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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: 070 - (21/02/03)
The Slovene economy is faring well. At a time when the rest of Europe was doing poorly its GDP grew at over 3% in 2002. This confounded the forecasts of both the EU and the IMF, which predicted growth of less than 3%. Inflation at 7.5% for the year was 0.9% less than the figure in 2001.
All of these statistics should be taken with caution. There is no guarantee that they are really that accurate even in an advanced economy with a long tradition of collecting statistics, which is the case with Slovenia, easily the most advanced of the ex-communist countries. But the very fact that only 3% or so growth is being claimed lends credibility to the figures.
Record external surplus
One set of statistics that has to be reasonably accurate is that referring to foreign trade. For imports have to be paid for with money, not guesses of their size; and exports yield measurable revenues.
Slovenia recorded a record 500m Euro balance of payments surplus in 2002 for the January-November period. Curiously, exports and imports of goods were in more or less balance; it was a surplus in services that created the big overall figure.
Reasons for optimism
Slovenia is a sophisticated place, with a buoyant tourist industry, a financial sector in good shape, while it is beginning to attract FDI. This is not at all surprising given its many advantages astride the Alps and being a natural gateway to the Balkans.
Communism may have had many defects, but fewer in Slovenia than in any other former communist country. Tito had the sense to leave it alone more or less, allowing it to cultivate its market economy. People were at least well educated, a tradition that has continued in Slovenia with its sound economy, enabling teachers to be paid.
There is every prospect of Slovenia doing well inside the EU, which it joins in the first wave in June 2004. There should be some benefit from the scrapping of restrictions on foreigners owning land and other assets, although a screening process is necessary to keep out the Italian mafia.
Global rating company Dun&Bradstreet (D&B) said in its latest report on Slovenia that the country has succeeded in securing the top position in the region. Despite recent political changes, Slovenia shows a stable economy. The rating gained a growth trend for January.
D&B adjusted some macroeconomic estimates in its report and added forecasts for this year. Slovenia will record inflation of 6%, the report said. Target inflation of 4.5% will be reached in 2004, and last year's inflation estimate was increased to 7.5% from 6.5%. "This year's GDP growth is to stand at 3.8%, while next year it is expected to reach 4.1%," D&B said.
One third of Slovenia's leading bank goes to Belgium's KBC
After years of indecision, the government finally partially privatised the largest state-owned bank Nova Ljubljanska Banka (NLB), reports Slovenia News. As of September, NLB is 39% owned by foreigners.
Purchasing a 34% stake, the Belgian banking and insurance group, KBC, became its key strategic partner in the first stage of privatisation; the European Bank for Reconstruction and Development bought 5%. The purchase fee, totalling almost €500m, is to be used by the state to reduce public debt. NLB, which got a new management board in July and a new supervisory board in September, then entered the second phase of privatisation. A 9% stake was offered for sale to portfolio investors, but bids arrived for only 0.3% of the shares. Meanwhile, the privatisation of the second largest bank, Nova Kreditna Banka Maribor (NKBM) did not go through - in small consolation to the domestic public who were stirred up by heated debates about Slovenia's national interest and the nonsense of selling the country's financial foundations to foreigners. Instead, NKBM is to become the core of the second banking group in Slovenia. The Group is also to include the Post Bank of Slovenia (PBS), which should have originally been privatised on its own.
Bonds in Slovenian tolars quoted on Luxembourg bourse
Bonds issued by KBC Ifima in Slovenian tolars and purchased by Nova Ljubljanska banka (NLB) bank were quoted on the Luxembourg stock exchange, Slovenia News reports. The bonds, having a total nominal value of €13m, were offered by NLB directly to financial investors, specifically insurers and investment funds; almost 90% of the bonds had been sold by January 9th.
The bonds are medium bonds, secured by Belgium's KBC bank, and have a fixed interest rate of 8.25%. They will mature on January 10th, 2006, when the total capital will be paid out. Chairman of the board of NLB, Marko Voljc, said that the issue of the first bonds in Slovenian tolars abroad was important both "as a symbolic event as well as a way for NLB to acquire experience and technical knowledge for future issues."
Electricity market liberalised
Slovenia's electricity market has opened to foreign suppliers, Slovenia News reported. This will enable large users to purchase abroad up to 25% of electricity consumed in the country annually. Moreover, the natural gas market has also opened up to foreign suppliers in line with the energy act and a European directive on natural gas. If the electricity market fully opened up, more than 63% of Slovenia's needs would be purchased abroad, which is why the government advised the company managing Slovenia's electricity grid, ELES, to limit imports to 25% of annual electricity consumption.
Consumption reached a record high last year, as 10.55bn kWh of electricity was consumed through the end of November, up 7.5% over the same period in 2001. Just before Christmas, the government adopted a decree on electricity that determines rules and conditions for power supply and the relationship for power suppliers. Effective within two months, the decree treats electricity as a commodity whose price depends on quality. This gives users and power distributors the chance to agree on either a sub-standard or above-standard supply.
Slovenia opens its real estate market to EU citizens
In line with the European agreement, Slovenia has opened its real estate market to the EU citizens, Television Slovenia web site has reported.
They will be able to buy real estate properties in line with the principle of reciprocity.
When Slovenia joins the EU, this principle will be abolished and a safeguard clause will be implemented according to which the real estate market can be protected for additional seven years in the case of any disturbances...
FOREIGN ECONOMIC RELATIONS
Economic gains through cooperation
Political cooperation has been demonstrated by numerous bilateral visits, reports Slovenia News. In June 2001, the then Slovenian President, Milan Kucan, paid an official visit to Greece upon the invitation of his counterpart, Constantinos Stephanopoulos. On that occasion, he also met with Prime Minister, Costas Simitis, Speaker of Parliament, Apostolos Kaklamanis, and an opposition representative. The visiting Slovenian delegation included Foreign Minister, Dimitrij Rupel, who met his Greek counterpart, George Papandreou. Greek Prime Minister, Simitis, visited Slovenia in November 2001, when he held talks with the then President and Prime Minister, Kucan and Janez Drnovsek.
Given that bilateral ties are also close in defence and that Greece has offered Slovenia assistance in attaining NATO standards, Greek Defence Minister, Yannis Papantoniou, visited Slovenia in June 2002. Last year, defence cooperation focused on the navy, military training, engineering, military cartography and inspection. Both nations cooperate within the South East Europe Defence Ministers Meeting, civilian and military emergency planning, simulations within the SE Europe Simulation Network and in the forum for disaster prevention in the framework of the SE Europe Stability Pact.
The National Assembly formed a group of friendship with Greece in June 1998, a step followed by the Greek parliament a month later. Jozef Jerovsek heads the Slovenian group, and the Greek is headed by Nicos Zambunidis.
Economic cooperation is moderate and limited to trade in goods and services, as the countries have not developed higher forms of cooperation. Slovenian and Greek companies do not rely on cooperation contracts and investments in each other's economies are scarce. The Greek market is the target of exports by some large Slovenian companies, such as the oil company Petrol, the aluminium producer Talum Kidricevo, the Ljubljana Tobacco Factory and the retailer Mercator. The Ljubljana-based turbine manufacturer Litostroj has placed several tenders with various partners for the construction and modernisation of hydroelectric power plants in Greece. Greece in turn has been increasing capital exports and sees Slovenia as the first among the markets of the former Yugoslavia worth investing in because of low risk and high development factors. The country also offered guarantees and favourable loans for joint ventures with Slovenian companies. While two joint commerce offices have been set up in Greece, only the Slovenian-Greek Business Chamber has been operating. The joint commission for economic cooperation is due to meet for its first session this year.
The Athens University of Agriculture has been participating in a twinning project aimed at the structural development of Slovenian rural areas. Both countries have also expressed interest in cooperation in tourism and wish to strike an agreement that would, among other things, pave the way for setting up a joint commission to boost tourism. Greece has always been one of the most popular holiday destinations for Slovenian tourists.
Slovenia and Greece have recently recorded an increase in trade. Slovenia's exports rose by 29.9% to US$29.9m in 2001 over 2000, while imports increased by 46.7% to US$31.9m. In the first nine months of 2002, Slovenia exported goods worth €28m, up 26.3% over the comparable period in 2001, and imported €35.8m worth of goods, which is a gain of 23.3% over 2001.
Both nations maintain lively relations in culture, especially in the exchange of graduate and postgraduate scholarship students. Slovenian films are regularly featured at the Thessalonica Film Festival and, last year, one of the awards went to the up-and-coming Slovenian actress, Manca Dorrer.
Slovenia represents important market for Italy, Urso stresses
Adolf Urso, the Italian deputy industry minister, in charge of trade, travelled to Ljubljana recently to meet with Slovenian officials and to attend a business forum held at the Slovenian Chamber of Commerce (CCIS) to discuss key issues, reports New Europe. According to Urso, Slovenia represents an important market for Italy. "Relations between the two countries are excellent, as trade is growing," Urso said. Italy is the eighth leading exporter in the world and ranks fourth, just behind Austria, France and Germany, Urso explained.
"Slovenia represents a gateway to the Balkans in a geographical, cultural and economic sense. The Balkans is a strategically important region, so Italy is especially interested in cooperation with Slovenia," Urso told the forum participants. "We believe that in partnership with Slovenia we could enter the SE markets together."
Jozko Cuk, the head of the CCIS, said his country is pleased to attract new investments, but "we hope that Slovenian companies will have similar opportunities on the Italian market."
Bilateral trade amounts to about €3bn each year. Italy also placed fourth in direct investments in Slovenia last year. Urso said Italian investments in Slovenia are critical because of the latter's imminent accession to the European Union. According to Italian business experts, EU membership will help boost the Slovenian economy, and economic growth should stand at about 4%.
"We wish for Slovenia to become a springboard to SE Europe," Matej Kovac, chief of the Agency for Economic Promotion of Slovenia and Foreign Investments, was quoted as saying. "We also aim for out companies to develop their competitive edge in international circles."
The biggest Slovenian exporters to Italy are aluminium maker Talum, textile producer Aquasava, carmaker Revoz, aluminium producer Impol and Slovenian Steelworks' Acroni. Italy's top exporters are textile group Mura, oil traders Petrol and OMV-Istrabenz and home appliances maker
Lek launches sales of Amoksiklav
Slovenian pharmaceutical group Lek has potentially become a rival for British drug maker GlaxoSmithKline after announcing it had begun selling the generic form of the latter's hit antibiotic Augmentin on the US market, reports New Europe. Lek's product goes by the name of Amoksiklav. Owned by Swiss group Novartis AG, Lek is the third group to gain a foothold in the US market with sales of this generic drug. GlaxoSmithKline filed a suit against the Slovenian group last November because of its move.
The British group said its sales of Augmentin total US$2bn. Lek though believes it could record strong sales across the Atlantic. "We expect to sell at least US$100m of Amoksiklav in the United States this year. On our first day on the market we sold US$27m of Amoksiklav there," Janja Bratos, management board member at Lek told reporters
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