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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)

Books on Slovenia



 
Update No: 118 - (29/03/07)

Slovenia, the Balkans forerunner 
Slovenia joined the EU in 2004 with 10 mainly central European countries. 

Following highly successful economic reforms, Slovenia was the only one of the 10 new members to be on track to join the euro single currency this year, which it duly did in January. 

If Slovenia is the most advanced of the former communist states in the Balkans by far, Germany is the key state in the EU, its largest and its paymaster. The German Chancellor Angela Merkel is the present president of the EU. She made it one of her first initiatives to visit Slovenia last year and establish good relations. 

She sees it as the natural model for the others in the Balkans region of how to proceed. 

Slovenia had already been singled out last year as the key Balkan interlocutor for Brussels by another major figure on the European stage. "As we share our experiences about what happens in other parts of Europe and the world, we turn to those who know a certain area. It is clear that Slovenia knows this region best," President of the European Commission Jose Manuel Barroso said then. 

Speaking to the press after meeting PM Janez Jansa during his first visit to Slovenia, Barroso explained that Slovenia is expected to give its input to the EU's "collective thinking" in shaping a policy on the Western Balkans. 

He, moreover, stressed that the European prospects for the countries in this region are especially important in respect to peace and stability. However, these countries will become EU members only after they meet all economic and political criteria, Barroso continued. 

Barroso used the opportunity to praise Slovenia, saying that the country is "a good example of success" among EU members. It will be the first among the EU newcomers to adopt the euro, join the Schengen area and also preside the EU, he added. 

Meanwhile, PM Jansa told the press that European neighbourhood policy and in particular the Western Balkans will be a priority of Slovenia's EU presidency in the first half of 2008. He expects the discussion on the EU constitution to get underway at that time. Moreover, the bloc will also have to focus on energy policy during this period, Jansa added.

Out of sight; out of mind
No news is usually good news; and Slovenia is hardly ever in the spotlight. Ljubljana was the venue for Putin's first meeting with Bush in June 2001, just months before 9:11. 

But nothing of note has occurred to make Slovenia newsworthy. The international organizations are paying attention all the same, whose verdicts are interesting for what they say and who is saying them.

ECB Sees Significant Budgetary Imbalances in Slovenia
The European Central Bank (ECB) has found "significant budgetary imbalances" in Slovenia in its March bulletin on the economic situation in the eurozone, placing Slovenia among the countries which are "not yet in safe budgetary positions."

Slovenia is expected to meet its medium-term objective by 2009, but its updated stability programme points to "backloaded adjustment strategies with risks on the expenditure side," reads the report, which was published on Thursday, 15th March. 

The 2006-2009 stability programme which Slovenia submitted to the EU at the end of last year envisages a general government deficit growing from 1.5% of GDP in 2007 to 1.6% the following year and dropping to 1% in 2009. 

The European Commission assessed the programme as plausible but lacking in ambition. It said most of the planned measures were geared towards 2009, which is why it called on Slovenia to take these measures faster, especially in light of the current strong economic indicators. 

Statement at the Conclusion of an IMF Mission to Slovenia
Press Release - International Monetary Fund
March 20, 2007 

The following statement was issued on March 16 in Ljubljana by an International Monetary Fund mission:

A staff team from the European Department of the International Monetary Fund (IMF) concluded the annual Article IV discussions in Slovenia on March 15, 2007. This consultation focused on ways to sustain Slovenia's good macroeconomic performance following euro adoption and to deal with longer-term challenges, especially in the financial sector, to strengthen competitiveness and growth.

Slovenia has done well, but euro membership brings new challenges. The recent euro zone entry is a testimony of Slovenia's commitment to sound macroeconomic policies. Looking ahead, maintaining prudent fiscal and wage policies, and increasing economic flexibility and productivity will be key to ensuring that the economy can continue to grow without building up inflationary pressures. Over time, if wages grow faster than productivity, Slovenia can lose competitiveness and fall into a low-growth trap.

To ensure non-inflationary growth in an economy at capacity limits the IMF mission recommended a tighter than budgeted fiscal stance for 2007-08 underpinned by reforms in rigid spending. This would also help flexibility of fiscal policy over time to deal with shocks, create room for capital spending and accommodate the welcome reduction of taxation. Rationalization measures need to be targeted on inefficient expenditure to ensure the quality of public services in which implementation of performance budgeting will be important. Substantive reforms with the pension system sooner than later are also needed to ensure its sustainability over time given the rapid aging and generous pension benefits in Slovenia-otherwise there is a need to accumulate more savings to cover future pension spending.

In the financial sector, reducing vulnerabilities during these good economic times and further developing capital markets are important to ensure sustained financial stability and long-term growth. The banking system remains sound and stable, but profitability is regionally low and interest rate margins are under pressure. In an environment of strong credit growth and increasingly integrated markets, closer monitoring of credit risks especially to the leveraged enterprises is important. To increase efficiency in the sector and enhance transparency, privatisation should proceed in line with government plans and large financial institutions should be listed on the stock exchange. Together with the development of private pension funds, and full implementation of EU directives this should also contribute to the development of capital markets facilitating access to finance and productivity.

Sanader: We Will Go To Arbitration With Slovenia
One problem area for Slovenia is its relationship with neighbouring Croatia. But things are being settled peacefully.

Croatian Prime Minister Ivo Sanader said that Croatia would seek arbitration on the issue of the borders with Slovenia. 

Sanader said that, once the introductory part of a conference in Zagreb on the "Solidarity and togetherness with the Church and people in Bosnia and Herzegovina - interaction for new visions" was over, Croatia would seek arbitration on the issue of the borders with Slovenia. 

"We have not been able to reach a bilateral agreement in 16 years," he said, adding that the issue now had to be resolved by international institutions. 

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AGRICULTURE

EU Approves EUR 40m in Restructuring Aid for Sugar Plant 

The European Commission said last week that the fund for restructuring Europe's sugar industry contained enough funds to pay out aid to all who requested it. This means that Tovarna sladkorja Ormoz, Slovenia's lone sugar plant, will get 39.8m Euro, the Agriculture Ministry said on Monday, Slovenia News reported.
Out of the total, 3.87m Euro would go to sugar beet growers, 8.25m Euro for severance pay to redundant workers and the rest would go for closing down, decommissioning and environmental restoration of the plant in the NE Slovenian town of Ormoz. 
The plant was forced to end operations in the wake of the EU-wide sugar reform, which the bloc confirmed in late 2005. 
The Agriculture, Food and Forestry Ministry added that the cabinet would send the plan for the restructuring of the plant to Brussels this week. The plan is for the Commission to review but not assess its suitability, the ministry said. 
Efforts are underway to have the plant converted to biofuel production. Jurij Dogsa, the chairman of sugar factory Tovarna sladkorja Ormoz, said recently that the plant would have to undergo a 35m Euro overhaul in order for it to be able to produce 50,000 cubic metres of bioethanol a year.

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AUTOMOBILES

New Twingo Hits Assembly Line at Revoz 

Slovenian carmaker Revoz has launched the serial production of Renault's new model of the Twingo city car. Being the only Renault factory making the new model, the Novo mesto-based company expects the project will generate 300 new jobs, Slovenia News reported.
According to Revoz's spokeswoman, Renata Bele, the company currently produces 750 new Twingo and the Clio Storia models every day, with production running in three shifts. By introducing a full night shift, Revoz plans to increase production to 900 cars a day by May. 
With the serial production of the new Twingo coming into full swing in June when the car is to go on sale in France and Slovenia, Revoz moreover expects it would have to expand its current working force of 2,700 with an additional 300 workers. 
Revoz, since mid-2005 also the only Renault factory making the second generation of Clios, produced more than 153,000 cars last year and plans to increase its future yearly the output to around 210,000.

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CREDIT RATINGS

S&P assigns benchmark 1bn Euro bond AA

Standard & Poor's Ratings Services assigned its AA senior unsecured debt rating to the Republic of Slovenia's proposed inaugural Euro-denominated domestic benchmark bond (one billion Euro, maturing in 2018), the rating agency said, New Europe reported.
At the same time, Standard & Poor's affirmed its AA long-term and A-1+ short-term sovereign credit ratings on the Republic of Slovenia. The outlook is stable. "Slovenia's very strong credit standing reflects the country's healthy economic prospects and the government's tight control over fiscal accounts," said Standard & Poor's credit analyst Ana Mates, adding: "It also reflects the government's impressive achievement in reducing inflation to within the Maastricht treaty target for EMU (European Monetary Union) entry." 
Slovenia was the first of the EU's 2004 cohort of new member states to accede to the EMU, thus shielding the sovereign from potential balance-of-payments pressures. The government's commitment to fiscal prudence resulted in a better outcome than budgeted in 2006, with the general government deficit at 1.2 per cent of gross domestic product (GDP). In addition, the debt burden is relatively stable at 28 per cent of GDP. This performance augurs well for Slovenia's prospects within the currency union. Slovenia's growth rates have averaged 4.5 per cent since 2004, while its current account deficit of around two percent of GDP in 2006 compares favourably with those of most peers and demonstrates the competitiveness of Slovenia's economy. Nevertheless, in the context of a currency union, increased productivity and wage and labour market flexibility become more important to maintain competitiveness. 
The ratings on Slovenia remain constrained by its hesitant approach to the reforms necessary to underpin further growth without jeopardising the fiscal stringency of recent years. With GDP per capita at just above 60 per cent of the AA median in 2006, a process of real convergence is of paramount importance. "Improvements to Slovenia's competitiveness and continued economic restructuring, which in turn support the process of convergence to AA median income levels, would be key drivers of long-term improvements in the rating," Mates said, adding: "Conversely, the ratings could come under pressure if the budget balance deteriorates significantly, especially given the imperative for fiscal discipline in a currency union."

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TELECOMMUNICATIONS

Si.Mobil to launch 3G by July

Slovenia's second largest mobile operator Si.Mobil has begun constructing a W-CDMA network and expects to launch 3G services by July this year, TeleGeography reported on February 23rd. 
Si.Mobil paid 6.5 million Euro for a UMTS licence last September and is planning to invest 10 million Euro in its 3G infrastructure rollout this year. The company told local press that it plans to upgrade 100 GSM base stations a year to 3G, beginning in cities, and to augment coverage with so-called 2.75G EDGE services. TeleGeography's GlobalComms database notes that 3.5G services are set to be rolled out in tandem with its UMTS network under a Europe-wide HSDPA supply deal between parent group Mobilkom and Swedish vendor Ericsson, signed in February 2006. Domestic broadband operator T-2 won a 3G concession alongside Si.Mobil, whilst the country's only active 3G provider, Mobitel, launched W-CDMA services in selected areas in December 2003, and after expanding its coverage, signed up around 60,000 users by the end of 2006, it was reported.

Telekom Signs Deal on Second Kosovo Mobile Licence 

Telco Telekom Slovenije and Kosovo officials signed an agreement in Pristina, making Telekom's subsidiary Ipkonet the region's second mobile operator, Slovenia News reported.
The agreement was signed by Telekom chief executive Bojan Dremelj, the boss of Telekom's wireless subsidiary Mobitel Klavdij Godnic, Akam Ismaili of Ipkonet and Kosovo Telecommunications Agency director Anton Berisha. 
Telekom won the licence after Kosmocell, the company that was initially declared the winner, failed to pay the licence fee in time. 
As a result, the agency withdrew the licence from Kosmocell and awarded it to second-placed Ipkonet. The Slovenian consortium paid the EUR 75m licence fee on 22 February. 
Kosovo Prime Minister Agim Ceku expressed his satisfaction that the deal, which is important for the locals, was finally closed. 
This will boost competition in the field of communications and give consumers more choice, he said prior to the signing. 
The second mobile operator in the region will also bring new investments in the telecommunication infrastructure, development and new jobs, Ceku added. 
Beside paying the licence fee, Telekom will invest some EUR 120m in the construction of a mobile network, which will make it one of the largest Slovenian investors in Kosovo. 
The construction is to start immediately and the basic infrastructure is to be finished by the end of the year, so that first services should be available by then. 
Telekom Slovenije expects that in the next five years it will acquire a 50% market share and have around one million subscribers after eight years. 
Telekom and Ipkonet also have plans in other businesses, including internet and fixed line network.

Nokia wins network contract with Tusmobil

Finnish mobile telecommunications giant Nokia said in a statement on March 11th it had been picked by Slovenian operator Tusmobil as a GSM/EDGE network supplier and operator, News Room Finland reported. 
The launch of Tusmobil's network is scheduled for May 2007. The statement did not mention the value of the deal.

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