Controversial bank levy replaced with development fund

Economics and politics

Controversial bank levy replaced with development fund

22. 06. 2020 13:35

On Monday, the Slovak Banking Association (SBA) agreed with the Governing cabinet on cancelling the controversial bank levy. In exchange for this step, the banks should help to restart the economy.

The government agreed with the SBA on creating the so called Slovak Development Fund, which will replace the levy. Prime Minister Igor Matovič said that the money paid in levy per year stayed "practically unavailable and frozen and could not have been used to help people and the economy." As the PM added, the state needs more liquidity due to the corona crisis and the new fund should provide it. Banks should invest €1 billion into it and the money could be used for state projects. Moreover, the banks should invest another €1 billion into loans for people and businesses and €0.5 billion into loans for state projects.

The special bank levy entered into force in 2012, originally covering potential future financial crises, and protecting the stability of the banking sector in Slovakia. The original plan was to cease it in 2020. However in November 2019 the previous government decided that the levy would continue and increased the levy from 0.2% to 0.4%, thus, doubling the income from the levy from approximately €150 million to €300 million. A that time, the governor of the National Bank of Slovakia Peter Kažimír said that the extension of the levy and its increase posed a higher risk in terms of financial stability.

Mojmir Prochazka, Photo: TASR

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