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Update No: 062 - (20/06/02)

The premier of Slovenia, Janez Drnovsek, is becoming a highly respected figure on the world stage. He it was who introduced Bush to Putin in June last year. The Russians like Slovenia, an ex-communist country with splendid attractions as a tourist location, yet never under Russian rule, so free of the resentment felt by the Georgians and others. Drnovsek welcomed UN Secretary Kofi annan to Ljubjana in early June.

The mini-Switzerland 
The Slovenes are doing well, by far the most successful of the former Yugoslav peoples. Indeed with a per capita income on a par with Portugal or Greece at nearly US$17,000 per annum, they are certain to join the EU and do well within it, a mini-Switzerland, in the Balkan stretch of the Alps. 
Like Switzerland, they have attracted the wrong as well as the right sort of attention from abroad. Not without reason, the government is concerned about the encroachment of the Italian mafia, which has made embarrassing inroads into certain sectors of the economy, as with Montenegro, (whose president, Milo Djukanovic, is under official Italian investigation for smuggling). Consequently the provisions for foreign investment are not so open as the EU commission would like.
This is the big stumbling block in EU negotiations. Nevertheless, the government has concluded a majority of the 29 chapters of 'l'acquis communitaire.' There is no doubting the good will on both sides.

Steady growth of the economy
The republic's economy has been growing steadily, if not spectacularly, but then from a much higher base than in other post-communist countries. GDP grew by 4.6% in 2000 and then by 3.0% in 2001 and a prospective 3% in 2002, very respectable compared to an EU average expected for this year of 1.3%, the relevant point of comparison for Slovenia these days. The figures for foreign direct investment (FDI) are more disappointing, a meagre US$110m in 2000, US$330m in 2001 and a derisory US$131m expected for this year.
That should all change once Slovenia is in the EU, with a compliance with all the chapters of 'l'acquis communitaire.' For there could be not better place for foreign investors, the natural gateway to the entire ex-communist Balkan region, yet in effect an EU country already, with, as it so happens, higher educational standards and a tradition of multi-lingual cosmopolitanism. The very reluctance to accept newcomers on any terms is a proof of the integrity and soundness of the Slovenes as potential partners. There is no post-communist country with brighter prospects.

Inflation the problem
The rate of inflation is around seven per cent annually. Indeed, the May figure was of 7.5% on an annual basis. But the price rises in 2002 have been of a one-time nature, analysts aver. The central bank is determined to reduce the inflation rate to 3-4% per annum by the time Slovenia joins the EU, due in 2004. Drnovsek and central bank chairman, Mitja Caspari, are of like mind here.

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BANKING

Sale of 5% in the NLB to the EBRD approved

The sale of a state-owned five per cent stake in Slovenia's first bank, Nova Ljubljanska banka (NLB) to the European Bank for Reconstruction and Development (EBRD) has been approved by the Government, Slovenia Weekly reported. 
Finance Minister, Anton Rop, was authorised to sign the contract to the value of €63.9m. Aside from the 5%, the EBRD will also purchase shares not bought by others. In the next three years, the bank will offer these shares to Slovenian portfolio investors at a falling price each year, the Government decided.
In 2006, the EBRD is to sell its five per cent of the NLB as well. The conditions of the sale and share price equal those of the sale of a 34 per cent stake to Belgium's banking group, KBC, earlier in May. In order to harmonise budget revenues and expenditures, a supplementary budget for this year is to be drafted by the Finance Ministry by 30th May at the latest, the Government decided.

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CONSTRUCTION

Slovenian construction materials maker expands to Russia 

A Slovenian roofing materials manufacturer opened a joint-venture facility worth 2.2m Euros in Russia's Kovrov on 31st May. The new company, Trimo-VSK, was launched by general managers of the Trebnje-based Trimo and Russian company Reut, Tatjana Fink and Sergei Vasilievich Dmitriev. 
Trimo, one of Slovenia's most successful firms in steel constructs production, enhanced its presence on the Russian market in 2001. The company relayed its know-how to Russia and set up a production facility of housing materials together with Reut. 
Fink took part in a business delegation accompanying Ljubljana Mayor, Viktorija Potocnik, on an official visit to Moscow. The delegation there held talks with Governor of the Moscow region, Boris Gromov. Fink was pleased with the fact that the Slovenian business representatives had the possibility of discussing business cooperation directly with the governor, she said following the meeting.

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FINANCIAL NEWS

Central Bank expects slowdown in price growth for 2002 

Officials at Slovenia's central bank said they expect slower growth in prices for the remainder of 2002. The main reason for this is a surge in inflation during the first four months (a cumulative 4.6 per cent with the annual rate at 8.4 per cent). However, this is temporary and should die down in the future. Therefore, high inflation has forced the bank to amend its forecast inflation rate for the whole year from 5.8 per cent to seven per cent, Slovenia Business Week reported.
On a more upbeat note, the central bank also made a 0.2 percentage point upgrade of its 2002 economic growth forecast to 3.1 per cent, while also forecasting a further increase for 2003, when GDP growth is expected to amount to 3.9 per cent. 
Bank of Slovenia Governor, Mitja Gaspari, told the press they expect that factors behind the price increases will die down in the coming months and, given a calm September and October, when prices tend to be under the greatest pressure, "we believe that seven per cent is a realistic estimate." Gaspari defended central bank monetary policy, emphasising it is following policies aimed at a continuing reduction of inflation, with the final goal being the meeting of convergence criteria for membership in the Eurozone.

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MINERALS & METALS

Slovenian Steelworks encouraged with growth trend 

Up seven per cent year-on-year, with operating profits totalling 1.45bn tolars, the core companies of the Slovenian Steelworks group (Acroni, Metal, STO and Nozi Ravne) generated net sales revenues of 60.67bn tolars in 2001. 
The group increased sales by two per cent last year, selling 312,231 tonnes of products, while exports jumped by 4.1 per cent to 206m Euros, up nine per cent over the year before, the group's supervisory board reported. Data from the first quarter of this year also indicates a similar growth trend, despite the harsher global market conditions, the board noted, quoted by Slovenia Business Week. 

Steel maker inks 11.5m Euro investment deal

Acroni Jesenice has signed an investment deal totalling 11.5m Euros, which will be used for renovation and is expected to boost production in the business of stainless construction and electrical steel, the Jesenice-based steel maker reported recently. The leading Slovenian steel mill noted that 30% of the investment funds will be provided from the company's own sources, with the rest of the funds coming from a five-year loan. The company anticipates the investment to begin returning a profit in four years, Slovenia Business Week reported. 
US firm Fata Hunter, whose bid was favoured by Acroni following a tender, will also participate in the project of production enlargement. Acroni is part of the Slovenian Steelworks group, which last year generated net sales revenues of 269m Euros, up 7% year-on-year. Operating profits came in at 6.4m Euros.

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SHIPPING

Port of Koper opens second pier on 45th anniversary

Coinciding with the Port of Koper's 45th anniversary, a new pier and 10,800 square metres of storage space were put into operation recently. With investment valued at nine million Euros, the Port has plans to make further investments, namely in the construction of additional road and rail links, reports New Europe. Also, a further 120,000 square metres of storage space are planned, general manager of the Port of Koper, Bruno Korelic, said recently. 
Slovenian Transport Minister, Jakob Presecnik, underlined the need to finalise various matters arising between the Port and the state, including the signing of a licence agreement for the infrastructure and the sale of state-owned preference shares, which had been put off for a while. "The government has decided to sell a part of the preference shares, but it must keep a commanding share for a while," Presecnik said, explaining that this would likely be the state affairs until two key issues are resolved. These have to do with improvement of rail links between the interior and the Port, and the issue of a licence for use of the third pier.

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