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Books on Slovenia
REPUBLICAN REFERENCE
Area (sq.km)
20,273
Population
2,011,473
Capital
Ljubljana
Currency
Tolar
President
Janez Drnovsek
Private sector
% of GDP
40%
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Update No: 103 - (28/11/05)
The new international player
Slovenia is playing a much larger role in the world since the Bush
Administration came to power. Seen as easily the most Western of Europe's former
Communist states it is an ideal venue for new initiatives with the others,
particularly Russia. The message is subliminal: 'Don't you all want to end up
like this beautiful, peaceful, democratic and prosperous country?'
Slovenia escaped the appalling post-independence violence and tension that has
afflicted the other former Yugoslav states. It was where Bush first met Putin in
June 2001. It is hosting an important conference in December, in which events in
Georgia will head the agenda.
Mikhail Saakashvili, the president of the former Soviet republic of Georgia
often returns to his pet subject of the retrieval of the territorial integrity
of Georgia. He will have another opportunity to air his views soon in December
during the OSCE summit in Slovenia's capital, Ljubljana.
Georgia is still in a conflict relationship with its two unrecognised republics
of Abkhazia and South Ossetia, situated in the Northern Caucasus. This is no
longer, as in the 1990s, based on outright war. But no proper peace has been
declared and they remain under the wing of Russia, with which they have deep
ties.
Washington the saviour?
President Saakashvili said in an interview with Reuters that he was counting on
the USA's assistance in the recreation of the territorial integrity of his
country. US diplomats are currently working on certain suggestions on the
matter, which are expected to be expressed during the forthcoming OSCE summit in
Slovenia.
Mikhail Saakashvili did not give any specific details about the suggestions,
although he did not miss a chance to say something scathing about Russia.
Speaking about the USA's role in the regulation of Georgia's conflict with
Abkhazia and South Ossetia, Saakashvili said: "It means that we will have
someone at the table to make Russia understand that peace will be good for
everyone."
Where better to make that point than peaceful, lovely Slovenia?
PM convinced time is right for reform
The Economist organized a Roundtable with the Government of Slovenia. The
one-day event on October 18th saw top-level attendance among politicians and
business officials.
Prime Minister Janez Jansa took the opportunity to make a major, long-prepared
statement of a new reform plan. He is convinced that the "time is
right" to carry out structural reform in Slovenia. According to him, the
current economic stability is fertile ground for taking measures that will make
Slovenia's economy better and prepare it for increasingly fierce global
competition, reported Slovene Press Agency STA.
Jansa believes that the package of reforms being put forward is one of the best
around. Outlining the measures to domestic and foreign business officials on
Tuesday, 18 October in Bled, he said that Slovenia was looking to make better
use of its potential, something that the planned reforms should enable.
"With the implementation of the key measures of this package in 2007,
Slovenia can expect to enter a period of overall improvement," Jansa told
officials gathered at the business conference.
Jansa admitted that the gradualistic approach to reform adopted by Slovenia
since independence in 1991 had produced a stable economy in Slovenia. Now we
want to draw on that stability to implement more radical measures that will make
Slovenia even better, he said. The aim of the measures is to create a more
business-friendly environment that will make Slovenia more competitive, allow it
grow rapidly and subsequently catch up with the most developed countries in the
world.
A number of measures, he said, have already been implemented, including efforts
to cut red tape. But now it is the turn of the key measures, including a
simplification of the tax code, he added.
According to him, the most controversial of the planned measures - the flat tax
- is an attempt to simplify Slovenia's tax code. In his opinion, the trade
unions have been too quick in stating their outright rejection to flat tax.
"We want to lead a dialogue with the social partners so that we can achieve
broad consensus," he stressed, adding that the unions should keep an open
mind instead of attacking measures before even considering their potential
benefits.
He admitted that the government was wary of a referendum being called to decide
on some of the measures, particularly the flat tax. There have been cases where
previous governments have had to shelve reforms because of opposition from
unions, he pointed out.
Moreover, Jansa is convinced that the planned measures will speak for themselves
and will as such be an important factor in improving Slovenia's global
reputation. Coupled with its stint as EU president in 2008, he thinks that
Slovenia has a good opportunity to promote itself as a location to do business.
In this he is almost certainly right. Given that Slovenia has easily the most
advanced of all post-communist economies, an ideal location in the Alps,
naighboroughing Austria and Italy atop the Balkans and a highly educated work
force, it is of prime interest to foreign investors.
Luxembourg-Ljubljana axis; Slovenia to join eurozone by 2007
Prime Minister Jansa is keen to strengthen ties with other EU states, now
that Slovenia is also a member. He stated during a recent visit to Luxemburg
that there is great potential for cooperation with Slovenia, in particular in
financial services, the chemical industry, tourism and investments. He also made
a significant policy announcement.
Along with his Luxembourg counterpart Jean-Claude Juncker, they have urged the
British EU presidency to re-double its efforts in ensuring that an agreement on
the EU's 2007-2013 budget framework is reached at the summit in Brussels in
December.
Jansa said he was not too optimistic, but he nevertheless hopes that an
agreement may be reached in December. "New member states need more time to
prepare for the new perspective and carry out structural budget reforms to phase
the funds efficiently," he said. Juncker agreed with Jansa that the new
member states need a budget agreement as soon as possible, while he stressed
that the compromise proposal of the Luxembourg presidency, which was not
endorsed, was not perfect, but it was the best possible solution. EU topics
dominated Jansa-Juncker talks, including the EU constitutional treaty.
Juncker voiced the expectation that Slovenia will be the first new member state
to enter the eurozone. Prime Minister Jansa said that preparations for the
adoption of the euro in 2007 were on track, with inflation being the only
criterion that Slovenia is yet to meet. "We are currently 0.3% off the
mark, and I am confident that we will meet all Maastricht criteria by June next
year," Jansa said.
The prime ministers also talked about the Balkans and the prospects of EU
enlargement, with Jansa underlining Slovenia's support for the EU accession of
countries in the region
The Economy in Focus
There is an excellent article on domestic developments in Slovenia; we
publish the first part.
It is by Andrej Brstovsek, posted on Tol on the web on 17th October 2005. Andrej
Brstovsek is a journalist with the Ljubljana daily Dnevnik.
Slovenes analyse the centre-right government achievements after a year in
office, while the opposition gets a new leader.
"It's the economy, stupid!" Bill Clinton's famous maxim seems to have
found a new home in Slovenia as the country assesses the performance of its
government a year after the historic landslide victory that brought the right to
power.
Prime Minister Janez Jansa, who took over after many years on the opposition
benches, says that economic and political stability are the main achievements of
his tenure so far. Most analysts agree that the economy is doing well, although
it is too soon to say whether this is also due to the previous government's
policies or indeed the sole achievement of Jansa's team.
It is no surprise that the economy took the top spot not only with politicians
but also analysts and society at large. For a long period Slovenian politics had
two main priorities: membership of NATO and the European Union. Politics was all
about achieving those two goals - and that happened last year.
Capable of running a government
The incoming centre-right government was greeted with mixed expectations
after last October's general election. Voters were fed up with the centre-left
Liberal Democrats (LDS) who had ruled in Slovenia for over a decade.
But it was unclear how adept Jansa's Slovenian Democratic Party (SDS) would be
at running a government. It had been the main opposition group for many years,
during which it held no decision-making positions. Many were asking whether it
had sufficient human resources to run a country, and some of its beliefs seemed
vague too: in opposition, the party had long been a vocal critic of the slow
pace of transition, claiming that Slovenia had not moved away from its communist
past fast enough.
Now, a year after the election, the fog is lifting over the government, which in
addition to Jansa's SDS also includes the New Slovenia Party and two parties
that were also part of the previous governing coalition, the Slovene People's
Party and the Democratic Party of Pensioners of Slovenia.
The government took over smoothly and its members quickly adapted to their new
roles. Jansa, who at times used to be rather aggressive in opposition, is now
giving the impression of a calm and polished statesman.
By all measures nothing seems to stand in the way of Slovenia's adopting the
euro in 2007. Economic growth for 2005 will probably be around 3.9 percent as
anticipated. Exports have increased and unemployment is down. There are no major
problems with inflation despite skyrocketing oil prices on the world markets.
But Jansa's government still has some major economic issues to tackle. The prime
minister himself cited structural reforms as a top priority. The government is
now considering introducing a flat tax or, as a distant possibility, increasing
the VAT rate to make up for a loss in revenue after the possible abolition of
the wage tax paid by employers.
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BANKING
Slovenian NLB submits offer to buy Cont Banka
Nova Ljubljanska Banka (NLB) which is Slovenia's largest bank, has offered
132.58 Euro per share to buy the remaining 1.57 per cent of Serbian continental
Banka, The Reporter News reported recently.
NLB aims to buy up to 5,957 continental shares. NLB, which is 34 per cent owned
by the Belgian banking group KBC, already owns 98.43 per cent of Continental
having paid 49.5 Euro.
Continental was the third state-owned bank Serbia sold this year. So far, Serbia
has earned 275m Euro from the privatisation process of bank assets.
The change of ownership of four private banks supplied the country with 400m
Euro in investments.
Several foreign bank institutions have entered Serbia's banking sector such as
Italian Intesa and Findomestic, French Credit Agricole, Austrian Erste Bank,
Greek Piraeus, EFG Eurobank Ergasias and Alpha Bank this year.
The assets of Serbia's banking sector totalled 6.5bn Euro at the end of last
year.
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FINANCIAL NEWS
October inflation rises by 3.1%
Slovenian consumer price index rose by 3.1 per cent in October from a year
earlier and by 0.2 per cent from September, the Slovenian Statistical Office
said recently, New Europe reported.
"The highest increase of prices was registered in clothing and shoes,
education and other food and accommodation services," the office reported.
Consumer prices in September rose by 1 per cent from the August figure, and by
3.2 per cent over 12 months. Slovenia's October inflation measured according to
the EMU convergence index was 2.7 per cent, still exceeding the 2.4 per cent
index requested by the EU for Eurozone members, the office reported. Slovenia
joined the European Union last year and hopes to join the Eurozone by 2007.
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FOREIGN INVESTMENT
Australia's Aristocrat Leisure acquires 50% stake in Electroncek
Gaming machine manufacturer Aristocrat Leisure Ltd said recently that it has
acquired a 50 per cent interest in Slovenia's Elektroncek group of companies,
New Europe reported.
Aristocrat's initial investment will be 30 million Euro with up to a further 10
million Euro payable, dependent on the achievement of certain financial
performance targets for the years ended December 2005 and 2006. Elektroncek,
which trades under the Interblock brand name, manufactures a range of
electro-mechanical multi-terminal gaming products, including Roulette, Dice and
Sic Bo. The company sells its products in a wide range of gaming jurisdictions,
including territories in Europe, the US, Canada and Macau. It currently has
products awaiting approval in a number of jurisdictions, including the
Australian state of New South Wales. Aristocrat said Elektroncek is forecasting
2005 December year revenues of about 40 million Euro and earnings before
interest tax, depreciation and amortisation (EBITDA) of about 10 million Euro.
The acquisition is expected to be earnings accretive by around one percent in
2006.
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