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SLOVAKIA


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 23,700 20,500 19,700 61
         
GNI per capita
 US $ 3,950 3,760 3,800 80
Ranking is given out of 208 nations - (data from the World Bank)

Books on Slovakia

REPUBLICAN REFERENCE

Area (sq.km) 
48,845

Population
5,430,033 

Capital 
Bratislava 

Currency 
Koruna 

President 
Ivan Gasparovic

Private sector 
% of GDP
60%

  

Background:
In 1918 the Slovaks joined the closely related Czechs to form Czechoslovakia. Following the chaos of World War II, Czechoslovakia became a communist nation within Soviet-ruled Eastern Europe. Soviet influence collapsed in 1989 and Czechoslovakia once more became free. The Slovaks and the Czechs agreed to separate peacefully on 1 January 1993. Historic, political, and geographic factors have caused Slovakia to experience more difficulty in developing a modern market economy than some of its Central European neighbours. 

Update No: 087 - (27/07/04)

New president to work closely with premier
Slovakia's new president, Ivan Gasparovic, after meeting with Prime Minister, Mikulas Dzurinda, and parliamentary leader, Pavol Hrusovsky, said recently that they had agreed to cooperate closely on important questions.
"I am very glad that we practically understood each other in all spheres in which Slovakia will be active, whether in foreign or internal affairs," said Gasparovic.
Gasparovic, who enjoyed the support of the opposition Smer party during presidential elections, says he plans to meet regularly with both Dzurinda and Hrusovsky.
"In foreign policy questions, we would like to inform each other of our opinions before making them public," he said, adding that Dzurinda had also agreed that the president or a representative of his office should be allowed to attend certain cabinet meetings.
Gasparovic's predecessors, Rudolf Schuster and Michal Kovac, did not attend cabinet meetings, although permitted to do so by law. "If we adhere to everything that we said, I am convinced that our relations will always be good," said Gasparovic.
Gasparovic defeated Vladimir Meciar, the previous premier and hardman of the country's politics, in an election in April - much to the relief of the West.

Government strategy
Dzurinda has cited four main priorities for the coming period. Meeting the conditions for membership of the EU and NATO are his most important aims for 2004-05.
Speaking in Bratislava Dzurinda said the year would be a decisive one, as it would become clear whether the country had achieved its aim of catching up with its neighbours that began the EU accession process a year earlier.
Creating an effective business environment comes second on Dzurinda's list of aims. The Premier said his cabinet aimed to create conditions for sustainable economic development. Third on the list is the improvement of living standards, with Dzurinda claiming that 2004 will see increased wages and purchasing power, lower unemployment and more jobs created. The Premier's final priority is the fight against crime and corruption.

Fico calls to raise parliamentary threshold
Róbert Fico, the leader of the Smer party, has reiterated his call for the raising of the threshold for parties entering parliament from five per cent to seven per cent of the electoral vote. Fico said the aim of his proposal was to standardise the Slovak political scene and reduce the number of smaller parties.
Smer would also like to see the introduction of a majority election system, with individual deputies elected to represent their own constituencies. Fico said "Slovakia is one constituency and [deputies] are responsible to no-one. Provided they are obedient to their party leadership, they can be sure of being nominated again."
According to the latest opinion polls, if Fico's proposals were adopted, his former colleagues in the Party of the Democratic Left (SDL) would be excluded from Parliament with the support of just 6.9 per cent of the electorate. Support for Fico soared after he quit the SDL to form Smer, he regularly scored up to 25 per cent in polls conducted last year.

EC approves Slovak budget deficit cuts plan
The European Commission (EC) recently approved Slovakia's plan to slash its public budget deficit to below 3% of gross domestic product (GDP) by 2007.
On the other hand, the EC characterised the government's macroeconomic plan for 2004-2007 as not overly ambitious. "Slovakia has recently implemented far-reaching and impressive public finance reforms," the EC said in a statement.
The Commission saved most of its praise for tax and pension reforms and efforts to control public spending. It says that the planned fiscal policy is strict enough to help Slovakia meet its 2007 target. The macroeconomic plan, in contrast, "does not look very ambitious and is back-loaded," the EC added. 
The Commission advises the country to accelerate its deficit cutting by using unplanned tax income, and says Slovakia should not delay reforms in health care and the public sector.
In other fiscal developments, Slovakia's gross foreign debt fell by US$771.1m to US$17.46bn in March, said the National Bank of Slovakia (NBS) in a statement. Per capita, the debt fell to US$3,245 from US$3,389 in February.
The central bank could not provide a year-on-year comparison due to a change in methodology. At the beginning of 2004, foreign debt amounted to US$18.32bn. Long-term foreign debt fell by US$439.9m to US$10.16bn in March. The central bank attributed the drop to a reduction in obligations concerning business loans, crown-denominated state bonds, and repayment of loans taken by the state abroad. Short-term foreign debt fell by US$331.2m to US$7.3bn.

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AUTOMOBILES

Volkswagen Slovak plant reaches capacity


Germany's Volkswagen (VW) produced 281,000 units last year in its Slovak plant, and says now that it has almost reached capacity it will focus on stabilising rather than further expanding its operations, Interfax News Agency reported recently.
VW CFO, Manfred Bauder, told Interfax that the Bratislava plant will continue to produce the Polo, Golf, Touareg, and Seat Ibiza models. Bauder told participants at the recently held Autocee Slovakia 2004 conference that the company cannot exceed its 300,000 unit annual capacity.
Nevertheless, he noted that turnover this year could be up 10% from last year's total of 184bn Slovak crowns. The plant will not expand its production of Touareg or other off-road vehicles beyond its current annual production of 90,000 units.
Despite hints by Seat President Andreas Schleef, Bauder said production of the Ibiza model will not be moved back to Spain. The Slovak plant produces 100 Ibizas per day, and the contract is valid for all of 2004.
Bauder said he knew nothing of changes planned for next year. Bauder further thought that the launch of plants by PSA Peugeot-Citroen and Hyundai/KIA, contractor networks could be interconnected, but there could also be a shortage of skilled workers.

Faurecia invests in Slovakia

French car parts make Faurecia will build a new €30m production facility in the western Slovak town of Hlohovec, Slovak Economy Minister Pavol Rusko and Laurent de Lustrac of Faurecia said recently, New Europe reported. 
The plant should begin producing bumpers, primarily for the PSA Peugeot-Citroen plant in nearby Trnava, in 2006. The new plant will initially employ some 300 people and annual turnover is expected to reach €60m. According to Rusko, the firm is likely to continue expanding in Slovakia, with investment of up to €100m possible. Faurecia selected Slovakia for its new plant due to the presence of carmakers Volkswagen, PSA and Kia in the country. Low labour costs and government support also helped Slovakia win the new facility. Faurecia is one of the world's biggest car parts producers, turning out dashboards, bumpers, seats and exhaust systems. The firm employs 60,000 people in 27 countries and showed turnover of €10bn in 2003.

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BANKING

Eximbanka nets 54.6bn crowns

Slovakia's export-import bank Eximbanka made an after-tax profit of 95.7m Slovak crowns (€2.39m) last year, according to a report on Eximbanka's results for 2003 approved by the Cabinet, New Europe reported recently. 
Eximbanka's insuring and banking activities supported exports totalling 54.6bn crowns, which accounts for 6.8% of the country's total exports. Of this figure, Eximbanka's banking services assisted with exports worth 40.5bn crowns and, furthermore, insurance activities supported exports worth 14.1bn crowns. Most financial resources in loans and loan guarantees were granted for exports to EU countries, 55%, to Central European Free Trade Agreement (CEFTA) countries, 29.7%, to South-East Asia, 6.8%, and to the Commonwealth of Independent States, 4.6%.

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ENERGY

Ruhrgas bids for Nafta stake

German energy concern Ruhrgas will buyout minority shareholders in the Slovak oil and gas company Nafta at 1,259 Slovak crowns per share, New Europe reported.
Nafta shareholders have 30 days in which to sell their shares. Ruhrgas says it will use money from its own sources to fund the buyout. Nafta stock last traded on the Bratislava stock exchange in early June when it went for 1,270 crowns per share. Ruhrgas made the buyout offer after acquiring 40.13% of Nafta from another German firm, REW Gas International, for 2.5bn crowns. Ruhrgas already controlled 56% together with Gaz de France through the Slovak gas utility SPP.

SE retains stake in Paroplynovy cyklus

The soon-to-be privatised power company Slovenske elektrarne (SE) will keep its blocking stake in the heat and energy producer Paroplynovy cyklus (PPC), Interfax News Agency reported recently.
The country's cabinet cancelled a January resolution stating that SE had to sell the PPC shares in conjunction with the National Property Fund (FNM). In the meantime, the fund has sold 90% of PPC to PPC Holding, part of the Penta financial group, for 2.01bn Slovak crowns.
According to the old cabinet resolution, the selling price of SE's 10% stake in PPC was to be derived from this price. Now, however, Economy Minister, Pavol Rusko, says the sale would not be to SE's advantage because the power producer has a disadvantageous contract for electricity purchases from PPC which would costs SE billions of Slovak crowns. The government has effectively paralysed PPC's majority owner, because the company's articles of association state that decisions at general meetings require the approval of shareholders with 91% of votes. Rusko did not comment on the cabinet's most recent decision, but he is on the record as saying the PPC sale would lower the price the government hope to receive for the sale of a 66% stake in SE this year.

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PRIVATISATION

Railway freight in the spotlight

Slovakia will privatise its railway freight transport system in an international tender, Slovak Finance Minister Ivan Miklos, New Europe reported recently. 
Before the privatisation, the state-owned Zelznicna spolocnost (ZSSK), which operates the national railway system, will be split into two parts, one responsible for passenger transport and the other for freight transport. The company should be split by the end of this year or in the first quarter of 2005, according to Miklos. While the minister did not say how much the government hopes to get for the sale, he said that proceeds would be used to pay off the company's debts. Two years ago, Slovakia's national railway company was transformed into ZSSK, which operates railway transport, and Zeleznice Slovenskej republiky (ZSR), which manages the tracks.

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