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SLOVENIA


 

 

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)

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Update No: 115 - (21/12/06)

Slovenia adopts the Euro
Over the coming year, Slovenia will reach two important milestones that will raise the country's visibility in the world and put the EU's embrace of ex-communist countries to a new test. On January 1st, the former Yugoslav republic became the first of the EU's10 new members to adopt the Euro. 
The step will complete Slovenia's transition from planned economy to being a full member of Europe's competitive single market. A year later Slovenia will inherit the EU's rotating six-month presidency, another first for a new member from the east and a signal of confidence from larger member states.
Each step, if successful could help revive the faded feeling among the eight central European countries that joined the EU in 2004 that Brussels and core EU countries are serious about continuing their integration rather than treating them as second-class. The steps could also significantly raise the image of Slovenia, which has suffered from obscurity since its birth in 1991. "For locating Slovenia on the world map, this will be a very good occasion," says Janez Jansa, prime minister.

The Slovenian-Slovak confusion
Bertrand Russell, the philosopher and wit, once made the remark that the First World War broke out because of the difference between Slovenia and Slovakia and personally he could never tell the difference. Not one of the sages wittiest remarks, but a good instance of a certain sort of Central European humour.
Confusion between Slovenia and Slovakia, among everyone from average EU citizens to US presidents, provides fodder for much self-deprecating humour in Ljubljana, the capital. But a low profile has other effects. Before its accession to the EU, Slovenia was consistently ranked by EU citizens as the country they would least want to see join, despite it being the most prosperous candidate for membership from the region.

Coming EU presidency
The chance to run the EU's political machinery from January to June of 2008 will undoubtedly raise that profile but will also represent an extreme challenge for a country of 1.9m people. "It's a little bit like taxiing a 747 with a bicycle," quipped one Western diplomat.
The government is not taking the task lightly, devoting substantial attention and resources to preparing for the task and recruiting nearly 2,000 bureaucrats. Much of the responsibility is purely administrative, but it also includes sensitive tasks, such as chairing more than 200 committees and working groups and drafting their agendas.
Slovenia could find itself playing an important role in attempts to revive the EUs failed constitution and reform its finances.
But Slovenia's first political priority, says Mr Jansa, will be to keep the momentum of enlargement alive for its Balkan neighbours, including Croatia, the most advanced, and Serbia, perhaps the most problematic. With Romania and Bulgaria joining in 2007 and disagreement over Turkey's candidacy splitting the big countries, Mr Jansa is keen to see the rest of the Western Balkans are not forgotten.

Pole of regional stability
Slovenia has its own economic interests at stake. Its companies have worked hard to revive trade connections in the region. But Mr Jansa insists the entire EU would suffer from the instability that would follow if countries such as Bosnia-Herzegovina and Serbia were to feel the EU has closed the door to them.
Mr Jansa has shown some boldness in pursuing regional stability with troops as well. By March, when Ljubljana despatches more soldiers for peacekeeping in Kosovo, Slovenia will have more troops abroad in Nato missions per capita than any other member of the alliance. 
Euro adoption represents a different opportunity, lowering risks and costs for companies doing business in the Eurozone. It may also boost the image of Slovenian companies. Marjan Kramar, chief executive of Nova Ljubljanska Banka, Slovenia's largest bank, says: "Slovenian companies will be, in principle, even stronger, because they will be not only European but form the heart of Europe."
Slovenia's move to the Euro exposes, however, some troubling aspects about adoption rules and about the single market. For Estonia and Lithuania, it is a harsh irony that their openness to foreign investment and other pro-growth policies ended up helping to disqualify them from Eurozone membership by fuelling inflation.
Slovenia, for its part, has never embraced privatisation and regularly stands accused of hampering foreign investors. But having satisfied the Maastricht criteria, Slovenia will adopt the euro first.

Exclusion from labour markets of Euroland
It is also ironic that Slovenians will soon use the common currency but remain barred from free access to some of the Eurozone's labour markets. Austria and Germany, most notably, still control labour movement from the eight central European countries that joined in 2004. As a matter of principle, this irks Slovenian policymakers.
"We would have preferred a faster timetable to make a reality of the political commitment to the free exchange of people and capital," says Andrej Bajuk, the finance minister.
In practice, however, the restrictions have little impact. Few Slovenians, even the young and university educated, seem interested in working abroad. They have good reason to stay. Per capita GDP in purchasing power parity is more than 80 per cent the EU average and the gap is closing as Slovenia's economy grows twice as fast as the rest of the Eurozone. Welfare benefits are among the most generous in Europe.

Need for further reforms
Unfortunately for home-body Slovenians, many economists are convinced they cannot sustain their competitiveness in the global economy without paring down the social welfare net and cutting taxes.
The centre-right coalition headed by Mr Jansa came in to power in 2004 promising a real shake-up. It campaigned on pledges of privatisation, lower taxes, pension adjustments, streamlining government and a host of other reforms.
The government has lowered taxes - "the biggest step forward in the tax system in Slovenia's history," boasts Mr Jansa - but the pension system remains, according to a European Commission report, a "time-bomb." The government has replaced hundreds of managers and directors at companies it controls, supposedly as a prerequisite for privatisation, but almost nothing of importance has been sold since 2004.
Thomas Robertson, US ambassador to Slovenia, insists the government should not be judged a failure on reforms, but gives low marks on privatisation. "They have taken control but if this is the end of the game, it has been less than successful," he said.
Mr Jansa agrees and pledges that privatisation will move forward in banking, telecommunications, energy and other areas. But, he is quick to say, "I don't think we will be successful by selling everything." He also adds: "These companies are doing quite well. If we stop at this point no harm has been done."

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CONSTRUCTION

Construction works stood at 2bn Euro in 2005 - Slovenia 


Slovenian construction companies carried out construction works worth nearly 2 billion Euro, Slovenia Business Week reported on November 27th, citing data released by the National Statistics Office. 
The value of construction increased in all categories in comparison with 2004. It rose by 12 per cent to 270.5 billion Slovenian tolars (1.13 billion Euro) for buildings, and by over one percent to 207.1 billion Slovenian tolars (864.2 million Euro) in engineering, it was reported. The value of buildings construction was higher mainly due to the 24 per cent increase in the value of residential construction. The value of non-residential buildings construction meanwhile rose by almost nine percent. 

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DEFENCE

Ministers Sign Cerklje Airport Reconstruction Document 

Four Slovenian ministers recently signed a protocol on the scope and contents of a national spatial plan for the renovation of the Cerklje ob Krki military airport. The Defence Ministry said that the facility would not be used as a NATO airbase, Slovene News website reported.
The protocol was signed by Defence Minister, Karl Erjavec, Economy Minister, Andrej Vizjak, Environment and Spatial Planning Minister, Janez Podobnik, and Transport Minister, Janez Bozic, in Cerklje ob Krki barracks. Erjavec said that the national spatial plan should be adopted early in 2008. 
The defence minister added that construction of new buildings at the location would take place between 2007 and 2011. The project is estimated at around 70m Euro, with NATO contributing 38m Euro. 
The upgraded airport is to serve as a host nation support facility, meaning that Slovenia should allow NATO aircraft to temporarily land there if asked by the alliance. As a NATO member, Slovenia would also have to allow aircraft maintenance and supplies, Erjavec said. 
After the upgrade, the facility will serve as the Slovenian Air Force's main base, housing the majority of the aircraft currently located at the Brnik airport, Erjavec noted. 
The modernisation involves a cutting-edge navigation system that would allow landings by day and night, and an increase in the length of the runway. The airbase will also be equipped for civilian aviation purposes, the minister explained.

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ENERGY

Power Giant HSE to Generate Over 33m Euro in Net Profit in 2006 

Slovenia's biggest power producer, HSE group, expects to generate SIT 186bn (0.78bn Euro) in revenues this year, and about one billion Euros in 2007. The core HSE company is to post SIT 8bn (33.38m Euro) in net profit and thus become one of the most profitable Slovenian companies, HSE chief executive, Joze Zagozen, said recently, Slovene news website reported.
According to the official, HSE has spent SIT 26bn (0.11bn Euro) on investment this year, while it plans to raise the sum to SIT 100bn (0.42bm Euro) in 2007. 
The company's long-term plan foresees HSE-generated power to increase from 7 terawatt hours to 39 TWH in 2018, when the company is expected to make two billion euros in revenues. 
"This will not be possible without an efficient trade network abroad," Zagozen said. He reminded the reporters that the company had set up companies in Italy, Serbia, Hungary, Croatia, the Czech Republic and a branch office in Romania. 
Zagozen said the company would continue the construction of a chain of hydro plants on the lower Sava river, upgrade the Avce pumped storage hydro plant and start the overhaul of the thermal power plant in Sostanj. 
Moreover, he said preparations would be launched for the construction of power plants on the middle Sava and other construction projects. Nevertheless, Zagozen does not think this will be enough to reduce Slovenia's energy dependence. 
The HSE has therefore studied around 100 possible locations in southeastern Europe, while it is currently working on 20 investment projects, in particular in the countries of the former Yugoslavia, according to Zagozen.

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TOURISM

Over 1m tourists used Slovenian tours in 2005 

A total of 874,225 Slovenian and 306,593 foreign tourists used Slovenian tour operators in 2005, with the largest number of Slovenians (40.5 per cent) going to Croatia, according to data published on November 29th by the National Statistical Office, New Europe reported.
Other popular destinations for Slovenians included Italy (6.7 per cent), the Czech Republic (5.2 per cent), Greece (5.1 per cent) and Turkey (4.4 per cent). A total of 5.7 percent of Slovenian tourists travelled outside of Europe, mainly to Africa (67.8 per cent), Asia (18.3 per cent) and the Americas (13.9 per cent), data from the Statistical Office also shows. The number of Slovenian tourists who spent at least one night on tours organised by Slovenian travel agencies increased by 34.4 per cent and the number of their overnight stays by 41.2 per cent in comparison with 2004. While in 2005 the number of Slovenians travelling around the country increased by 9.2 per cent, the number of Slovenian tourists travelling abroad increased 2.5-fold. Meanwhile, over 1.35 million overnight stays were recorded in the country in 2005, 17 per cent more than in 2004. The largest number of foreign tourists that came to Slovenia on organised tours in 2005 came from Germany (17.7 per cent), followed by Italy (15.4 per cent), Austria (11 per cent), France (10 per cent) and the UK (9 per cent), it was reported. They averaged 4.4 overnight stays in Slovenia, the office added.

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TRANSPORT

Modernisation Contract Signed for Part of 5th Route Section 

The management of the National Rail Transport Agency and subcontractors recently signed a SIT 8.7bn (36.3m Euro) deal to modernise the Pragersko-Ormoz section of the railway. The section in NE Slovenia is part of the 5th pan-European transport corridor which makes it a priority investment, Agency director Rajko Satler said, Slovene News website reported.
The signing in Maribor was attended by Jelka Sinkovec Funduk, the head of the Railways Directorate at the Transport Ministry, who said this was the first and an important investment for modernising the country's rail infrastructure. 
The contractors selected for the construction began work on 15th December and are expected to complete the modernisation in 720 days. Minor disturbances to passenger and cargo transports are expected during the works. 
The deal is also partly financed by the European Union, which contributed SIT 3.5bn (14.6m Euro), while the remainder came from the state budget.

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