Business Czech finance minister focuses on Slovak lessons

04-02-2014 15:07 | Chris Johnstone

Slovakia has come to the foreground as a possible inspiration for finance minister Andrej Babiš’ to shake up his new fief and the Czech Republic.

Andrej Babiš, photo: Filip JandourekAndrej Babiš, photo: Filip Jandourek Czech Minister of Finance Andrej Babiš seems keen to shake up his ministry and force it to learn from foreign experience. And nowhere does his attention appear to settle more than Slovakia. As Babiš recently commented; whereas the Slovaks in the past learnt from the Czechs, it might now be time for the tables to turn and see Czechs learning from Slovaks. You almost suspect a reverse takeover bid mounted by the billionaire businessman and ANO party leader.

On his visit last week to Bratislava, Babiš also took in a few Slovak ministries to deepen his knowledge of how things are done there. He has already suggested that Czechs could follow Slovaks in clamping down on Value Added Tax fraud. Satellite surveillance of lorries in Slovakia has apparently allowed officials to stamp out so-called carousel fraud and, unfortunately, driven the criminals into the vulnerable Czech Republic, according to Babiš.

Slovak lessons could also be taken in raising tax revenues and introducing a new and cheaper state emergency oil reserves and fuel regime, the minister adds. He has highlighted in the past the fact that Slovakia largely escaped the wasteful Czech solar power boom. Here, the more cautious Slovaks evidently learnt what not to do.

Selective inspiration can be found almost anywhere outside states that are not self-evident basket cases that have failed, though some of Mr. Babiš’ Social Democrat colleagues in the Cabinet might prefer Scandinavian countries or Germany as their role models.

For all its economic catch up success, Slovakia still shows many of the strengths and weaknesses of its bigger Czech neighbour. Economic growth has been concentrated on a few key sectors, such as car making, which are plugged into the globalised world market and subject to downturns in demand.

On employment and education, Slovakia has a much worse problem of joblessness and the number of Slovak students opting for Czech universities is hardly a vote of confidence in local institutions. Transport too, has been a problem area with the Slovak government clearly tempted to launch more public-private partnership projects for road building but unsure whether they can be structured properly so that they aren’t a fast lane for rapid construction company profits.

Both countries have major regional disparities in development and both Slovakia and the Czech Republic have patchy records on pumping EU funds.

Even regarding Slovakia’s famous clamp down on corruption, where local agent provacateurs can be used by the police to catch suspects, the overall results might not be so quick or convincing. Slovakia was placed 61 in last year’s Transparency International corruption perception survey compared with the Czech Republic’s slightly better ranking of 57 in the global comparison.

More broadly, the international credit agencies tasked with taking a pretty broad overview of a country’s performance see little difference between the Czech Republic and its former sister state. One, Standard and Poor’s, puts the Czech Republic slightly ahead, but two of the other big global agencies give the same rating to both countries.

Perhaps, Babiš believes local lessons from a country with a similar background and institutions will be easier to translate into practice than some off the shelf solution from further afield. If the answers are appropriate, then the ‘made in’ label should not really matter.

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