% of GDP
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: 079 - (01/12/03)
The Slovenes are the best-placed of all the former communist countries. This is true both metaphorically and quite literally. They have the spirit of independence and initiative that comes from living in the high Alps. Rugged, craggy and mountainous, the terrain is a suitable image of the national character.
The people are well-educated. The age of schooling has been lowered from seven to six, with mathematics and English being taught in three stages. Numeracy and proficiency in languages are regarded as de rigeur. Slovenes excel at computers and technical disciplines, while being avid to keep abreast of the latest cognitive and scientific developments.
Mandatory military service has been done away with. Prime Minister Tone Rop said on September 9th that "from today, the obligatory army service in Slovenia is over, and now the professionalisation of the army is on the way." Slovenia was the one republic of former Yugoslavia that broke away without a protracted war, although there was a fracas over a few days in which 79 lost their lives in 1991.
Slovenia now enjoys not only geopolitical, but financial, autonomy. GDP growth of 2.9% in 2001 and again in 2002 has been steady if not spectacular, sufficient to finance return of debt.
Slovenia is going to be financially independent by next year, says the central bank chairman, Mitja Gaspari. "Slovenia has become independent of international sources of finance and is therefore indirectly making a transition to the group of developed countries that finance the less developed," he said recently at the annual meeting of the IMF and the World Bank.
Its credit rating with Moody's Investors Service is excellent at Aa3 for foreign currency bank deposits and bonds. It has a strong record of prudent fiscal and debt management, including the use of the proceeds of privatisation to pay back debt.
The latest annual report by Moody's on the republic is positive. "The credit ratings are also supported by the performance of public and private sector managers with decades of experience in EU markets, and consensus views across the political spectrum on economic issues," said Jonathan Schiffer, Moody's vice president and senior credit officer, and author of the report.
According to Schiffer, the ratings of the country are constrained "by moderate but stubborn inflation, public sector and social welfare spending that needs to be reduced, and an inflexible labour market in which wages and other labour costs are not sufficiently contained."
The report noted that the recent upgrading of Slovenia's foreign currency ceiling to Aa3 from A2, bringing it in line with the Aa3 domestic currency rating, "reflects the advanced economic and financial integration of the country with the European Union, as is evident by the recent invitation to join the EU by 2004."
Schiffer highlighted in the report that the risk of a foreign currency crisis that "could lead to systemic interruption in foreign currency debt servicing by issuers domiciled in this country" is continuously and significantly "reduced." The author stressed that elimination of all foreign currency transfer risk would occur only at the time of entry into EMU.
Foreign investment and acquisitions
The sale of state assets to private investors has gathered pace in the 2000s. In 2002 Slovenia's leading Nova Lubljanska Banka was acquired by KBC Bank, while the Swiss phrmaceutical giant Novartis bought up the leading drugmaker, Lek. These two deals nearly doubled the amount of FDI in the country, modest to date at $2bn.
Lek is doing brilliantly under its new management. It is becoming the regional centre for Novartis, from which foreign acquisitions in other countries are being made, as well as a big export drive.
Slovenia's major drugmaker, Lek is expected to up revenues by about 34% this year, to 134bn tolars (551m Euro). "We will achieve this goal despite a weak dollar," Lek Chairman, Metod Dragonja said in an interview with STA, adding that the effects of the revamped drug prescription system will also "leave" their mark on the company's balance sheet.
Dragonja noted, however, that this year's sales figures will not yet show the effect of additional products made for the new owner, Swiss pharma group Novartis. "These effects will be visible next year, when we take over the marketing of Novartis products for central and eastern Europe," he noted.
The company's profits are in line with plans, outperforming sales growth. Yet profits also heavily affected by considerable provisions that Lek has to make to tackle risk management. The release of provisions depends on the course of patent disputes and procedures related to intellectual property rights, the chairman was quoted as saying.
Lek will have invested heavily this year, earmarking 84.8m Euro for investment spending. The two largest investments are production facilities abroad, in Poland's Styrkow and Romania's Targu Mures, through which Lek will supply the local markets.
The company is also undertaking extensive works in all of its facilities in Slovenia, including a new plant for the production of pills in Ljubljana, the expansion of Lek's sodium clavulanate production of several smaller facilities in Menges, near Ljubljana.
Dragonja also mentioned legal proceedings that certain companies have launched against Lek, most notably in the US, which is rapidly becoming Lek's largest market with sales expected at 170m Euro this year. "Lawsuits against generic-drug makers are nothing unusual in the US," he said, "but they are expensive and take a lot of energy."
Slovenia might change farm subsidy payment scheme - agriculture minister
Slovenia might change the existing system of paying agricultural subsidies with the alternative acreage-based scheme, Agriculture Minister Franci But said after meeting with European Agriculture Commissioner Franz Fischler on 3rd November, STA News Agency has reported.
"We have to check whether preserving the current scheme makes sense. In the framework of integration into the EU's common agriculture policy, the introduction of the scheme based on the regional approach with per-hectare payments seems the most appropriate way," Minister But said.
In order to provide for an appropriate expert basis for such a decision, the ministry has already ordered several surveys to determine which scheme would bring more money to Slovenia. "This will be the main gauge," Minister But stressed.
Officially, Slovenia has not yet decided whether to start EU membership with the standard scheme currently in place in the 15-nation bloc, or the simplified scheme that is to apply for newcomers.
According to But, the decision will have to be reached soon, possibly by the end of the year, due to the impending EU membership and in light of the common agriculture policy reform that the EU confirmed in June.
The per-hectare payment scheme is intended for the newcomers. Its introduction would redistribute the funds to the benefit of smaller farms. In general, however, the absorption capacity would increase, Minister But claims.
Before the ministry submits its proposal to the government, the minister also plans to consult the civil society on the matter, he said after meeting with Commissioner Fischler.
Slovenia is currently the only EU newcomer that is already paying farm subsidies from its own budget, both for field crops and animals.
Slovene government willing to contribute to Renault investment in country
In a bid to convince the French car maker, Renault, to expand its production facility in Slovenia rather then elsewhere, the government on 30th October decided to launch a procedure to grant Renault 10 per cent of the investment value, which amounts to 37m euros, STA News Agency has reported.
If Renault decides to manufacture its new model in Novo Mesto-based Revoz, the government is willing to contribute internationally-comparable state aid in the amount of 10 per cent of the investment, payable between 2005 and 2007, Economy Minister, Tea Petrin, told the press after the government session.
Slovenia is one of the most serious candidates for a location for Renault's new assembly plant along Turkey and Slovakia, which the car maker wants to launch in 2007. According to Petrin, the main advantage of Revoz is that it has been "one of the most successful and efficient facilities in the Renault corporation."
The government is aware of the fact that Renault's investment could be very important for the economy, so the cabinet is willing to do everything in its power to bring the production facility to the country, Petrin stressed. The new plant would create 700 new jobs.
In addition, local suppliers - which currently supply less than 20 per cent of all parts - would have more business, which would indirectly create another 500 jobs, according to government estimates. The state aid, if awarded, would be in line with Slovene and EU legislation on state aids, Petrin underscored.
Revoz is one of the largest Slovene companies, and the largest exporter in terms of revenues. It is primarily Revoz that has made France Slovenia's fifth most important trade partner.
Successful deal for Prevent
The Slovenj Gradec-based Prevent may soon open a plant in China to manufacture car seat covers for Volkswagen cars there, after the company signed a major deal with the German automotive group earlier this year. According to a report published by the daily 'Delo,' Prevent has employed an additional 300 workers to manufacture seat covers for the latest edition of Volkswagen Golf. The competition to get the deal was very fierce, Prevent CEO, Joze Kozmus, told the Ljubljana-based paper.
Every year, Prevent manufactures some 700,000 sets of seat covers for Golf, Volkswagen's top-selling model. Along with five plants in Slovenia, Prevent also has plants in Croatia, Bosnia-Herzegovina, Spain, Moldova and Brazil, and manufactures three million car seat covers a year.
FOREIGN ECONOMIC RELATIONS
FM Rupel promotes business ties in Uzbekistan and Kazakstan
Strengthening bilateral economic relations and studying the situation in the region, in light of Slovenia's presidency of the Organisation for Security and Cooperation in Europe (OSCE) in 2005, were the main goals of Slovenian FM, Dimitrij Rupel's, official visits to Uzbekistan and Kazakstan, Slovenia News reported.
In what was the first meeting at such a high level between representatives of Slovenia and Uzbekistan, Rupel and his Uzbek counterpart Sadik Safayev (on the picture) signed an agreement on boosting investments and a protocol on cooperation between foreign ministries, while Slovenia opened a consulate in Tashkent. The Slovenian minister is convinced that there is basis for successful development of good bilateral relations. In Kazakstan, Rupel met with his counterpart Kassymikomart Tokayev and Prime Minister Danial Ahmetov. Relations between Slovenia and Kazakstan are good, problem-free and there are no obstacles to further development, the officials concluded according to the Foreign Ministry. Slovenia would like to boost economic cooperation with Kazakstan, added the ministry.
In 2002, exports to Kazakstan increased by 24% to US$11.4m. Imports went up by 15% to US$8.7m. Rupel stressed that Kazakstan is interesting for Slovenia as a partner in constructing certain transport projects, as well as a market for pharmaceuticals and telecommunications.
Search is on for nuclear waste landfill location
Since local communities have the final say on whether they want a landfill in their backyard, the Nuclear Waste Agency has employed the services of a mediator to try and find common ground with local authorities, Slovenia News reported. Talks are currently underway with three local communities which have appropriate locations for a nuclear waste facility. The mediator, Margareta Jeraj Kunc, last held talks with local officials in Dravograd, NE Slovenia, but they rejected her.
In the last year alone, she visited about 30 municipalities. She says that she received varying responses and that certain communities have shown interest in conducting further talks. She pointed out, however, that the task is much easier abroad since local communities see much projects as an opportunity to improve their budgets and create new jobs in the region.
Most low- and medium-level radioactive waste in Slovenia comes from the Krsko nuclear power plant, which produces about 40% of the power that Slovenia requires. The plant has so far produced about 2,300 cubic metres of radioactive waste, which is stored on-site. However, since the plant is only halfway through its useful life, the amount of waste will almost certainly double.
The EU demands that Slovenia find an appropriate location by 2008; the landfill must be constructed and operational by 2013. Geological surveys have shown that about half of the country has appropriate geological characteristics for such a dumping site. What remains to be done now is to reach an agreement with one or several local communities to start construction.
Istrabenz continues investments in tourism
The oil trader, Istrabenz, has become the new owner of Jama Hotel, situated just 100 metres from a world renowned tourist site in Slovenia, the Postojna Cave, slovenia News reported. This latest Istrabenz's push in the tourism sector comes after the company six months ago became the majority owner of a company managing the Karstic Cave. The deal was done as Istrabenz purchased the bankrupt company Hoteli-turizem (HOT), which owed it 442,000 Euro. The only bidder at the public auction, the Koper-based company paid 1.7m Euro. Apart from Jama Hotel, the company also took over 8,500 Euro of creditor claims, Istrabenz said.
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