Books on Slovakia
% of GDP
Update No: 091 - (26/11/04)
No comment on alleged union of SDKÚ and HZDS
An extraordinary story is abroad in Slovak politics that the two leading parties
in the country are considering an electoral pact at the next elections. Their
party leaders refused to comment on speculations that they were contemplating
cooperating after the 2006 national elections.
The ruling Slovak Democratic and Christian Union (SDKU) party is led by Premier
Mikulas Dzurinda. Former PM Vladimir Meciar leads the opposition party, Movement
for a Democratic Slovakia (HZDS).
Jozef Grapa from the Movement for Democracy, a party founded by President Ivan
Gasparovic, said the SDKU and the HZDS were planning to create a ruling
coalition for the next election term, according to the daily SME.
Grapa said that under the alleged agreement, Dzurinda would remain the Slovak
prime minister and Meciar would be the new parliamentary speaker.
This seems to be a bizarre idea, given the strongly pro-Western policies of the
SDKU and the primitive populism and nationalism of the HDZS. Meciar is a
notorious political thug, although he did belie the charge of being a dictator
by submitting himself to a popular vote in 1998, which he lost.
But his party still got 19% of the votes in the last elections, leaving it the
largest party, so that an alliance can be seen as making tactical, if not higher
Pact among the coalition
What does make more sense is that three of the four ruling coalition parties in
Slovakia have made a pact that none of them would team up with the opposition
during parliamentary voting. Similar promises have been made in the past, but
occasionally the temptation to push through special interest legislation has
been stronger than loyalty to coalition partnership.
According to Béla Bugár, the leader of the SMK, a coalition partner, the
outcome of the meeting was that everyone agreed to join forces to erase
problematic relationships in parliament. "At least we will try," Bugár
The meeting to renew unification vows among the ruling coalition was held at the
request of the SMK in reaction to a recent incident in which the SDKÚ voted in
line with the opposition HZDS against a bill making changes to a national forest
management company, Štátne lesy. An SMK minister had prepared the legislation.
This unusual voting pattern of course has lent some credence to the idea of a
re-alignment along the bizarre idea mentioned above.
The SMK has also on occasion aligned itself with the opposition, however. The
party supported the opposition's call to investigate links between political
parties and unlicensed deposit companies that collapsed, bilking citizens out of
billions of crowns.
Another ruling coalition party, New Citizens Alliance (ANO), helped opposition
parties push through several changes to parliamentary procedure. With ANO's
help, the Slovak parliament is now empowered to create special committees to
investigate public interest issues.
Analysts say that the pact between the ruling coalitions is fragile.
Nevertheless, the parties are optimistic about the prospects of keeping the
agreements. Pavol Minárik of the KDH told The Slovak Spectator, "In fact,
we have not manufactured any concrete agreement but we have agreed to act in a
way befitting coalition parties."
Minárik does not think that the agreement is different from the previous ones,
but said the parties acknowledged the need to discuss rules violations. "In
the event of a violation of the ruling coalition agreement, we will have to
repeat this [reunification] process again," said Minárik.
The SMK shares the KDH's view. By requiring the ruling coalition to meet after
perceived rules violations, the ruling coalition hopes to transmit the message
that relations within the parties are normalised.
"The agreement does not mean anything else, only that the partners will
create some agreements that will be binding for all. The coalition does not have
any other option so we think that everyone will work on fulfilling this
agreement," Lívia Pokstaler of the SMK press department told The Slovak
The SDKÚ used the meeting to persuade its partners that it has not manufactured
any agreements with Meciar's party, the HZDS. Dzurinda once again declared that
a concord between the SDKÚ and Meciar's party is a "completely made up
Liberal ANO party Deputy Chairman Lubomír Lintner told the news wire TASR that
there was no reason to fear that the government would not survive its current
According to Lintner, it is necessary to create time to seek consensus in those
cases where the opinions of the coalition partners differ. "Politics also
results in voting together with the opposition. Everything should be done to
avoid the reoccurrence of such situations," Lintner said.
The ruling coalition agreement stipulates that all actions should be the result
of consensual agreement. If no agreement is reached, none of the coalition
partners ought to submit the controversial issue to parliament until the ruling
coalition council takes a stand on the issue.
Under the pact, if any of the ruling coalition parties breaks away to unite with
the opposition during a parliamentary vote in order to push through certain
legislation, it would be considered a violation of the ruling coalition
Economy doing well
The electoral prospects of the government will depend on its economic
performance. Here there has been some good news for some time.
Slovakia's economic and labour productivity has grown more quickly than that of
the US over the past five years and is gradually approaching the European Union
average, a report released in Brussels indicates. On the other hand, Slovakia
significantly lags behind in its employment rate and financial commitment to
research and development, according to the expert report on the Lisbon Strategy
of the EU. The Strategy was adopted in 2000 and set out the goal of making
Europe the world's most competitive economy by 2010.
Hyundai plant construction begins
The Zilina-based Construction Authority issued a building permit on October
14th, enabling the launching of construction works on the Hyundai/Kia site,
The permits were issued for a press shop and for utility connections. According
to the Mayor of Zilina, Jan Slota, the issue of a construction permit means the
end of the threat that the Korean carmaker would leave Slovakia, as the deadline
was set for October 15th.
Austrian Airlines covets Slovenske Aerolinie
Austrian Airlines Group confirmed its interest in the privatisation of
Slovak airline company Slovenske Aerolinie, Slovensko.com reported recently. The
Austrian airline said it wants to gain a majority in Slovenske Aerolinie,
however, preserving the company's Slovak identity. It claims it currently holds
a 30% share in the Slovak civil aviation market.
"The development of Slovak civil aviation is of significant importance to
us, considering the company's market position," read a company statement.
In the next months Slovenske Aerolinie should receive financial assistance
amounting to €5m with the support of Austrian airline. These resources would
be used for Slovenske Aerolinie's restructuring. The Slovak carrier said
Austrian airline's intent is to contribute to the implementation of Slovenske
Aerolinie's business plan by securing financial assistance and know-how.
Slovenske Aerolinie provides scheduled and chartered air transport for
passengers, cargo and mail, plane maintenance and it runs a travel agency as
World Bank leader hails Slovakia's banking sector reform
The World Bank's regional leader for Central Europe and the Baltics, Roger Grawe,
has said that the restructuring of the banking and business sectors in Slovakia
can be described as the most powerful reorganization compared with all the
neighbouring countries, Radio Slovakia reported.
He said that the country's good economic results, confirming that Slovakia's
economic reform was one of the most successful in the world, and also the amount
of investment channelled into Slovakia in the past few years were visible signs
of this programme.
S&P rating actions on three Slovak banks
Standard & Poor's Ratings Services said recently it had revised its outlook
on Slovak Tatra Banka and Vseobecna Uverova Banka (VUB) to positive from stable.
At the same time, Standard & Poor's affirmed its BBB-/A-3 counter-party
credit ratings on Tatra and its BB+/B counter-party credit ratings on VUB. In
addition, the public information (pi) rating on Slovenska Sporitelna (SLSP) was
affirmed at BBpi, New Europe reported.
Standard & Poor's does not publish outlook statements on pirated entities.
The various rating actions reflect the improving economic environment in the
Slovak Republic associated with its accession into the European Union, as well
as the positive trends in the banks' financial profiles and performance. In
addition, Slovakia's economic structure is strengthening.
"Further international political and economic integration - in particular,
through EU membership - is helping Slovakia to attract non-privatisation-driven
foreign direct investment," said Standard & Poor's credit analyst,
Magar Kouyoumdjian. "As a result, the country is expected to post of the
strongest economic growth performances among Central and East European
countries, despite tepid international economic conditions," he added.
Furthermore, there is strong political willingness to continue to reform the
public sector. Improvements in The banks' asset quality, profitability, and
capitalisation have been strong over the past few years, particularly for the
privatised banks. "Increasing opportunities for growth will be created for
leading Slovak financial institutions if positive and sustainable economic
developments continue," Kouyoumdjian said. "The competitive
environment has intensified, however, and the banks need to demonstrate
sustained growth in core revenues," he added.
Given the relatively late restructuring and privatisation of VUB and SLSP, the
banks still need to demonstrate consistent improvements, particularly in the
face of increasing competition and in relation to Tatra's stronger financial and
market position. The ratings on Tatra reflect the bank's strategically important
status within the Austria-based Raiffeisen Zentral bank, Oesterreich, which
indirectly holds 86 per cent of Tatra's shares. The bank's own strong market
position, good capitalisation and liquidity, and low levels of problem assets,
also support the ratings. Constraining rating factors include the
still-higher-than-average economic and industry risks to which banks are exposed
in Slovakia and the challenge of an increasingly competitive environment, where
Tatra's main competitors were privatised and restructured.
The ratings on VUB reflect the ongoing support and commitment from the bank's
strategic owner, Banca Intesa SpA, its strong franchise and market position, an
improving operating environment and a healthy financial profile. The ratings are
constrained, however, by higher-than-average industry and economic risks,
significant competitive challenges and a need to grow core revenues.
The "pi" rating on SLSP reflects support from and the commitment of
its majority shareholder, Austria-based Erste Bank der oesterreichischen
Sparkassen AG, as well as SLSP's strong position in the Slovak banking sector
and improving financial profile due to the fairly completed restructuring. The
ratings are constrained by increasing competition, residue credit risks, and the
still high - albeit improving - economic and industry risks of the operating
"The outlook on Tatra and VUB reflects improvements in the Slovak economy,
coupled with a more vibrant business culture. The maintenance of good financial
results and continued ownership support could result in improved
creditworthiness for major Slovak banks," Kouyoumdjian said.
Telecom posts 2bn crowns net
Dominant fixed-line telecommunications provider Slovak Telecom ended the first 9
months of 2004 with a net profit of 2.069bn Slovak crowns calculated according
to international financial reporting standards (IFRS), down 11.2%, New Europe
Earnings before interest, tax, depreciation and amortisation (EBITDA) amounted
to 6.138bn crowns during the reported period. Total revenues of the company
amounted to 12.655bn crowns, a drop of 5.4% year-on-year, the company said.
Deutsche Telekom holds 51% in Slovak Telecom.
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