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Civil service cuts to speed privatisation and boost budget

Advisors close to Deputy Prime Minister for the Economy Ivan Mikloš are predicting "a big fight" as a series of public sector reforms aimed at trimming state sector fat go to ministries for intra-governmental comment before a full submission in early July.
A recent audit carried out by the Deputy PM's office showed that state administration reforms could save between 2.6 and 3.9 billion Slovak crowns ($60 to $90 million) for the state budget, vital both in keeping the state's finances under control and making state administration more effective.
"We are trying to free up [the government's] resources, not just to save money but to make the government more efficient. In the long run it will be more cost-effective as well, but at the moment we are trying to attract the very best possible people [to the public sector].


Having proposed wide-spread civil service reform, Deputy PM for Economy Ivan Mikloš (right) has the knives out for fat ministries.
photo. TASR

Advisors close to Deputy Prime Minister for the Economy Ivan Mikloš are predicting "a big fight" as a series of public sector reforms aimed at trimming state sector fat go to ministries for intra-governmental comment before a full submission in early July.

A recent audit carried out by the Deputy PM's office showed that state administration reforms could save between 2.6 and 3.9 billion Slovak crowns ($60 to $90 million) for the state budget, vital both in keeping the state's finances under control and making state administration more effective.

"We are trying to free up [the government's] resources, not just to save money but to make the government more efficient. In the long run it will be more cost-effective as well, but at the moment we are trying to attract the very best possible people [to the public sector]. This is a complete restructuring of the civil service," said Mikloš' advisor Katarína Mathernová.

She added: "The money [allotted within state administration] is not spent efficiently at the moment."

Covering all 22 ministries, the findings have, according to Mathernová, produced an agreement in principal on the need for the reforms. However, there is expected to be baulking from some ministries when they are asked to make cutbacks. "Of course by the time it gets through the government there likely will be some adjutments made. This is not a take-it-or-leave-it proposal," Mathernová observed.

The audit recommends three major changes to the present state administration: reorganisation of the ministries, shifting authorities among the ministries, and integrating budgetary organisations (such as the Road Fund and various cultural bodies) into the ministries that would reduce the number of civil servants by 15-20%. The audit also concluded that a reduction of budget-supported bodies either through privatisation or turning them into public institutions was needed.

The reforms, while expected to significantly reduce pressure on the budget, are also hoped to give a boost to what some observers have criticised as lagging privatisation, by making civil servants more efficient and reducing bureaucracy.

Of 17 privatisation projects scheduled for the first half of this year, only seven have been completed. The privatisation of the state's three biggest banks, Investičná a rozvojová banka (IRB), Všeobecná úverová banka (VÚB) and Slovenská sporiteľňa (SLSP), has been criticised by both the International Monetary Fund (IMF) and the Organisation for Economic Cooperation and Development (OECD) as progressing too slowly, while a winner of the tender for the sale of the state's telecoms monopoly (Slovenské Telekomunikácie - ST) is only now about to be announced, some seven months behind schedule.

"We are pleased with things such as the banking sector privatisation, but we would like privatisation to go quicker than it has been. But it is all a question of capacity. There is a lot of work in preparing all these projects and there are bureaucratic problems in pushing things through quickly, despite a political will at the top [of government]," said Mathernová.

Ministries were reluctant to comment on the reforms. Finance Ministry spokesman Peter Švec said: "Right now we are just analysing the material and we would not want to comment on this now. It is still under consideration."

Savings in the public sector have long been urged by international groups such as the World Bank (WB), the IMF and the OECD, with the state budget being squeezed and little room seen to boost state revenues.

The budget for 2000 envisages a deficit of 18 billion crowns ($433 million), with revenues of 183.58 billion crowns and expenditures of 201.58 billion crowns. The government's predictions for 2001 see a deficit of 22 billion crowns.

"The reforms are absolutely the right move," said Anton Marcinčin, a consultant with the World Bank in Slovakia. "We can only speculate on what short-term effect this reform would have on the budget, but I think that this is the kind of thing that would have a very large long-term effect."

Marcinčin added that the Deputy Prime MInister's move would deal with a problem that former communist countries everywhere are trying to overcome. "If you look [at the state sector administration] in Slovakia and see how long some of the people have been working there - it's wrong to say that anyone who has been there more than 20 years should go, but sometimes it looks like it's a socialist sector," Marcinčin added.

Recently Mikloš admitted that often, if the government wants to carry out a project quickly, it will appoint an external team to get the job done even though it pays its own public sector staff to perform such work.

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