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GAŠPAROVIČ REJECTS NOMINEE FOR KEY CENTRAL BANK POST IN HISTORICAL DECISION, CITING A LACK OF EXPERIENCE

President defies parliament, cabinet

AFTER three months of delay, President Ivan Gašparovič has finally decided that he will not name Deputy Finance Minister Vladimír Tvaroška to the post of vice governor of the National Bank of Slovakia (NBS). As vice-governor, Tvaroška would have been responsible for monetary policy, a key responsibility ahead of the planned introduction of the euro in 2009.

AFTER three months of delay, President Ivan Gašparovič has finally decided that he will not name Deputy Finance Minister Vladimír Tvaroška to the post of vice governor of the National Bank of Slovakia (NBS). As vice-governor, Tvaroška would have been responsible for monetary policy, a key responsibility ahead of the planned introduction of the euro in 2009.

The president's decision is the first time in Slovakia's history that the head of state has refused to honour an appointment approved by both the cabinet and the parliament. Finance Minister Ivan Mikloš, who is Tvaroška's mentor, labeled it "a very dangerous precedent".

While NBS officials greeted the decision as "not good news" for the central bank, the cabinet at its June 7 session decided to challenge the president's move with the Constitutional Court.

It is unclear how long it will take for the Court to resolve the dispute, but it is certain to last at least several months.

Given that the government and parliament approved the nomination in March 2006, Mikloš said that the president was obliged to approve the nomination.

Gašparovič, however, argued that Tvaroška does not meet one of the criteria for the job.

"If the president appointed Tvaroška as NBS vice-governor despite the fact he doesn't meet the condition of having at least five years of experience in a management, scientific, or pedagogical position in the monetary field or in finance, as a state official he would not be acting in accordance with the law," said Marek Trubač, the president's spokesman.

NBS Governor Ivan Šramko, who like Mikloš believes that Tvaroška meets the expert criteria for the job, said at a June 7 press conference that the NBS would likely have to make some changes to its top board to address the new situation.

"The post of the vice-governor for monetary policy is very important and should this situation [the vacancy] last long, the NBS bank board will have to take steps to eliminate the risks that flow from leaving this position vacant," Šramko said.

The Slovak media have speculated that the president might have other than expert or legal concerns. The opposition Smer party, which supported Gašparovič in his 2004 run for the presidency, was unhappy with Tvaroška's nomination, and did not support it in parliament. Smer MP Maroš Kondrót claimed that Mikloš and Tvaroška "made mistakes" in the 2005 state budget that forced them to increase consumption taxes during the year.

Gašparovič took an unusually long time to scrutinize Tvaroška's credentials, and eventually decided that his four years as Mikloš' deputy and his role for four years before that as the leader of Mikloš' team of advisors did not constitute five years of management experience in finance.

The president, however, denied playing politics with the nomination.

"We absolutely reject any allegations that the president decide in favour of any political party," Trubač told The Slovak Spectator.

According to the spokesman, anyone who is familiar with the NBS Act would agree that the president could not approve Tvaroška's nomination "...not even if all parties stood on their heads [to persuade the president to do so]".

According to constitutional lawyer Radovan Procházka, however, the president should have accepted the decision of the parliament.

According to Procházka, by approving the cabinet nomination, parliament had confirmed that the candidate met the conditions for the position.

Regardless of the political background of the issue, analysts said that the squabble over the vice-governor nomination came at a bad time.

Miroslav Šmál of Poštová banka said that with the NBS and Slovakia on the road towards adoption of the euro, "the independence of the central bank should not be undermined.

"Slovakia now finds itself at a demanding stage ahead of the planned adoption of the euro, during which difficult issues such as inflation and budget deficits must be tackled. The president surely had his reasons for rejecting Tvaroška, but I'm also sure that the same can be said of the Finance Ministry which nominated him to this post," Šmál told The Slovak Spectator.

He noted that the NBS board still does not have a full complement of members because of the vacant vice-governor post.

In his opinion, the NBS, just as central banks across the world, needed a full staff to be able to handle local issues related to global developments, such as the growth in oil prices and their impact on local inflation.

Other analysts agreed.

"The vacant vice-governorship for monetary policy is a notable loss at a time when Slovakia is preparing for entry into the Eurozone," ING bank analyst Ján Tóth told SITA.

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