The Finance Ministry is planning further reduction of state support of housing construction savings. The state bonus on housing construction savings should go down from 20 percent to 15 percent, according to the draft revision to the housing construction law to be discussed by the cabinet in the near future. The revision is a response to the trend of gradual decreasing interest rates on the money market. Depending on the effect of the approved change in the state subsidy, the revision should bring savings up to SKK 100 million to the state budget. The revision should take effect from July 2003.

According to the Finance Ministry, effective interest on housing construction savings should be 7.7 percent after the change. Differentiation of interest rates between housing construction savings and the average interest rate on time deposits in banks would be thus preserved. After the cut in key interest rates by the National Bank of Slovakia (NBS), the average interest rate on time deposits in banks is 4.84 percent. Concurrent exemption from taxation interest income on housing construction savings will thus still stimulate effective interest rates on housing construction savings, states the Finance Ministry.

Parliament last approved a revision to the housing construction savings law in mid-November 2002, lowering the state bonus on housing construction savings from 25 to 20 percent of the annual saving. From January 1, 2003, the state subsidy on housing construction savings has lowered to SKK 3,000 per account annually on concurrent increase of the calculation basis for the state bonus to SKK 15,000.