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SLOVAKIA


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 31,868 23,700 20,500 59
         
GNI per capita
 US $ 4,920 3,950 3,760 73
Ranking is given out of 208 nations - (data from the World Bank)

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REPUBLICAN REFERENCE

Area (sq.km) 
48,845

Population
5,423,567 

Capital 
Bratislava 

Currency 
Koruna 

President 
Ivan Gasparovic

Private sector 
% of GDP
60%


 
Update No: 093 - (28/01/05)

The Slovak success story
The Slovak premier, Mikulas Dzurinda, has won two successive elections, the first time a prime minister has done so in Central Europe. The region has consolidated democracy, not least because those that make most progress in economic liberalisation, such as Slovakia, are also those that take the greatest strides in consolidating the rule of law. Judged against the continuing corruption and economic stagnation of former communist bloc states that have not fully democratised, Central Europe, and notably Slovakia, has witnessed a remarkable transition.
A turning point came with the ejection of Premier Vladimir Meciar in parliamentary elections in 1998. He ran a corrupt and racist regime, which discredited the country and debarred it from EU and NATO entry. He made a surprisingly good showing in the first round of presidential elections last year. But the present incumbent, Ivan Gasparovic, beat him in the second round on April 19th, to the great relief of Brussels, for Slovakia was just about to join the EU, which it duly did in May 2004.
The economy is buoyant. Slovakia posted year-on-year GDP growth of 5.3 per cent in the year to November 2004, the latest figure available. The government intends to implement its approved reforms this year, aiming at improving citizens' standard of living, said Dzurinda, unveiling the government's priorities for 2005 in early January. "We expect 2005 to be a year of real-wage growth at more than 3 per cent," said Dzurinda, which was true of 2004. The number of new jobs should also grow by 1 per cent, while consumer price inflation should slow down. The cabinet also wants to address the issue of regional disparities.
This year, the Slovak government has yet to push through the reform on university funding. Other priorities include attaining an active presence in the Euro-Atlantic structures, the drawing of European funds, and Slovakia's fulfilment of criteria to join the European Monetary Union (EMU) and the Schengen Agreement on outer EU border safety.
The government also wants to focus on the restoration and development of the High Tatras, which were hit by gale-force winds, resulting in a natural disaster.

Minister makes out case for a 'knowledge' economy
Slovakia's current competitive advantage lies in its low cost and efficient production. But as the economy moves closer to that of the rest of the EU, this advantage will be lost. 
The Slovak government wants the country to be ready for this moment, and is therefore committing itself now to the development of a 'knowledge' economy, as explained by Pl Csky, Slovakia's Deputy Prime Minister, during a speech in Bulgaria on 17 January. 
'In the horizon of ten years, many investors focusing on cheap large-scale and low value-added production will be likely to start leaving Slovakia, heading further east. If we want the quality of life in Slovakia to continue growing, we must foresee this problem and start addressing it now,' said Mr Csky. 
The country has therefore developed a national Lisbon strategy, focusing on the four areas that it considers to be the most significant: human resources and education; the information society; entrepreneurial climate; and science, research and innovation. 'Our economic growth must be based on the ability of Slovak people to work with new information, to generate new knowledge, and to apply it in practice,' said Mr Csky. 
Slovakia's schools and universities are also experiencing reform in line with these objectives. Universities need to expand their capacity and improve quality, according to Mr Csky. They will also need to adapt in order to respond to the need for life long learning, and to operate as research centres on an international level, the minister added.

Bush-Putin summit set for Bratislava Castle
Under Dzurinda, Slovakia has come in from the cold. The bad old days of Meciar are firmly behind it. It is now courted on all sides. The February 23rd-24th summit meeting of the US and Russian presidents, George Bush and Vladimir Putin, will probably take place at Bratislava Castle, President Gasparovic said on January 18th. He said that Putin would stay in Bratislava for one more day on a bilateral visit. 
"The three of us have unanimously agreed that Bratislava Castle should be the summit venue, also as a symbol," Gasparovic said after a meeting with Prime Minister Mikulas Dzurinda and parliament chairman Pavol Hrusovsky. Situated on a rocky outcrop above the Danube River, Bratislava Castle dates back to the early Middle Ages, but has been extended and reconstructed many times since. At present it houses exhibitions from the Slovak National Museum (Historical Museum and Music Museum), as well as the reception rooms of the Slovak president and parliament. It is a national cultural monument. 
The castle meets the security criteria required for such an important event very well situated on a hill, not right in the historical centre of the city, it is accessible only through a few paths which can be easily closed to the public. 
Gasparovic said that Putin would stay in Bratislava not only on Feb. 24, when he is meeting Bush, but also on Feb. 25, when he is to meet top leaders of Slovakia. "We've received information that President Putin will stay for one more day and will consider this an official visit," Gasparovic said. 
According to the preliminary schedule, Bush is to land in Bratislava on Feb. 23, in the evening. He is to meet Putin on Feb. 24 and will probably leave Slovakia on the same day late in the afternoon. Putin is expected to arrive in Bratislava on February 24 in the morning. 
No accurate schedule of Bush or Putin's meetings in the Slovak capital is available for the time being. It will be probably disclosed only a few days before the summit. Up to 1,500 journalists might attend the summit, in addition to several hundreds of persons accompanying the two prominent guests. 
The Slovak government has already assigned 205 million crowns (about US$6.95m) for security measures to be taken. It is going to deploy 5,500 police officers and 400 fire fighters and rescuers in what Interior Minister Vladimir Palko has called the largest security operation in the country's history.

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AVIATION

Slovak army's MiG-29 fighter aircraft to undergo modernization by end of 2006


The modernization of 12 Russian-manufactured MiG-29 fighters belonging to the Slovak Army will cost US$130m next year. This will involve money from unfreezing the Russian debt. The delivery of goods will account for another part of the costs, Sme, Bratislava reported.
Work is currently being done on making these aircraft "fit" for service. The modernization will consist of replacing the navigation systems and avionics and will take until the end of 2006. The manufacturer of the aircraft, RSK MiG, the BAE Systems and Rockwell Collins companies, and the Trencin Aircraft Repair Shops are also cooperating in this.
According to Defence Minister, Juraj Liska, the modernization has been delayed by two or three months. "The companies that are supplying the technology for our MiGs - whether they are British or US companies - had to go through a long approval procedure in their own countries regarding whether they can export this hardware, to Russia, where this modernization will be carried out on the first prototypes." Now, according to him, there is nothing to prevent the hardware from being built into the fighters in Russia. "Thus, these MiGs will be compatible with any of the aircraft in the Alliance," claims the minister. According to him, six of the aircraft should be ready by the end of 2005.

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MINERALS & METALS

US Steel to invest US$200m

Slovak steel producer US Steel Kosice will invest US$200m in a new production line for sheet metal for the automobile industry, the firm's President, Christopher Navetta, said at a press conference on December 16th, cited by Interfax. The board of directors of the firm's parent company is expected to approve the project in early 2005. US Steel Kosice will launch construction on the project as soon as final approval is given, in order to be able to produce sheet metal to the Kia and Peugeot auto makers as soon as they begin production, according to Navetta. US Steel Kosice will also target carmakers in the Czech Republic, Poland and Hungary for sales.

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TELECOMMUNICATIONS

Brussels approves Telecom's takeover of EuroTel Bratislava

The European Commission approved on December 17th the takeover of mobile operator EuroTel Bratislava by dominant fixed line operator Slovak Telecom (ST), SITA news agency reported. With respect to the fact that up until now ST owned a 51% stake in EuroTel, acquiring the remaining 49% will, according to the Commission, not pose a threat to effective economic competition. The European Commission was examining the impact of the proposed acquisition on economic competition on the mobile communication market and data transmission services.
According to the published stance the Commission came to the conclusion that the changed form of ST's influence in EuroTel will not bring the mobile operator an increased market share on the mobile communication market. After completion of the acquisition both firms should remain independent legal entities. The current 51% stake in EuroTel, acquiring the remaining 49% will, according to the Commission, not pose a threat to effective economic competition. The European Commission was examining the impact of the proposed acquisition on economic competition on the mobile communication market and data transmission services.
According to the published stance the Commission came to the conclusion that the changed form of ST's influence in EuroTel will not bring the mobile operator an increased market share on the mobile communication market. After completion of the acquisition both firms should remain independent legal entities. The current 51% shareholder of EuroTel, ST, agreed at the end of September on the purchase of the 49% stake in EuroTel from an Atlantic West BV consortium, which owns the same stake in the Verizon Communications and AT&T Wireless company. The seller and buyer agreed at that time, neither to publish the acquisition price nor any other transaction conditions.
According to sources close to the transaction, the acquisition price for the 49% stake should be around 250m. Mobile operator EuroTel registered in the first quarter of 2004 a year-on-year growth in revenues from mobile and data services by 22.6% to 5.933bn Slovak crowns. Total revenues of EuroTel in a year on year comparison grew by 21.7% to 6.255bn crowns. EuroTel closed the first 6 months of 2004 with record earnings before interest, tax, depreciation and amortisation (EBITDA) amounting to 2.657bn crowns, which in comparison with the first half of 2003 represented growth of 23%.

Telecom watchdog launches investigation into Silentel

Slovak Telecommunications Office (TU) kicked off an investigation into Silentel, a company offering a new mobile phone anti-bugging system SITA reported recently. 
"After initial findings, we can confirm that this company owns a software solution and an added appliance. The office will further investigate especially the added appliance used in this system," said the spokesman of the market regulator, Roman Vsvro.
In this case, the key question is whether this appliance is used as an extension to the system or as an end-user phone appliance. In the case of the appliance being an end-user telephone of communication device, the company would have to apply for a licence, forward all technical and constructional documentation and receive a compliance confirmation from the Telecommunications Office.
According to Silentel spokesperson, Boris Skoda, their "Secur-Safe" product isn't an end-user phone appliance. This is confirmed by several analytical reports prepared on the company's behalf. The system is based on a software application. Martin Tatara, the company's marketing and sales director, confirmed this at a recent presentation of the product. In this case, we are talking about a data transmission, he said. The device makes it impossible to reverse engineer or decode the encryption. He compared the used encryption to that one used for telephone banking or Internet banking.
In connection with this new product, government authorities have also responded. Interior Minister, Vladimir Palko, said in an interview for Hospodarske Noviny daily that it is necessary for the state to be able to legally monitor phone calls in line with existing legislation. "We are prepared to legally ensure, that we have this possibility," said Palko. Intelligence service, the Slovak Information Service (SIS), is prepared to support the new legislative initiative.

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TOURISM

Hotels report stronger Q3 sales

Sales at accommodation facilities in Slovakia rose 2.5% year-on-year to 4.66bn Slovak crowns in the first nine months of this year, despite a 5.1% decline in the number of guests, according to figures released by the Slovak Statistical Office (SUSR), cited by Interfax recently. The number of foreign visitors to Slovakia in the monitored period fell by 0.4% year-on-year to 1.16m. Foreigners accounted for some 45% of total guests. The number of Slovak tourists using accommodation services stood at 1.41m. Accommodation sales to foreigners amounted to 2.95m crowns, or 63% of total sales, an increase of 6.8% year-on-year.

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