Table of Contents

Executive Summary
Assessment and Recommendations
Chapter 1. Key Economic Challenges Facing Slovakia
-Slovakia Has Successfully Accelerated its Catching-Up Process
-Four Challenges in Fostering Broader-Based Growth and Higher Employment
-Annex: The 2004 Tax Reform
Chapter 2. Policies to Smooth the Path to Euro Area Succession
-Price Stability Looks to Be within Reach but Risks Remain
-Exchange Rate Stability May Be the Most Challenging Criterion
-The Cost of Pension Reform Creates Risks for Meeting the Government Deficit Criterion
-Interest Rates Have Already Converged to Euro Area Levels
-Conclusion
-Annex: Estimating Slovakia's Equilibrium Exchange Rate
Chapter 3. Policies to Boost Job Creation and Improve Labour Mobility
-Incentives to Work Have Been Strengthened
-Job Creation: Promoted by Flexible Labour Markets but Inhibited by High Payroll Taxes
-A New Housing Policy is Required to Improve Inter-Regional Labour Mobility
Chapter 4. Improving Conditions for Innovation and Growth
-A Development Strategy for Diversification beyond FDI
-Improving Human Capital and Education
-Improving Conditions for Innovation in the Business Sector
-Developing an Information Society
-Improving the General Business Environment
Chapter 5. Building a Modern Public Sector
-Fiscal Balances Have Considerably Improved and Fiscal Institutions Have Been Strengthened
-A Far-Reaching Administrative Decentralisation Was Launched
-The Medium Term Fiscal Framework is Ambitious but More Priority-Setting is Needed
-New Reforms aim at Enhancing the Quality of Public Governance and Services
-Annex: Fiscal Decentralisation in Slovakia
Annex: The Implementation of Previous OECD Recommendations