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SLOVENIA


 

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 21,108 18,800 18,100 67
         
GNI per capita
 US $ 9,810 9,760 10,060 53
Ranking is given out of 208 nations - (data from the World Bank)

Books on Slovenia

REPUBLICAN REFERENCE

Area (sq.km) 
20,273

Population 
1,935,677

Capital 
Ljubljana 

Currency 
Tolar 

President 
Janez Drnovsek

Private sector 
% of GDP 
40% 

  

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: 083 - (19/03/04)

Slovenia the star
The Slovenes are joining the EU in May with the other nine newcomers. They are the only ones to do so from the former Yugoslavia. The reason is not hard to find.
Yugoslavia was a very different sort of federation than the USSR. It allowed a measure of real autonomy to its six constituent parts. It also allowed a degree of market economics.
By far the best-placed to do well, geographically and culturally, was Slovenia. In the Alps it is a sort of mini-Switzerland. With spectacular mountainous scenery and magnificent Baroque and other architecture, inherited from its past as a part of the Austro-Hungarian Empire, it is a splendid tourist attraction.

The figures prove it
Slovenia is very much the odd-man out in Central Europe, indeed among all the former communist states. On a purchasing power parity basis, it actually has a GDP per capita higher than that of Greece or Portugal, already both in the EU, which it is joining in May. It is here in the same boat as another entrant, Cyprus. By comparison the other eight newcomers in the current enlargement have a per capita income barely 40% of the EU average.
Its GDP per capita came in at $16,000 in 2001 and has reached nearly $18,000 by now after growth of 2.5-3.5% in GDP since then. Inflation is still a problem, but Slovenia can certainly aspire to be the first of the entrants to join Greece in Euroland, ahead of Poland the Czech Republic and Hungary.
Although Slovenia enjoys this GDP per capita advantage over the other transition economies of Central Europe, it needs to speed up the privatization process and the dismantling of restrictions on foreign investment. About 45% of the economy remains in state hands, and the level of foreign direct investment inflows as a percent of GDP is the lowest in the region.
Foreign investment has not been encouraged because the Slovenians fear, not without reason, that mafia elements from Italy and the Southern Balkans, notably Albania and Montenegro, would rapidly move in if restrictions on foreigners owning land and property were relaxed. Indeed, they would have reason to beware of Serbian gangsters too, implicated in many a scam in the region and not a few assassinations, as of Premier Zoran Djindjic of Serbia in March.
It is not only gangsters, however, who appreciate Slovenia's superb location as the gateway to the Balkans. So do legitimate businessmen. From May the republic will, moreover, be a Balkan gateway to the EU for other Balkan businesses and for those from further afield.

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AGRICULTURE

Slovene farmers to get over 210m euros of aid in 2004


Slovenia will dole out 21bn tolars (88.4m euros) in subsidies to farmers this year. An additional 21bn tolars (88.4m euros) will be handed out for rural development, with the EU providing 80 per cent of these funds, Agriculture Minister, Franci But, told the annual meeting of the Slovene Association of Cooperatives, STA News Agency reported.
Minister But presented novelties in farm subsidies, which will presumably enter into force next year. He said that Slovenia will initially introduce regional per-hectare payments - as opposed to per-farm subsidies - but will later negotiate for a combination of both systems.
Measures to be introduced this year include milk quotas and quotas for the restoration of vineyards. Moreover, farmers will be entitled to new premiums for suckler cows and support for the production of nuts. The latter, however, will be minor, he said.
In addition to subsidies provided by the state and the rural development funds, farmers will also be entitled to funding from the agricultural environmental programme, which will boast funds of 7bn tolars (29.5m euros), 5bn tolars (21m euros) more than last year.
Minister But concluded by stressing that farmers will have to adapt to EU standards after Slovenia joins the EU, as well as to fierce competition. "Farmers will have to be entrepreneurs in order to survive on the global market," he said. 

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AUTOMOBILES

Renault finalises Revoz full acquisition


French car maker Renault has paid €42.5m for a 33.32% stake in Slovenian car plant Revoz, that raises its ownership share in the Slovenian company to 100%, New Europe reported recently. 
The deal between Renault and a number of authorised investment companies was signed at the end of last year, while the transaction was recently carried out. Renault was in effect forced to buy out the minority stake because the minority owners did not wish to join in any potential investments that would accompany the building of a new model at the Revoz plant, Revoz had said in announcing Renault's decision in February.

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AVIATION

Adria flies in the black in 2003


Reporting a net profit of over €450,000 for 2003, Slovenian flag carrier Adria Airways said it was pleased to finish the year in the black, despite the ongoing crisis in the airline industry, Slovenia News reported recently. 
Adria's passenger numbers were up 6% to 864,368 last year. The company said that its earnings from regular flights were up 4%; charter flights brought in 11% more than in 2002. The servicing of Bombardier jets generated revenues of €6.6m. Despite rising fuel and airport fees, Adria upped its operating earnings by 24%, mostly as a result of concerted efforts to increase productivity, the company claims. The airline believes that 2004 could be a year of recovery for the industry.

No-Frills Airline Coming to Slovenia

British Budget airline Easyjet will start flying to Ljubljana Airport as of 1st May, becoming the first low-cost carrier to operate flights to Slovenia, Slovenia News reported recently. 
The commencement of daily low-cost flights between Ljubljana and London, which will coincide with Slovenia's membership of the EU, has been welcomed by Aerodrom Ljubljana, the company running Ljubljana Airport. According to its chairman, Vinko Moze, the company is happy because there is a great interest in cheap flights in Slovenia. The arrival of Easyjet to Ljubljana will also help boost traffic at the airport, Moze said, adding that he was confident flights on the route would be filled to capacity. Negotiations with Easyjet lasted a year, and efforts to bring a budget airline to Slovenia were accelerated by the establishment of a consortium that promotes Slovenian tourism in Great Britain, Moze explained. Tickets for the Ljubljana-Stanstead route have already started selling on Easyjet's website, which says that Slovenia is "considered one of the most up and coming ski, and summer holiday destinations."

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BANKS

NLB determined to stay leading bank


Nova Ljubljanska banka (NLB) has been, and will remain, the largest Slovenian international bank; its new chairman, Marjan Kramar, is confident that this goal is attainable through the existing ownership structure, with the Belgian banking and insurance group KBC holding about one-third of NLB, reported Slovenia News recently. 
This structure also makes it possible to keep the bank in shape to face the increasingly harsh competition on the market, Kramar, who took over the office from Marko Voljc on 1st February, stated in his first session with the press. The NLB is determined to keep its position on the domestic market at least as strong as it is now. "We'll do everything in our power to focus our attention on the clients, in retail as well as corporate banking," he pointed out. Kramar stressed that the domestic market is highly competitive, especially in corporate banking. Comparisons show that the terms of borrowing for Slovenian companies are currently very favourable. Companies can use this, and the result is pressure on the margins. "Since we cannot change the market, we have to respond by continuously streamlining our operations," Kramar explained. The chairman also highlighted the bank's operations abroad. "This is one of our best assets and opportunities, which we intend to use even more to our advantage in the future."

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CREDIT RATINGS

Eastern European region with a DB2c rating

The international rating firm Dun & Bradstreet (D&B) recently confirmed Slovenia's lone stand atop the Eastern European region with a DB2c rating. Holding this rating for eight months now, D&B say in its latest report that Slovenia's risk outlook for February "remains broadly unchanged," the Slovenia Business Week reported. 
The February report underscores that recent data points to further moderate economic growth in Slovenia. However, the report noted that the country has not yet seen a long-anticipated upturn in its exports. Unconvinced that stronger growth in Western Europe will have helped Slovenian exporters in the last quarter of 2003, D&B has downgraded its growth forecast for the year from 2.5 to 2.3%. Touching on the political climate in the country, D&B says that it is yet to be seen whether the strained relations between Slovenia and Croatia will improve as a result of a new government coalition taking office in Croatia.

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ENERGY

Istrabenz and Gorenje join forces to trade in electricity


Istrabenz energetski sistemi, a subsidiary of the energy company Istrabenz, signed a deal with home appliances manufacturer Gorenje on the creation of a joint venture that will produce and sell electric power, New Europe reported recently. 
The new company, called Istrabenz-Gorenje, will be looking for opportunities in Slovenia and abroad. After its first year of operation, it is expected to sell between 3,000 and 4,000 GWh of power, said Istrabenz energetski sistemi chairman, Robert Golob, who will also head the new company's supervisory board. The company will not only sell electricity, but also produce it, said Golob, explaining that they would be too vulnerable to volatile market conditions if they only embarked on power trade. The company's target markets include Germany, Austria, the Czech Republic, Slovakia and countries of the former Yugoslavia, he added. Furthermore, Istrabenz-Gorenje intends to redeem part of Russia's clearing debt claimed by Slovenia, by importing power from Russia.

Istrabenz reports 2003 profit of €10m

The Istrabenz holding company reported a net profit of €10.2m in 2003, which is slightly above estimates, Slovenia News reported recently. 
Revenues meanwhile amounted to €28.2m, a drop of 19% over 2002, and the operating losses came to €4.75m, according to the group's preliminary results. Revenues were lower last year given that a year earlier they were extraordinarily high because of the sale of a 15% stake in Banka Koper. Last year, Istrabenz began fulfilling its plan to increase investments in all of its core fields - energy, tourism and investments - with the number of subsidiaries rising from 17 to 25, the holding company said. In 2004, the group plans to continue investing into its core businesses of energy and tourism, and anticipates net profit to amount to €3.58m. The investments are to include a new trademark for tourism services, renovation of prestigious hotels in the Slovenian resort Portoroz and Croatias Opatija, and the construction of small hydro power plants in Slovenia and Bosnia-Herzegovina. The Istrabenz holding company manages the operations of the Istrabenz group, which also includes Slovenia's second-largest petrol trader OMV Istrabenz.

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FOOD & DRINK

Pivovarna Union profit soars in 2003


Despite tough conditions on the Slovenian beverage market, the country's second-largest brewer Pivovarna Union posted a net profit of €5.4m in 2003, up 89.3% over 2002 and 10.2% more than anticipated, Slovenia News reported recently. 
Revenues were up 4.4% to €72.5m, 0.5% above the target, the company's preliminary results suggest. Meanwhile, Pivovarna Union's operating profit totalled €5.9m in 2003, 147% more than the year before and 14.3% above forecasts. In 2003, the company earmarked €6.7m for investments. As of 1st March, the company was led by a new management board. The previous board, and its chair, Marijan V Mir, were relieved of their duties in the second half of January; Dusan Zorko has been appointed the new chief executive. Union is in 47.2% ownership of the largest Slovenian brewer Pivovarna Lasko, while the Belgian multinational interbrew owns 41.2%. The two companies have been battling for control of Union for more than two years.

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FOREIGN ECONOMIC COOPERATION

Slovenia and India look to boost trade


An air service agreement between Slovenia and India was signed by Foreign Minister Dimitrij Rupel and Indian External Affairs Minister, Yashwant Sinha, after the pair held wide-ranging talks on issues of bilateral and international interest as part of Rupel's two-day visit to India, Slovenia News reported recently. 
Once Slovenia has joined the EU, opportunities for economic cooperation with India will increase significantly, they agreed. Slovenia expects a better environment and new opportunities for cooperation with India upon EU accession, as it will automatically become a signatory of the cooperation agreements between the EU and India. This was also stressed at the meeting with Minister of Commerce and Industry, Arun Jaitley, when Rupel presented the advantages offered by the Port of Koper, which he said could be India's gateway to Europe. Jaitley informed him that the Indian government is currently conducting a study on the sea ports and sea routes in the Adriatic. FM Rupel also inaugurated a new Slovenian embassy in New Delhi, which is seen as a crucial step in efforts to boost trade.

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FOREIGN LOANS

Slovenia to get €2.6bn for regions from 2007 to 2013


Slovenia could receive up to €2.6bn from the EU budget for regional development and cohesion policies in the 2007-2013 period, according to the EU cohesion report which has been confirmed by the European Commission, Slovenia News reported recently. 
The ten acceding countries combined are to obtain €140.2bn during this period to narrow the gaps in development, much less than the incumbent 15 members; the 15 incumbents can count on €173.8bn. Slovenia would get the €2.6bn if it remains at least a partial beneficiary of cohesion funds. The EU provides this money to regions whose GDP is below 75% of the EU's average. The Commission did not say whether Slovenia will remain a beneficiary. Moreover, it regards Slovenia as one region, although it is not excluding the possibility that the country will be divided into two or three regions in the future. As one region, Slovenia is expected to break the 75% ceiling soon - the latest data puts the GDP at 73.7% of the enlarged EU's average. Meanwhile, Slovenia will almost certainly not be among the beneficiaries of special funds for regions that will be affected by the so-called "statistical effects" of enlargement.

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PHARMACEUTICALS

Lek opens new production unit


Slovenia's drug maker Lek recently opened a new production facility for manufacturing biopharmaceuticals in an investment topping €18m, reported New Europe reported recently. 
The first production unit of its kind in Slovenia as well as in Central and Eastern Europe stretches over an area of 2,800 sq m. Its construction took two years, with most of the equipment manufactured in Slovenia. The new unit will improve Lek's position on the market, Lek chairman Metod Dragonja told the opening ceremony.

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TELECOMMUNICATIONS

Petrol and Mobitel team up to provide new way to pay for fuel


Slovenia's leading petrol trader and mobile operator, Petrol and Mobitel, have teamed up to develop a new system of paying for petrol using a mobile phone, Slovenia News reported recently. 
Owners of Petrol's Magna benefits card, who are subscribers of Mobitel, will be able to activate a virtual Magna account which will let them pay for petrol bought at Petrol service stations via their mobile phones. After filling up, a customer will be able to dial a special number which will allow his purchase to be processed. The purchase will be recorded on the customer's Magna account, while a fee will be paid to Mobitel for the service. According to Petrol chairman, Janez Lotric, the system is just one of the innovations the company is introducing in a bid to make paying for petrol easier. Petrol is also developing a network of filling statements that will be equipped with card readers that will allow customers to pay for petrol by swiping their debit cards and entering their pin directly at the pump, thereby eliminating the need to go to the cashier.

Telekom moves to annex ISP subsidiary

The management board of the Slovenian telco, Telekom Slovenije, has moved to annex its internet wing Siol, Slovenia News reported recently. 
Telekom believes this is a logical step, given that other European telcos have incorporated internet telephony into their operations. However, the government, which owns a majority stake in Telekom, has already said it sees no reason for this step. The Telekom board decided to follow the footsteps of other European telcos in integrating the Internet wing into the parent company. Telekom chairman, Peter Grasek, believes the step should be carried out ahead of EU membership, as this would allow the company to enter the EU market with a structure comparable to telcos elsewhere. He also claims that annexing Siol would improve efficiency and reduce costs. Yet the government, which represents the State's majority stake in Telekom, has already said it is against this move. Information Society Minister, Pavel Gantar, said that integration would be questionable from a legal stand-point. "I have spent the whole year warning Grasek that IP technology should be developed at Telekom, but that integration of Siol and Telekom would be problematic given the adoption of new legislation," he said.

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