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SLOVAKIA


 

REPUBLICAN REFERENCE

Area (sq.km) 
48,800

Population
5,415,000 

Capital 
Bratislava 

Currency 
Koruna 

President 
Rudolph Schuster

Private sector 
% of GDP
60%

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Background:
In 1918 the Slovaks joined the closely related Czechs to form Czechoslovakia. Following the chaos of World War II, Czechoslovakia became a communist nation within Soviet-ruled Eastern Europe. Soviet influence collapsed in 1989 and Czechoslovakia once more became free. The Slovaks and the Czechs agreed to separate peacefully on 1 January 1993. Historic, political, and geographic factors have caused Slovakia to experience more difficulty in developing a modern market economy than some of its Central European neighbours. 

Update No: 072 - (17/04/03)

NATO entry
Premier Mikulas Dzurinda is highly esteemed in Western corridors of power, such as NATO and the EU. Slovakia is on the fast track to join both institutions by 2004. On March 27th parliament unanimously approved NATO entry, while Brussels is encouraging EU entry in every way possible.
The Slovaks have given the US use of 3D visualisation software to train dolphins to hunt for mines, as in Umm Kasr, the port in the south of Iraq which is the main conduit for the new troops and humanitarian aid. The software comes from the Alohovec - based Dimension - 5 organisation for use by US marines training the dolphins. The Slovaks then have made their own unusual mark in the "coalition of the willing."
Actually, the Iraq war has been unpopular with the general population, but Slovakia's support for it at governmental level was deemed vital by Dzurinda. He signed the eight-nation statement backing the US in Iraq, which was organised by Tony Blair. Bratislava is now a valued interlocutor in NATO councils ahead of formal accession.

The economy slowly picks up
The Slovak economy has not been growing rapidly, but is not languishing either, say as Moldova's is. It is benefiting from where it is placed, right in the heart of Europe, next to the powerhouse EU, which, however, is not growing rapidly itself at the moment.
GDP growth was 5.4% on an annual basis of for the last three months of 2002. It is shaping up to be 4.8% in the first half of 2003, after being 4.4% for the fiscal year in 2002. Exports were sluggish last year, as was investment. But they both show signs of improvement in 2003. Growth is the highest among the Visegrad Four countries.
Hungary, which has been a recipient of foreign investment on a huge scale, is now showing interest in Slovakia. Mol, the Hungarian oil and gas concern, is keen to acquire a controlling stake in Slovnaft, its Slovakian equivalent. Slovakia is likely to become a key stage in the Central European power grid, taking energy from Russia westwards. Its central location in Central Europe is paying off handsomely both in geopolitical and in economic terms Slovakia is arriving on the European scene.

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FINANCIAL NEWS

Slovak ministry considers options to end strategic firms' sell-off

Coalition partners should discuss privatisation of remaining stakes, which the government holds in strategic companies, during the first half of this year, SITA News Agency has reported. 
The Economy Ministry is working on its analysis of impacts of the potential sale of the stakes in the strategic companies. It has also announced a public tender for a supplier of a comparative study of two alternatives of potential revision to the so-called large-scale privatisation law. 
The first alternative would represent full or partial completion of privatisation of companies, where the Economy Ministry performs shareholder rights. 
The second alternative should specify benefits from drawing dividends over a period of 10-15 years if privatisation of strategic companies is not completed. 
Under the large-scale privatisation law, the Slovak government has already sold 49 per cent stakes in gas utility Slovensky plynarensky priemysel (SPP), crude oil pipeline operator, Transpetrol, and three power distribution companies. Revision to the large-scale privatisation law could also influence privatisation of dominant power producer Slovenske elektrarne [Slovak Power Plants].

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FOREIGN ECONOMIC RELATIONS

Slovak minister, British MPs discuss expansion of economic ties

Economy Minister, Robert Nemcsics, met a visiting delegation of British MPs in Bratislava on 25th March for talks on business cooperation between the United Kingdom and Slovakia, liberalization of Slovak energy prices and investment possibilities, TASR web site has reported. 
"We presented Slovakia as a country open to British investments, and discussed mainly the fact that business between the countries is not meeting its potential," Nemcsics told TASR afterwards. 
According to him, the cause might be a lack of information on the investment and business possibilities available to investors in both countries. 
The UK is one of Slovakia's most important trade partners. Last year's bilateral trade totalled 34.41bn korunas (825m euros), up by 3.7 per cent on the year.

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FOREIGN INVESTMENT

Slovak-Japanese printed circuit board venture opens in Nitra

A new plant of the Slovak-Japanese company, Sluzba SIIX, that will carry out installation of printed circuit boards was opened in Nitra on 3rd March, TASR web site has reported. 
The plant is owned by Slovakia's Sluzba VD and Japan's SIIX Corporation; its construction cost 116m korunas (2,761,904 euros) not including investment of 120m korunas in technology. 
The joint venture has basic capital of 3m korunas, and its majority owned is SIIX with a stake of 60 per cent. Sluzba VD Chairman Jan Fulop said the SIIX majority share was arranged so that the venture would qualify for a tax holiday (to do so, a company must have a foreign owner). 
The Slovak-Japan firm Sluzba SIIX Nitra was founded in October 2001 as SIIX's first manufacturing plant in Europe. It currently employs 110 people. Over the next two years, the company plans to introduce new manufacturing programmes for Panasonic, Sony and Toyota firms as well as programmes for electronics production in the car industry. The opening was attended by Slovak Economy Minister Robert Nemcsics.

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FOREIGN LOANS

HVB Bank cooperates with EC, EIB for SMEs development

The European Commission (EC), the European Investment Bank (EIB) and HVB Bank Slovakia announced they will support small- and medium-sized enterprises in Slovakia via funding. The money will fall under the SME Finance Facility, a special scheme promoted by the EC under the PHARE Programme, the EIB said in a statement, reports New Europe.
The deal stipulates that HVB Slovakia will offer up to €10m from a €50m EIB international loan (credit line) it received to selected SMEs for financing industrial, environmental, energy, infrastructure, tourism, health, education and service projects. The EC is backing the plan with financial incentives in order to facilitate the financing of SMEs and bolster their competitiveness, the EIB said.
Asked what he thought of the tripartite cooperation, EIB Vice President, Wolfgang said: "The EIB is lending to domestic and foreign direct investors alike in Slovakia. Cooperation with an experienced partner such as HVB Slovakia should help start many deals with positive long-term effects in terms of international competitiveness said EU-integration of the Slovak industry. The participation of the European Commission in the new scheme also helps create a favourable environment for the development of a solid SME sector in the new EU members."
International loans are credit lines to certain partner banks of the EIB, which on-lend the funds at their own risk and terms to small- and medium-scale investment projects meeting EIB's lending criteria. EIB said long-term international loans permit the partner banks to develop and diversify their long-term funding sources and to maximise their financing. The €50m international loan signed brings overall EIB lending in Slovakia, over the last decade, to about €1.4bn, the bank said.
In another development, the EIB is apportioning €27m to Slovakia to help subsidise the last 3.9km stretch of the motorway bypass to the southern region of Bratislava, which links Pan-European corridors V and IV.
ISPA, the EU's grant programme in support of environment and transport infrastructure projects for EU candidate countries, is also offering funding for the project. Roth said, "This road project yields substantial economic, environmental and European integration benefits and is ranked as one of the highest priorities for early implementation by Bratislava and Brussels."

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INDUSTRY

Whirlpool unit to receive state support

The Slovak arm of US home appliance maker, Whirlpool, will receive state support from Slovakia, Prime Minister, Mikulas Dzurinda said, Interfax News Agency reported recently.
The government is willing to spend €25m (one billion Slovak crowns) to help boost whirlpool Slovakia's washing machine production in the next two years. The proposed investment would ensure the company a top spot on the European market, as its production capacity would be about two million washing machines each year. The prime minister was quoted as saying he would submit a proposal for state support of the strategic investment to the cabinet in the coming months. 
Based in Poprad, Whirlpool Slovakia will also welcome four other companies that produce company components. The total investment for this project, which will provide 600 new jobs, will likely reach €40m. On a sour note, red tape has put up some obstacles for the project. "Whirlpool has still not received a building permit yet," Director, Errico Biondi, was quoted as saying. But Poprad Mayor, Anton Danko, said the municipality would guarantee and approval without delay. The Poprad plant is scheduled to begin production in late summer.

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TRANSPORT

Slovak president, EU commissioner discuss EU aid for roads, borders

President Rudolf Schuster on 3rd April received Michaele Schreyer, the European Commission's commissioner responsible for the budget, SITA News Agency reported. 
They discussed the use of EU funds and potential financial assistance from the European Union for the project of a southern route of a motorway across Slovakia, or the establishment of a training centre for border guards for the protection of the future Schengen border. 
According to President Schuster, the construction of the motorway, which could be financed from EU cohesion funds, could help reduce unemployment mainly in regions along the projected route and attract foreign capital, president's spokesman, Jan Fuele, told SITA. 
Ms Schreyer briefed the president on possibilities offered by EU funds to Slovakia and on her experience with the Slovak officials responsible for this field. She said that the situation is getting better and the use of funds is gradually taking off. 
According to President Schuster, the European Union could contribute to the establishment of a training centre for frontier guards of Poland, Hungary and Slovakia in eastern Slovakia. These countries will be responsible for the protection of the eastern Schengen borders after the enlargement of the European Union. According to the president, the training centre could operate in cooperation with the border police of EU countries.

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