Books on Slovakia
% of GDP
Update No: 105 - (30/01/06)
D-Day in September
The next parliamentary election in the Slovak Republic is tentatively scheduled
for September 2006. It is one place where 'Third Way' politics still count;
another is the Czech Republic, from which Slovakia seceded in 1993.
The opposition Party, Direction - Third Way (Smer), remains the dominant
political organization, according to a poll by UVVM. 32.5 per cent of
respondents would vote for Smer in the next parliamentary election, which the
governing coalition must dread.
The Party of the Hungarian Coalition (SMK) is now second with 12.2 per cent,
followed by the Movement for a Democratic Slovakia (HZDS) with 11.8 per cent,
and the Christian Democratic Movement (KDH) with 10.8 per cent.
Support is lower for the dominant party in the governing coalition, the Slovak
Democratic and Christian Union (SKDU). Meanwhile the Slovak National Party (SNS),
the Slovak Communist Party (KSS), the Free Forum (SF), the Movement for
Democracy (HZD) and the New Civic Alliance (ANO) are also ailing in the wings.
Dzurinda outlasts his popular welcome?
Since October 1998, the SKDU's Mikulas Dzurinda has led a coalition government
that included the KDH, the SMK and ANO. Dzurinda won a second term as prime
minister in September 2002.
Last year, Dzurinda survived a no-confidence motion after only 60 members of the
National Council voted in favour of the SMER-sponsored proposal-short of the 76
required to actually topple the government.
Dzurinda is the darling of Brussels and other Western allies; but he is disliked
at home. He introduced the flat tax that is socially divisive, even if beloved
of economic liberals abroad.
In December, Smer signed an agreement with the Slovak Trade Unions Confederation
(KOZ). Fico declared, "We are looking for allies to beat the current ruling
politics. Everyone is welcome."
The end of another global cynosure
Dzurinda has become a major figure on the world stage. He is basking in the
glory of his reform programme, widely seen in the US and the EU as a model of
He started it immediately after assuming the premiership in 1998 and was
re-elected, admittedly as head of a coalition of parties, in 2003, a rare feat
in the post-communist world.
His achievements have helped to facilitate a dynamic economy, which is also
greatly assisted by Slovakia's central position in Central Europe, attractive to
foreign investors, such as French and German motor manufacturers, and low wage
and other costs.
The Slovak economy is experiencing its greatest rate of growth in the past
decade. The Slovak Statistics Bureau has confirmed its forecasts and announced
that in the third quarter of 2005 the gross domestic product (GDP) grew by 6.2
per cent year-on-year. Slovakia thus ranks as the fastest growing economy in the
region, the SME daily wrote.
Economic growth is being driven by exports and increased household consumption.
Economists have warned, however, that this GDP growth structure carries the risk
of economic overheating. In particular, rising domestic consumption could result
in growing prices. According to VÚB bank analyst Mária Valachyová, the Slovak
central bank could try to tame local consumption by increasing key interest
The growth of the economy has had a positive impact on the creation of new jobs.
In the third quarter of the year, 2.24 million people in Slovakia had jobs, a
rise of 36,000 year-on-year. The unemployment rate decreased 1.9 per cent
year-on-year to 15.6 per cent.
The average wage in the national economy increased by 7.6 per cent in real terms
to Sk16,816 (441.7 Euro) a month, still very low by Western European standards.
Gas reserves represent 30% of total annual consumption
Slovakia's gas reserves represent 30 per cent of its total annual consumption,
which is the standard level for the EU25, Slovak gas utility SPP spokesperson,
Dana Krsakova, said recently, New Europe reproted.
The supply of Russian gas flowing to Slovakia via Ukraine fell by 30 per cent
after Russia cut off gas supplies to Ukraine. "SPP isn't counting on the
use of alternative routes for the supply of Russian gas for the time
being," said Krsakova. "As long as gas continues to flow to Slovakia,
SPP is able to cover gas consumption by using its own reserves," she added.
IMF estimates Slovakia's GDP to grow by 5.75 % in 2006
The result of healthy macroeconomic policy and the structural reforms in past
years was Slovakia's accession to the Mechanism of ERM II exchange rates, Slovak
finance minister, Ivan Miklos, commented recently on the release of an IMF
regular assessment report. "The government should now focus on creating the
conditions for the smooth transition to the Euro in January 2009," said the
recently published International Monetary Fund's (IMF) regular report.
In response Miklos said he found it "important the IMF statement points out
that Slovakia's healthy economic growth is not primarily driven by government
expenditures but rather by the private sector."
Although the IMF report embossed the position of Slovakia's economy as good, and
acknowledged that Slovakia already was meeting the Maastricht criteria for
long-term interest rates and public debt, "there still remain several risks
and challenges," it said.
"It is of paramount importance to decrease inflation and the fiscal
deficit. High unemployment remains problematic, and the stability of the Slovak
crown's rate will be tested by the country's membership in ERM II,"
according to the report.
"IMF recommends a cautious approach to additional incomes that can emerge
with the predicted higher economic growth, as the government has taken into
consideration in the 2006-2008 budget. Stated expenditures should be stuck to
even if there are higher revenues," the report read, emphasising potential
savings in public expenses as well.
According to the forum, further economic growth in Slovakia was on the cards,
New Europe reported.
It based this belief on higher net exports, expected after new carmakers Kia and
PSA Peugeot-Citroen launch production. According to the IMF prediction, the
country would see real GDP growth of 5.75 per cent in 2006 and 6.5 per cent in
MINERALS & METALS
Kovostroj Dobsina launches new operation in Romania
Kovostroj SRL, a related company of Kovostroj Donsina, Slovakia's biggest
producer of galvanised strips and thin-steel profiles used in plastic-frame
windows, recently started its Romanian operation, a statement from the company
announced. Strip, the company that owns Kovostroj, invested some eight million
Slovak crowns (214,000) in its new production facilities in the Balkans,
creating the first 10 new jobs. "Until now, we've been exporting profiles
to Romania, now we're going to produce them there," chairman of the
Kovostroj Board, Darko Karlovsky, said at a press conference, New Europe
The company's exports to Romania hitherto represented 18 per cent of its total
exports, the second largest percentage after the Czech Republic, which accounts
for one quarter of Kovostroj's exports. According to Karlovsky, the company ahs
an aim of becoming the leader on the central-European market in this field,
"which is why it continually invests in new engineering facilities."
Kovostroj originally belonged to the group of firms linked to VSZ Kosice. Kosice-based
company Strip became its new owner in 2003.
Mixed signals from Slovak government over sale of airports
A Slovak government coalition leader recently expressed doubts about the
proposed sale of the country's Bratislava and Kosice airports, raising the
possibility of a collapse of the huge privatisation deal. However, Slovak
transport minister, Pavol Prokopovic, told reporters the deal was nearly done
and that he would recommend the government accept the offer of the TwoOne
consortium. TwoOne is led by the operator of Vienna's airport. The mixed
messages underscored what could become a tough political battle over the
proposed tender. The European Commission, which last year said it would monitor
the privatisation because of unusual tender procedures, was also mulling to
enter the fray.
Parliament Chairman, Pavol Hrusovsky, of the Christian Democrats (KDH), a
partner in the right-wing coalition of prime minister, Mikulas Dzurinda, was the
latest leader to question the airport sell-off. "We have sufficient reason
not to agree with the privatisation," Hrusovsky told TASR news agency,
cited by Deutsche Presse-Agentur (dpa). Without giving specifics, Hrusovsky said
he wanted to discuss KDH's "reservations" with other coalition
partners before the government made a final decision.
Doubts over the sale have also been raised by opposition party leaders and by
one of the losers in the recent bidding for the state-run airports. The
recommended winner was TwoOne, whose investment partners include Austrian
Raiffeisen Zentralbank (RZB) and Slovak finance group Penta. But some opponents
of the deal expressed fear that the smaller Bratislava airport would suffer if
it were run by the operator of the nearby Vienna International Airport.
Ireland's budget airline Ryanair, which currently serves Bratislava, also
embarked the front opposing the takeover of the airport by TwoOne. Prokopovic
rejected fears that the Bratislava airfield would be monopolised by its larger
neighbour 50 kilometres away in Vienna. He said passenger numbers at Vienna were
already far higher than in Bratislava.
The controversy began on December 22nd when a transport ministry committee
recommended that the government sell its controlling stake in the growing
airports to TwoOne for an undisclosed amount. Three other bidders - consortiums
that include investors and operators of airports in Britain, Germany and Turkey
- were rejected. Prokopovic and the rest of Dzurinda's cabinet was expected to
act on the recommendation by the end of January. Citing the confidentiality of
the tender process, the government refused to discuss the bids.
Slovak media reported that TwoOne won the competition by offering 6.9 billion
Slovak crowns (US$222 million) and billions more in investments, bringing the
total bid package to 13.9 billion crowns. The ISAP group, led by the
Cologne-Bonn airport, reportedly made a higher investment bid of nine billion
crowns. The bidding took a political turn recently when opposition leaders
Robert Fico of the Smer party and Vladimir Meciar of the Movement for a
Democratic Slovakia (HZDS) said they were against the TwoOne proposal. ISAP even
threatened to complain to the European Commission if TwoOne gets finally picked.
Fico, meanwhile, warned that he would push to reverse the privatisation if his
party gains power in the next parliamentary elections in September.