Slovakia: Center-right coalition takes office in the midst of Covid-19 crisis
March 27, 2020
On 21 March, President Zuzana Caputova swore in the new center-right coalition government, led by Igor Matovic from the Ordinary People and Independent Personalities (OLANO) party, which won over one-third of parliamentary seats in the 28 February election on an anti-corruption platform. The new government takes office just as the economy braces for the impact of the Covid-19 pandemic, while the transition of power has delayed an economic response to the outbreak.
OLANO will head a four-party coalition including socially conservative and Eurosceptic party Sme Rodina (We are Family); liberal SaS (Freedom and Solidarity); and center-right Za Ludi (For the People), which together have a majority to change the constitution. The new government replaces the center-left Smer-SD party-led administration, which had been in power since 2012 and oversaw a period of robust economic growth.
While the new government had planned to start with constitutional anti-graft measures, the current Covid-19 crisis has shifted priorities to preventing a collapse of the healthcare system, minimizing disruption to supply chains and supporting digital education. The previous government declared a state of emergency on 15 March, closing schools and businesses, restricting movement and closing borders. Moreover, all four of the country’s car plants—the backbone of the export-led economy—have suspended production, likely crippling economic activity.
The new government has responded with a set of measures to cushion the economic fallout from the virus, which are pending cabinet and parliamentary approval. The measures include the introduction of an allowance for quarantine sick leave; a contribution for employers that keep work positions financed through the state budget or the European Social Fund; and aid for the self-employed, which is also to be funded by the state budget or the European Social Fund.
Growth is expected to take a hit this year as the Covid-19 pandemic hampers both domestic and external demand. Fixed investment is seen plunging amid downbeat sentiment and elevated uncertainty with regards to the duration of the pandemic. Meanwhile, on the external front, exports are seen contracting on disrupted supply chains and subdued European demand.
Author: Hanna Andersson, Economist