early to perceive what its long-term effects will be, so this treatment is more tentative. But because one would like to know whether Slovakia's return to an economic growth path is actually a result of the New System and whether this recent growth will persist, these issues are given some consideration.