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Books on Slovenia
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Update No: 118 - (29/03/07)
Slovenia, the Balkans forerunner
Slovenia joined the EU in 2004 with 10 mainly central European countries.
Following highly successful economic reforms, Slovenia was the only one of the
10 new members to be on track to join the euro single currency this year, which
it duly did in January.
If Slovenia is the most advanced of the former communist states in the Balkans
by far, Germany is the key state in the EU, its largest and its paymaster. The
German Chancellor Angela Merkel is the present president of the EU. She made it
one of her first initiatives to visit Slovenia last year and establish good
relations.
She sees it as the natural model for the others in the Balkans region of how to
proceed.
Slovenia had already been singled out last year as the key Balkan interlocutor
for Brussels by another major figure on the European stage. "As we share
our experiences about what happens in other parts of Europe and the world, we
turn to those who know a certain area. It is clear that Slovenia knows this
region best," President of the European Commission Jose Manuel Barroso said
then.
Speaking to the press after meeting PM Janez Jansa during his first visit to
Slovenia, Barroso explained that Slovenia is expected to give its input to the
EU's "collective thinking" in shaping a policy on the Western Balkans.
He, moreover, stressed that the European prospects for the countries in this
region are especially important in respect to peace and stability. However,
these countries will become EU members only after they meet all economic and
political criteria, Barroso continued.
Barroso used the opportunity to praise Slovenia, saying that the country is
"a good example of success" among EU members. It will be the first
among the EU newcomers to adopt the euro, join the Schengen area and also
preside the EU, he added.
Meanwhile, PM Jansa told the press that European neighbourhood policy and in
particular the Western Balkans will be a priority of Slovenia's EU presidency in
the first half of 2008. He expects the discussion on the EU constitution to get
underway at that time. Moreover, the bloc will also have to focus on energy
policy during this period, Jansa added.
Out of sight; out of mind
No news is usually good news; and Slovenia is hardly ever in the spotlight.
Ljubljana was the venue for Putin's first meeting with Bush in June 2001, just
months before 9:11.
But nothing of note has occurred to make Slovenia newsworthy. The international
organizations are paying attention all the same, whose verdicts are interesting
for what they say and who is saying them.
ECB Sees Significant Budgetary Imbalances in Slovenia
The European Central Bank (ECB) has found "significant budgetary
imbalances" in Slovenia in its March bulletin on the economic situation in
the eurozone, placing Slovenia among the countries which are "not yet in
safe budgetary positions."
Slovenia is expected to meet its medium-term objective by 2009, but its updated
stability programme points to "backloaded adjustment strategies with risks
on the expenditure side," reads the report, which was published on
Thursday, 15th March.
The 2006-2009 stability programme which Slovenia submitted to the EU at the end
of last year envisages a general government deficit growing from 1.5% of GDP in
2007 to 1.6% the following year and dropping to 1% in 2009.
The European Commission assessed the programme as plausible but lacking in
ambition. It said most of the planned measures were geared towards 2009, which
is why it called on Slovenia to take these measures faster, especially in light
of the current strong economic indicators.
Statement at the Conclusion of an IMF Mission to Slovenia
Press Release - International Monetary Fund
March 20, 2007
The following statement was issued on March 16 in Ljubljana by an International
Monetary Fund mission:
A staff team from the European Department of the International Monetary Fund (IMF)
concluded the annual Article IV discussions in Slovenia on March 15, 2007. This
consultation focused on ways to sustain Slovenia's good macroeconomic
performance following euro adoption and to deal with longer-term challenges,
especially in the financial sector, to strengthen competitiveness and growth.
Slovenia has done well, but euro membership brings new challenges. The recent
euro zone entry is a testimony of Slovenia's commitment to sound macroeconomic
policies. Looking ahead, maintaining prudent fiscal and wage policies, and
increasing economic flexibility and productivity will be key to ensuring that
the economy can continue to grow without building up inflationary pressures.
Over time, if wages grow faster than productivity, Slovenia can lose
competitiveness and fall into a low-growth trap.
To ensure non-inflationary growth in an economy at capacity limits the IMF
mission recommended a tighter than budgeted fiscal stance for 2007-08
underpinned by reforms in rigid spending. This would also help flexibility of
fiscal policy over time to deal with shocks, create room for capital spending
and accommodate the welcome reduction of taxation. Rationalization measures need
to be targeted on inefficient expenditure to ensure the quality of public
services in which implementation of performance budgeting will be important.
Substantive reforms with the pension system sooner than later are also needed to
ensure its sustainability over time given the rapid aging and generous pension
benefits in Slovenia-otherwise there is a need to accumulate more savings to
cover future pension spending.
In the financial sector, reducing vulnerabilities during these good economic
times and further developing capital markets are important to ensure sustained
financial stability and long-term growth. The banking system remains sound and
stable, but profitability is regionally low and interest rate margins are under
pressure. In an environment of strong credit growth and increasingly integrated
markets, closer monitoring of credit risks especially to the leveraged
enterprises is important. To increase efficiency in the sector and enhance
transparency, privatisation should proceed in line with government plans and
large financial institutions should be listed on the stock exchange. Together
with the development of private pension funds, and full implementation of EU
directives this should also contribute to the development of capital markets
facilitating access to finance and productivity.
Sanader: We Will Go To Arbitration With Slovenia
One problem area for Slovenia is its relationship with neighbouring Croatia.
But things are being settled peacefully.
Croatian Prime Minister Ivo Sanader said that Croatia would seek arbitration on
the issue of the borders with Slovenia.
Sanader said that, once the introductory part of a conference in Zagreb on the
"Solidarity and togetherness with the Church and people in Bosnia and
Herzegovina - interaction for new visions" was over, Croatia would seek
arbitration on the issue of the borders with Slovenia.
"We have not been able to reach a bilateral agreement in 16 years," he
said, adding that the issue now had to be resolved by international
institutions.
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AGRICULTURE
EU Approves EUR 40m in Restructuring Aid for Sugar Plant
The European Commission said last week that the fund for restructuring
Europe's sugar industry contained enough funds to pay out aid to all who
requested it. This means that Tovarna sladkorja Ormoz, Slovenia's lone sugar
plant, will get 39.8m Euro, the Agriculture Ministry said on Monday, Slovenia
News reported.
Out of the total, 3.87m Euro would go to sugar beet growers, 8.25m Euro for
severance pay to redundant workers and the rest would go for closing down,
decommissioning and environmental restoration of the plant in the NE Slovenian
town of Ormoz.
The plant was forced to end operations in the wake of the EU-wide sugar reform,
which the bloc confirmed in late 2005.
The Agriculture, Food and Forestry Ministry added that the cabinet would send
the plan for the restructuring of the plant to Brussels this week. The plan is
for the Commission to review but not assess its suitability, the ministry said.
Efforts are underway to have the plant converted to biofuel production. Jurij
Dogsa, the chairman of sugar factory Tovarna sladkorja Ormoz, said recently that
the plant would have to undergo a 35m Euro overhaul in order for it to be able
to produce 50,000 cubic metres of bioethanol a year.
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AUTOMOBILES
New Twingo Hits Assembly Line at Revoz
Slovenian carmaker Revoz has launched the serial production of Renault's new
model of the Twingo city car. Being the only Renault factory making the new
model, the Novo mesto-based company expects the project will generate 300 new
jobs, Slovenia News reported.
According to Revoz's spokeswoman, Renata Bele, the company currently produces
750 new Twingo and the Clio Storia models every day, with production running in
three shifts. By introducing a full night shift, Revoz plans to increase
production to 900 cars a day by May.
With the serial production of the new Twingo coming into full swing in June when
the car is to go on sale in France and Slovenia, Revoz moreover expects it would
have to expand its current working force of 2,700 with an additional 300
workers.
Revoz, since mid-2005 also the only Renault factory making the second generation
of Clios, produced more than 153,000 cars last year and plans to increase its
future yearly the output to around 210,000.
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CREDIT RATINGS
S&P assigns benchmark 1bn Euro bond AA
Standard & Poor's Ratings Services assigned its AA senior unsecured debt
rating to the Republic of Slovenia's proposed inaugural Euro-denominated
domestic benchmark bond (one billion Euro, maturing in 2018), the rating agency
said, New Europe reported.
At the same time, Standard & Poor's affirmed its AA long-term and A-1+
short-term sovereign credit ratings on the Republic of Slovenia. The outlook is
stable. "Slovenia's very strong credit standing reflects the country's
healthy economic prospects and the government's tight control over fiscal
accounts," said Standard & Poor's credit analyst Ana Mates, adding:
"It also reflects the government's impressive achievement in reducing
inflation to within the Maastricht treaty target for EMU (European Monetary
Union) entry."
Slovenia was the first of the EU's 2004 cohort of new member states to accede to
the EMU, thus shielding the sovereign from potential balance-of-payments
pressures. The government's commitment to fiscal prudence resulted in a better
outcome than budgeted in 2006, with the general government deficit at 1.2 per
cent of gross domestic product (GDP). In addition, the debt burden is relatively
stable at 28 per cent of GDP. This performance augurs well for Slovenia's
prospects within the currency union. Slovenia's growth rates have averaged 4.5
per cent since 2004, while its current account deficit of around two percent of
GDP in 2006 compares favourably with those of most peers and demonstrates the
competitiveness of Slovenia's economy. Nevertheless, in the context of a
currency union, increased productivity and wage and labour market flexibility
become more important to maintain competitiveness.
The ratings on Slovenia remain constrained by its hesitant approach to the
reforms necessary to underpin further growth without jeopardising the fiscal
stringency of recent years. With GDP per capita at just above 60 per cent of the
AA median in 2006, a process of real convergence is of paramount importance.
"Improvements to Slovenia's competitiveness and continued economic
restructuring, which in turn support the process of convergence to AA median
income levels, would be key drivers of long-term improvements in the
rating," Mates said, adding: "Conversely, the ratings could come under
pressure if the budget balance deteriorates significantly, especially given the
imperative for fiscal discipline in a currency union."
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TELECOMMUNICATIONS
Si.Mobil to launch 3G by July
Slovenia's second largest mobile operator Si.Mobil has begun constructing a W-CDMA
network and expects to launch 3G services by July this year, TeleGeography
reported on February 23rd.
Si.Mobil paid 6.5 million Euro for a UMTS licence last September and is planning
to invest 10 million Euro in its 3G infrastructure rollout this year. The
company told local press that it plans to upgrade 100 GSM base stations a year
to 3G, beginning in cities, and to augment coverage with so-called 2.75G EDGE
services. TeleGeography's GlobalComms database notes that 3.5G services are set
to be rolled out in tandem with its UMTS network under a Europe-wide HSDPA
supply deal between parent group Mobilkom and Swedish vendor Ericsson, signed in
February 2006. Domestic broadband operator T-2 won a 3G concession alongside
Si.Mobil, whilst the country's only active 3G provider, Mobitel, launched W-CDMA
services in selected areas in December 2003, and after expanding its coverage,
signed up around 60,000 users by the end of 2006, it was reported.
Telekom Signs Deal on Second Kosovo Mobile Licence
Telco Telekom Slovenije and Kosovo officials signed an agreement in Pristina,
making Telekom's subsidiary Ipkonet the region's second mobile operator,
Slovenia News reported.
The agreement was signed by Telekom chief executive Bojan Dremelj, the boss of
Telekom's wireless subsidiary Mobitel Klavdij Godnic, Akam Ismaili of Ipkonet
and Kosovo Telecommunications Agency director Anton Berisha.
Telekom won the licence after Kosmocell, the company that was initially declared
the winner, failed to pay the licence fee in time.
As a result, the agency withdrew the licence from Kosmocell and awarded it to
second-placed Ipkonet. The Slovenian consortium paid the EUR 75m licence fee on
22 February.
Kosovo Prime Minister Agim Ceku expressed his satisfaction that the deal, which
is important for the locals, was finally closed.
This will boost competition in the field of communications and give consumers
more choice, he said prior to the signing.
The second mobile operator in the region will also bring new investments in the
telecommunication infrastructure, development and new jobs, Ceku added.
Beside paying the licence fee, Telekom will invest some EUR 120m in the
construction of a mobile network, which will make it one of the largest
Slovenian investors in Kosovo.
The construction is to start immediately and the basic infrastructure is to be
finished by the end of the year, so that first services should be available by
then.
Telekom Slovenije expects that in the next five years it will acquire a 50%
market share and have around one million subscribers after eight years.
Telekom and Ipkonet also have plans in other businesses, including internet and
fixed line network.
Nokia wins network contract with Tusmobil
Finnish mobile telecommunications giant Nokia said in a statement on March 11th
it had been picked by Slovenian operator Tusmobil as a GSM/EDGE network supplier
and operator, News Room Finland reported.
The launch of Tusmobil's network is scheduled for May 2007. The statement did
not mention the value of the deal.
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