% of GDP
In 1918 the Slovenes joined the Serbs and Croats in forming a new nation, renamed Yugoslavia in 1929. After World War II, Slovenia became a republic of the renewed Yugoslavia, which though communist, distanced itself from Moscow's rule. Dissatisfied with the exercise of power of the majority Serbs, the Slovenes succeeded in establishing their independence in 1991. Historical ties to Western Europe, a strong economy, and a stable democracy make Slovenia a leading candidate for future membership in the EU and NATO.
Update No: 080 - (01/01/04)
The well-placed republic
Not every country did badly under communism. Slovenia is the best example of this, although it is certainly not intending to return to it. It has been doing nicely since independence in 1991, which came about with less bloodshed than in neighbouring former Yugoslav states.
Slovenia was, apart from Macedonia, the one republic of former Yugoslavia that broke away without a prolonged war, although there was some fighting a fracas in which 79 lost their lives in 1991. Mandatory military service has been done away with. Prime Minister, Tone Rop, said on September 9th that "from today, the obligatory army service in Slovenia is over, and now the professionalisation of the army is on the way."
The one boon of communism is that the people are well-educated. The age of schooling has been lowered from seven to six, with mathematics and English being taught in three stages. Numeracy and proficiency in languages are regarded as de rigeur. Slovenes excel at computers and technical disciplines, while being avid to keep abreast of the latest cognitive and scientific developments.
Slovenia now enjoys not only geopolitical, but financial, autonomy. GDP growth of 2.9% in 2001 and again in 2002 has been steady if not spectacular, sufficient to finance return of debt.
Slovenia is going to be financially independent by next year, says the central bank chairman, Mitja Gaspari. "Slovenia has become independent of international sources of finance and is therefore indirectly making a transition to the group of developed countries that finance the less developed," he said recently at the annual meeting of the IMF and the World Bank.
Its credit rating with Moody's Investors Service is excellent at Aa3 for foreign currency bank deposits and bonds. It has a strong record of prudent fiscal and debt management, including the use of the proceeds of privatisation to pay back debt.
The latest annual report by Moody's on the republic is positive. "The credit ratings are also supported by the performance of public and private sector managers with decades of experience in EU markets, and consensus views across the political spectrum on economic issues," said Jonathan Schiffer, Moody's vice president and senior credit officer, and author of the report.
According to Schiffer, the ratings of the country are constrained "by moderate but stubborn inflation, public sector and social welfare spending that needs to be reduced, and an inflexible labour market in which wages and other labour costs are not sufficiently contained."
The report noted that the recent upgrading of Slovenia's foreign currency ceiling to Aa3 from A2, bringing it in line with the Aa3 domestic currency rating, "reflects the advanced economic and financial integration of the country with the European Union, as is evident by the recent invitation to join the EU by 2004."
Schiffer highlighted in the report that the risk of a foreign currency crisis that "could lead to systemic interruption in foreign currency debt servicing by issuers domiciled in this country" is continuously and significantly "reduced." The author stressed that elimination of all foreign currency transfer risk would occur only at the time of entry into EMU.
Foreign investment and acquisitions
The sale of state assets to private investors has gathered pace in the 2000s. In 2002 Slovenia's leading Nova Lubljanska Banka was acquired by KBC Bank, while the Swiss giant Novartis bought up the leading drugmaker, Lek. These two deals nearly doubled the amount of FDI in the country, modest to date at $2bn.
Lek is doing brilliantly under its new management. It is becoming the regional centre for Novartis, from which foreign acquisitions in other countries are being made, as well as a big export drive.
Slovenia's major drugmaker, Lek is expected to up revenues by about 34% this year, to 134bn tolars (551m Euro). "We will achieve this goal despite a weak dollar," Lek Chairman, Metod Dragonja said in an interview with STA, adding that the effects of the revamped drug prescription system will also "leave" their mark on the company's balance sheet.
Dragonja noted, however, that this year's sales figures will not yet show the effect of additional products made for the new owner, Swiss pharma group Novartis. "These effects will be visible next year, when we take over the marketing of Novartis products for central and eastern Europe," he noted.
The company's profits are in line with plans, outperforming sales growth. Yet profits also heavily affected by considerable provisions that Lek has to make to tackle risk management. The release of provisions depends on the course of patent disputes and procedures related to intellectual property rights, the chairman was quoted as saying.
Lek will have invested heavily this year, earmarking 84.8m Euro for investment spending. The two largest investments are production facilities abroad, in Poland's Styrkow and Romania's Targu Mures, through which Lek will supply the local markets.
The company is also undertaking extensive works in all of its facilities in Slovenia, including a new plant for the production of pills in Ljubljana, the expansion of Lek's sodium clavulanate production of several smaller facilities in Menges, near Ljubljana.
Dragonja also mentioned legal proceedings that certain companies have launched against Lek, most notably in the US, which is rapidly becoming Lek's largest market with sales expected at 170m Euro this year. "Lawsuits against generic-drug makers are nothing unusual in the US," he said, "but they are expensive and take a lot of energy."
NLB approves SIB share liquidation
Nova Ljubljanska Banka (NLB) recently decided to liquidate local Slovenksa Investicijska Banka (SIB), in which it owns a majority stake. The bank proposed to SIB shareholders to liquidate the bank after the failure of talks with Italian banking group, Unicredito, for the sale of its stake.
If SIB is liquidated, its creditors would be fully repaid, NLB officials said. It is noted the NLB currently controls an 80.78 per cent stake in SIB.
Ispa financial memorandum for waste management centre signed
EU Ambassador to Slovenia, Erwan Rouere, and Rado Genorio, deputy head of the Government Office for European Affairs (SVEZ), recently signed an Ispa financial memorandum to build a waste management centre in Puconci, a town in the north-eastern Slovenian region of Prekmurje.
The project is worth some 10.1m Euro, with 3.3m Euro to be contributed by the pre-accession assistance programme Ispa. According to SVEZ, the waste management centre in Puconci is to include facilities for sorting waste and for composting, and a centre for hazardous waste management. To be completed by the end of 2007, all the facilities will be built according to the EU requirements and environmental standards.
Ljubljana strikes 2.3% increase in first 9 months of 2003
Slovenian exports in the first nine months of 2003 amounted to 8.357bn Euro, which is 2.3 percent more than in the same period last year. According to preliminary date of the National Statistics Office, cited by the Slovenia Business Week, three-quarterly imports were up 5.6 per cent at nine billion Euro.
The trade deficit in the first three quarters of the year totalled 648.2m Euro. This means that the import-to-export ratio at 92.8per cent, the figures showed.
Germany was Slovenia's chief export and import partner, with 1.952bn Euro in exports and 1.724bn Euro in imports. Slovenia has seen its deficit grow in comparison to last year's three-quarterly figures with most of the important trade partners. The deficit in trade with the EU, Slovenia's chief trading partner, was up 202.7m Euro in this period.
More encouraging are trade figures for the month of September. Preliminary data speaks of exports amounting to 1.062bn Euro or 5.9 per cent more than in September of 2002. This was Slovenia's best month in terms of exports this year.
Imports were up 7.5 per cent year on year in September, totalling 1.085bn Euro. With a relatively low trade deficit of 23.4m Euro, the import to export rate stood at 97.8 per cent for the month.
Slovenia ranked regional leader in IT access
Slovenia is the regional leader in access to the information society, a global survey compiled by the International Telecommunication Union (ITU) indicates, Slovenia News reported. On a scale of 0 to 1, Slovenia obtained a mark of 0.72 in the first-ever global survey of information and communication technology (ICT) access. The score puts Slovenia in 24th position on a global scale, together with France. Moreover, it shows Slovenia to be ahead of several present EU members, namely Ireland, Spain, Greece and Portugal. On the regional level, Slovenia is first among Central and Eastern Europe countries. It is also the only country in the region listed as having "high access" to IT services by the
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