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SLOVENIA


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 26,284 21,108 18,800 63
         
GNI per capita
 US $ 11,830 9,810 9,760 51
Ranking is given out of 208 nations - (data from the World Bank)

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% 



 
Update No: 093 - (28/01/05)

Slovenia has the highest reputation for economic stability and performance among the former communist countries. So it does also for political stability and democratic legitimacy. But recent reports by both international and domestic observers of the Slovene scene give mixed verdicts.

IMF Annual Report About Slovenia 
The International Monetary Fund (IMF) has published the World Economic Outlook, the most recent report on world economic trends. In referring to Slovenia, the report stated that it is well positioned for joining the ERM II exchange rate mechanism (ERM 11), despite having a substantially higher inflation rate than the European average. Slovenia, Lithuania and Estonia have been members of ERM II since June of this year, which is a precondition for entry into the European economic and monetary union, i.e. adopting the Euro. 
The IMF estimated economic growth for Slovenia last year at 3.9%, while forecasting 4.1% growth for 2005. Inflation was at 5.6% in 2003, while according to the IMF it dropped to 3.7% in 2004, and is forecast to be 3.2% in 2005. While the balance of payments was still positive in 2003, this year a deficit of 0.6% is expected, and a 1.4% deficit in 2005.
In this year's IMF report Slovenia was ranked in the category of countries of "Emerging Europe", which includes the new EU member states and countries of south-eastern Europe. Economic growth in this group was estimated at 5.5% in 2004, forecast to be 4.8% in 2005. Inflation was 7.1% in 2004, forecast to be around 5.9% in 2005. The balance of payments deficit was 4.3% last year, and will be around 4.1% in 2005.

Slovenia will not catch up until 2025
Growth statistics depend overwhelmingly on the base from which you start off. Slovenia's base line is high, indeed the highest in the former communist world.
Nevertheless, a leading Slovenian economic institute has concluded that Slovenia is unlikely to catch up to the average GDP per person in the European Union before the year 2025. This is 12 years later than predicted in the current national development strategy. 
At the moment, Slovenia's GDP amounts to around 76 per cent of the EU average, which means that the country's economy would have to grow annually by 4.9 per cent between 2002 and 2013 if it is to catch up to the average EU GDP by 2013. 
However, the Institute for Macroeconomic Analysis and Development (IMAD) predicts that economic growth in Slovenia until 2013 is to amount to around 3.6 per cent annually. This means that Slovenia will need at least 12 additional years to catch up to the average GDP in the EU. 
According to IMAD's Economic Mirror publication, Slovenia's economy grew at an average pace of 4.1 per cent annually between 1993 and 2002. Contributing most to growth was a rise in physical capital, whereas human capital contributed little. 
Human capital is expected to continue to make only a minor contribution to GDP growth until 2013, IMAD believes, while the effect of the rise in physical capital is expected to fall in this period. 
The study also points out that differences between the trends in human and physical capital in Slovenia and the rest of the EU are not such as to warrant a 24 per cent developmental gap. The main reason for the difference lies in technological progress, IMAD says. 

Ljubljana targets more FDI and less red tape
The new Slovenian government has decided to reduce the involvement of state in the economy and promotion of foreign direct investments (FDI) - two of its economic priorities - for the next term, Slovene press agency reported.
In the coalition's programme on the economy, the four coalition partners have set down the withdrawal of the state as an owner of companies as one of the main priorities. The withdrawal will involve the sell-off of assets owned by the state-run Restitution Fund and Pension Management Fund, as well as the sale of state-held stakes in companies such as the national telecom, Telekom Slovenije.
The privatisation of Telekom is dealt with in detail in the programme, with the government aiming to establish competition on the telecommunications market before launching the gradual sale of Telekom and its subsidiaries. The government also hopes to make Slovenia one of the most developed countries in terms of information technology.
Under the coalition's agreement, information technology is a crucial field for the future development of Slovenia. Another economic priority of the new government is the promotion of entrepreneurship. Measures will be undertaken that will facilitate the establishment of companies by cutting red tape and costs associated with this. 
The coalition intends to promote foreign direct investment, with one of the objectives being the establishment of a level playing field for local and foreign investors. The coalition also reaffirms Slovenia's commitment to adopt the Euro in 2007. According to the programme, the adoption of the Euro is associated with a number of benefits. However, in the opinion of the coalition the adoption of the single currency also brings with it a number of challenges, which require that the Slovenian economy becomes more competitive in the future.
The new government also hopes to increase discipline in the payment of taxes, while promising to offer tax breaks to companies, which invest in research and development. It also aims to improve the current tax system, among others by adopting changes to the already adopted income tax act. The basic tax policy goal will be to reduce the income tax burden. In the area of banking, the government intends to promote "healthy competition" that will benefit consumers. The government also intends to promote mortgages as a form of bank-issued loans.
As regards the privatisation of state-owned banks, the coalition intends to select strategic partners, which will promise to promote entrepreneurship in the country. One of the priorities of the new government in transport policies will be to reduce the burden on the environment as well as reinstating the status of the fifth and tenth pan-European routes as the priorities of transport policy in the country.

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ENERGY

HSE, Talum, Verbund partner up

Slovenia's largest power company Holding Slovenske elektrarne (HSE), aluminium producer Talum and Austria's largest power company, Verbund, signed an agreement on the establishment of a joint venture that will plan the construction of a large gas power plant in Slovenia, Slovene Press Agency reported.
The agreement on the establishment of Plinsko parna elektrana was signed on December 3rd. Under the ownership structure of the company, HSE will hold the largest stake (45 per cent), while Verbund will control 40 per cent and Talum 15 per cent of the new Kidricevo-based company, northeastern Slovenia. Brane Kozuh was appointed its manager, HSE said in a statement. The plant, located 25 kilometres southeast of Maribor, is to have an installed power of 800 megawatts. If constructed, it will have the latest equipment that will guarantee low nitrogen oxide emissions.

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FOOD & DRINK

Radenska sees revenues drop

Beverages producer Radenska is expected to post sales revenues of 7.8bn tolars (€32.5m) and profits of 350m (€1.45m) last year, which is far below 2003's figures, the company revealed recently, cited by Slovene press agency. This year the Radenci-based company will generate only 77% of the revenues reported in 2003, as the volume of sales dropped by one quarter. The management believes that the poor performance was prompted by tough trade conditions after Slovenia's European Union entry, with the increased prices of raw materials, notably sugar and packaging. Radenska Director General Zlatko Hohnjec told at a news conference that 2004 represented a serious test of the company's aptitude.

Istrabenz owner of 93 Per cent of Kolinska 

Istrabenz, the tourism and energy group, has acquired 73 per cent of Ljubljana-based food company Kolinska through its official takeover bid, raising its total stake in the company to 93.22 per cent.
According to a press release from Istrabenz, 2,181 shareholders of Kolinska accepted the takeover offer, selling it 73.35 per cent of the shares. 
All major Kolinska shareholders accepted the offer to sell at SIT 6,500 (27.11 euro) per share, which values the food company at SIT 20.6bn (85.91m euro). 
The last major owners to sell were the state-owned Pension Fund Management (KAD) and Restitution Fund (SOD), which held 11.56 and 10.59 per cent, respectively. 
The takeover had previously been given approval by the management board of Kolinska. Moreover, its members are among the many small shareholders who have already sold their shares to Istrabenz. 
Istrabenz CEO, Igor Bavcar, has said that the takeover will be a step forward in the company's bid to consolidate Slovenia's food-processing industry. 

Slovene company bids for takeover of Serbian beverage producer

Slovene energy and tourism group, Istrabenz, intends to buy the Serbian company, Rubin, which deals in production of wine and alcoholic beverages. Krusevac-based Rubin, a very well known company in former Yugoslavia, is today a leading company in the production and sale of alcoholic beverages. An attempt to sell it last year was unsuccessful, Radio Slovenia reported. 
Three would-be buyers have made a bid in response to last year's repeated tenders, and one of them was the Koper-based Istrabenz. It was not possible to find out from the Serbian Agency for Privatisation who the other two bidders were. Istrabenz did not say either how much they offered or who their competitors are. They are however hopeful that their bid will be successful. 
Before submitting the bid, Istrabenz made an agreement on professional advice with [Koper-based wine company] Vinakoper. The latter offered Istrabenz support in drafting a professional programme which will be needed in the event of buying Rubin. Experience in the area of winemaking is also one of the tenders' conditions. 

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FOREIGN ECONOMIC COOPERATION

Slovene, Serbia-Montenegro foreign ministers discuss economic ties, Kosovo

The foreign ministers of Slovenia and Serbia-Montenegro, Dimitrij Rupel and Vuk Draskovic, said there had been progress in the economic cooperation between the two countries despite certain imbalances, particularly to the detriment of Serbia-Montenegro. The ministers, who met at Bled on Sunday [9 January], agreed that Slovenian direct investment in Serbia-Montenegro could somewhat reduce the imbalance, STA news agency reported. 
The pair told a news conference that the chambers of commerce of both countries would agree on a meeting of company heads from Slovenia and Serbia-Montenegro, at which potential cooperation on third markets, such as China and the former non-aligned states, could be discussed.
Rupel and Draskovic also backed the signing of a contract between the two countries' air carriers, Adria Airways and JAT, on a permanent route between Ljubljana and Belgrade.
Touching on Kosovo, the ministers said the best solution would be one in a European context. Rupel said that both Serbia and Montenegro, as well as the province of Kosovo should be assured accession to the EU as soon as possible.
Draskovic proposed to Rupel that Slovenia assist Serbia-Montenegro in training personnel that will deal with the implementation of European legislation. Rupel accepted the proposal. He told the press that the training would take place either in Slovenia or in Serbia-Montenegro. 
Draskovic said this year was of key importance for Kosovo and welcomed the fact that Slovenia chairs the OSCE at a time when talks will be launched about the future status of the province. He said Slovenia knew what had been happening in the area in the past.
Rupel briefed Draskovic on the priorities of the Slovenian chairmanship of the OSCE, which include the stabilisation of SE Europe and Kosovo. 
The two ministers agreed to continue a dialogue on the matter and to make efforts for a dialogue between Belgrade and Pristina to get under way.
Rupel said that Slovenia would also back Serbia-Montenegro's efforts to enter the Partnership for Peace, although he admitted that Belgrade must first settle its issues with the international war crimes tribunal in The Hague.

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TELECOMMUNICATIONS

UnitedGlobalCom buys Telemach

US broadband communications provider UnitedGlobalCom on December 24th acquired Slovenia's leading cable company, Telemach, in a deal worth €71m. The agreement, approved by the UGC supervisory board, was signed on Christmas Eve. Telemach is Slovenia's largest broadband communications provider with over 105,000 cable TV subscribers and 13,000 broadband Internet customers. The company has grown significantly since 1999, with revenues up over 10-fold. UGC acquired the Slovenian cable provider from EMP Europe, a leading private equity firm dedicated to Central and Eastern Europe, and several Slovenian shareholders, including the Slovenian Railways and the Meglic family, which helped to found the company in 1999. The deal must still get the go-ahead from the Slovenian Competition Protection Office. Telemach Managing Director Vojko Rovere told the Slovene press agency that the company is delighted with the new owner as this opens new possibilities for the company's development. "We expect this to alter the development of competition on the telecommunications market in Slovenia," Rovere said. According to Rovere, Telemach wishes to remain the leading cable provider in Slovenia, offering a full range of broadband telecommunications services.

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TOURISM

Higher revenues at Aerodrom

Aerodrom Ljubljana, the company managing the Ljubljana Airport of Brnik, expects to record 41,064 arrivals and departures in 2005, 14% more than the current year, the company told Slovene press agency on December 15th. The company's supervisory board discussed the 2005 basic business policy and financial plan as well as the plan for the company's development for the year 2005. Aerodrom expects the number of passengers to increase by 15% to 1.2m, while no major changes are expected in cargo transport, according to the company's forecasts published on the web site of the Ljubljana Stock Exchange. The company expects to increase its revenues by 12% to 6.013bn tolars (€25m).

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