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slovenia

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SLOVENIA


 

REPUBLICAN REFERENCE

Area (sq.km) 
20,300

Population 
1,930,132

Capital 
Ljubljana 

Currency 
Tolar 

President 
Janos Drnovsek

Private sector 
% of GDP 
40% 

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Background:
In 1918 the Slovenes joined the Serbs and Croats in forming a new nation, renamed Yugoslavia in 1929. After World War II, Slovenia became a republic of the renewed Yugoslavia, which though communist, distanced itself from Moscow's rule. Dissatisfied with the exercise of power of the majority Serbs, the Slovenes succeeded in establishing their independence in 1991. Historical ties to Western Europe, a strong economy, and a stable democracy make Slovenia a leading candidate for future membership in the EU and NATO. 

Update No: 071 - (27/03/03)

Slovenia is increasing its international standing all the time. In early March it hosted a meeting of the Central European Free Trade Agreement (CEFTA), bringing Croatia to membership. CEFTA includes countries about to join the EU. Croatia is the neighbour with whom Slovenia has extensive ties, not only commercial ones, but historic ones. As former parts of the Austro-Hungarian Empire, as well as Yugoslavia, they understand each other.

Into the EU
The Slovenes are forging links further afield, notably with the EU, which they are about to join in June 2004. Slovenian accession is a smooth affair compared with the entry of Poland and other much larger countries with many peasant farmers. Among the candidate countries the Slovenes are the model for others to follow, notably Croatia, whose candidacy was furthered by Stipe Mesic, their president, winning over Chirac to the idea in Paris recently.
The only remaining problem is over foreigners being allowed to own land; the Slovenes are in a special position with mafia elements all around them. They do not want Italian, Albanian, Bosnian and other interlopers taking over chunks of their country. A tight policing operation is clearly called for from 2004 on.

The economy in fair shape
The economy is doing rather well and rarely for a European county at the moment there is an optimism in the air. Businessmen are confident of growth this year and next, 29% more expecting it than those who don't. They are also by a margin of 32% expecting exports to rise.
Inflation is still a problem but is coming down. The balance of payments is in deficit, but, at 669m Euro in 2002, manageably so. Slovenia's credit rating is good and a ten - year bond-issue being planned should go well. It is being designed to facilitate entry into the Eurozone by 2007. All in all, Slovenia is the one undoubted success story in its region, free from the rampant crime and corruption of the rest of former Yugoslavia. 
But then it has all the luck of an excellent location, like Switzerland, plus an educated, multilingual population. So far it has attracted only modest amounts of foreign direct investment, less than Croatia's US$4.5bn, much less than Hungary's US$20bn, more like US$2.5bn. That is almost certainly about to change.

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BANKING

Slovene bank bids for shares in Montenegrin bank


Slovenia's largest bank made a binding bid for a 91.5 percent stake in a Montenegrin bank on 24th February, STA News Agency has reported. The bid for Montenegrobanka is expected to be examined as very shortly by Montenegro's commission overseeing the bank's privatisation and the privatisation council. NLB [the Slovene bank Nova Ljubljanska Banka], which refused to say anything about the offered price, expected to receive a reply in early March. 
As the Slovene bank said, the bid has been made after having carried out due diligence and is in line with the bank's strategic goal to become a leading financial institution in Southeastern Europe. 
According to the daily 'Delo,' the deadline for NLB to supplement its bid set by Montenegro's agency for economic restructuring and foreign investment ran out on 26th February. 
Dissatisfied with the NLB's bid, the Montenegrin government does not seem too eager to strike a deal with the Slovene bank and would like NLB to raise its offer, Delo says. 
The Montenegrin daily 'Dan' said that the Montenegrin government was trying to "touch its bank up" in order to be able to reject the NLB's bid of the "humiliating five million euros."
Delo also quotes Dan as reporting that NLB is not willing to deal with the Montenegro's bank's debts of some 30m euros in loans taken out by companies associated with the ruling elite. 
Montenegrobanka has branches in all Montenegrin municipalities and larger cities, and has until recently been the leading Montenegrin bank. Some two years ago it ran into financial difficulties. Its privatisation will be the first privatisation of a bank in Montenegro. 
Following its strategy of expansion, NLB's Commercebank in Sarajevo has bid for the Bihac-based bank Una, the Slovene financial daily Finance said.
NLB's strategic goals are high profitability and growth of the balance sheet total to 20bn euros by the end of the year 2006. The aim of the NLB is to become a group which would offer financial services in an over 20-million market.

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ENERGY

Oil trader Petrol sets up company in Serbia


The leading Slovenian oil company, Petrol, has upgraded its Belgrade branch office to that of an independent company, Slovenia News reported. The newly founded Petrol Beograd will supervise the implementation of ambitious plans in the wholesale and retail Serbian oil market. 
The Ljubljana-based Petrol has been present with subsidiaries in the markets of Bosnia-Herzegovina and Croatia for several years, while in Serbia it only had a branch office. Petrol owns 11 petrol stations in Croatia and plans to expand their number to 18 by the end of this year. Bosnian drivers can fill up their tanks at 25 Petrol stations, while five more are under construction. The priority for the new company will be setting up its retail network in Serbia.

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FINANCIAL NEWS

Inflation at acceptable level

Despite relatively high inflation, the January rate is in line with the projected annual target inflation rate of 5.1%, Janez Sustersic, head of the government for Macroeconomic Analysis and Development (IMAD), said. "It's too early to talk about deviations from the scenario, either up- or downward," Sustersic commented. A similar view was voiced by the Director of the Ljubljana Law Faculty's Economic Institute, Franci Krianic, who expected January's price growth to stop at 0.5%, Slovenia News reported recently. 
Both experts agree that inflation could have been much higher had the government not balanced petrol prices by cutting the excise duty. "Inflation would have probably been higher by 0.3 percentage points. That would have meant an inflation rate on a par with last year's," Sustersic noted. Last January Slovenia posted a record high monthly inflation rate of 1.6%.
Krizanic and Sustersic believe that the greatest risk in attaining this year's target inflation rate is a possible military intervention in Iraq. "A minor shock can be neutralised; but a minor shock means an intervention that would last no longer than a month and oil prices that would exceed US$40 per barrel and depreciate relatively quickly," Sustersic explained. In such a case, the pressure of petrol prices could be neutralised by means of excise duties and they should not have any major impact on domestic inflation. However, in case of a sustained military action and with oil prices above US$40 per barrel for an extended period of time, "this could become a problem, since it would no longer make sense to neutralise the effects, and our forecast fails," he said.
Sustersic believes that all that can be done to bring down inflation has been done. "One further step still needed is to adjust the exchange rate policy, with a minor depreciation; that has never happened in January before," noted the head of IMAD.

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FOREIGN LOANS

EIB loans to Slovenia total €202 in 2002

The European Investment Bank (EIB) loaned a total of €202m to Slovenia last year. Between 1998 and 2002, the bank loaned Slovenia €1bn, data from the bank recently showed, the Slovenia Business Weekly reported. The biggest Slovenian recipient of (EIB) funds in 2002 was the Slovenian Motorway Company (DARS), which got €120m for the construction of a 37km stretch of highway between Ljubljana and the Croatian capital Zagreb - part of the 10th pan-European route. 
Slovenia's leading mobile telephony service provider Mobitel received €52m for the expansion of its network, the state got €20m for the decommissioning of the mercury mine at Zirovski vrh, while Hypo Alpe-Adria bank was the beneficiary of €10m used for the financing of small and medium-sized business projects.

New Phare project for poorest regions

Mayors from the poorest Slovenian region, Pomurje in northeastern Slovenia, signed a contract to set up a network business incubator in a bid to encourage development of products the state, the region and the entrepreneurs can benefit from, reports Slovenia News. The EU Phare project has been set up with the regional development agency and will be carried out in cooperation with the regional development agency from Cantabria, Spain. 
Slovenian Regional Development Minister, Zdenka Kovac, who attended the signing, said that the business incubator is a shining example and one of the foundations of more balanced regional development. The EU allocated €2m for the Pomurje incubator, the Slovenian government contributed €1m, while €1.7m was contributed on the local level.

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MINERALS & METALS

Dutch steel giant buys Alpos Sentjur stake in Slovenia

The Dutch steel group LNM, the world's third biggest company in iron metallurgy, bought 38% of the Slovenian steel company producing tubes, Alpos Sentjur, from the Czech iron-manufacturer, Nova Hut. 
In fact, LNM bought Nova Hut, which is being privatised, and Nova Hut has held the stake in Alpos since 1997. Alpos has four subsidiaries, and employs 740 workers. Its annual revenues for 2002 reached €60m, up 13% year-on-year. The company's estimated net profit for last year is €433,000, up from a year earlier, when it was set at €343,000, New Europe reported.

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