NBS sets inflation target at 4.5% to 5.8% for 2000
NBS Governor Marian Jusko presented the central bank's monetary programme for the year 2000 on December 22, in which the bank expects core inflation at the end of the year to be between 4.5% and 5.8%, accompanied by a rise in the consumer price index of between 8.5% and 9.5%.
Jusko said Slovakia's economy had recorded major improvements in in some areas in 1999, most notably in the deficit on the current account of the balance of payments, which fell to the 5% of GDP projected by the government. The NBS expects the same results again in the year 2000.
The development of prices was also in accordance with NBS expectations, Jusko said, while central bank representatives also welcomed the government's uncompromising attitude towards price deregulation.
According to the central bank's predictions, loans to the corporate sector are to increase 3.2% in 2000, while the fiscal deficit is expected to represent 3% of GDP not including resources for the restructuring of the banking sector.
Cabinet to settle state debts from ČSOB sale proceeds
The cabinet agreed at its regular session on December 22 on the distribution of the proceeds from the sale of the 23.1% stake in Československá Obchodní Banka (ČSOB), which was sold to the Belgian KBC Bank and the EBRD in mid December. The sale price totaled 17.1 billion Slovak crowns ($407 million), part which will be used to settle government debts.
The cabinet will allocate nearly five billion crowns to pay the state's debt to the Slovak Rail (ŽSR), which totals 6.3 billion crowns. Slovak Rail will use these funds to settle its overdue obligations with the social insurance company Sociálna Poisťovňa (3.2 billion crowns), the SZP health insurer (0.9 billion crowns), and to the tax office (0.9 billion crowns).
A total of 690 million crowns was earmarked for the financial clearing house Konsolidačná Banka and state companies and housing development funds.
The sum of 10 billion crowns will be given as a stand-by loan to ČSOB. The remaining 1.45 billion crowns will be allocated to the NBS to cover its costs.
FinMin plans 500 million EUR in Eurobonds for 2000
The Finance Ministry plans to issue Eurobonds worth 500 million euros next year, with the first issue scheduled to take place within the first quarter. "We plan to widen the basis of investors, and simultaneously we want longer maturity in comparison with the present year," said Finance Minister Brigita Schmögnerová at a December 20 press conference.
Schmögnerová also felt the projected volume of the Eurobond issues could grow. "I expect a more favorable situation next year than in 1999. I hope this will be confirmed by higher investor demand," she said, adding that the development of the Slovak economy in 1999 was viewed positively by two important rating agencies.
The result of the EU Helsinki summit, during which Slovakia and five other countries were invited to begin accession talks, should cast a positive light as well. The Finance Minister added that Emerging Markets Investors had labeled Slovakia's issue of Eurobonds as the best in central Europe.
J. P. Morgan wins advisory tender for Slovak bank sales
The Finance Ministry announced on December 23 that it had signed a contract with J. P. Morgan, the winner of a public tender for the selection of a financial advisor for the privatization of selected Slovak banks.
Deputy Finance Minister Viliam Vaškovič, who chairs the steering committee for restructuring and privatization of banks and restructuring of the corporate sector, said he was pleased that an internationally renowned financial institution had won the tender. "This selection ends the pre-privatization phase, and now the privatization of selected banks will begin. I am convinced we will successfully complete this process next year [in 2000]. However, another important task is still ahead of us - starting the process of restructuring the corporate sector," he said.
Budget deficit goal kept, analysts point to public sector
The government managed to maintain the 1999 state budget deficit at the planned limit of 15 billion Slovak crowns, according to data released January 3 by the Finance Ministry. The 1999 deficit was in fact reined in to 14.8 billion crowns, a feat praised by analysts.
For the coming year, however, these same analysts warned the government would have to follow through on its promises to cut employment in the public sector, and keep a tight rein on spending on non-budgetary funds like health insurance, the labour office and the road fund.
"Meeting the budgetary deficit is definitely a positive. However, the result as for the whole public sector will be decisive," Tatra Banka analyst Michal Kustra said.
ČSOB analyst Ľudovít Odor said he felt that meeting the budgetary deficit had sent a positive signal abroad. "Last year the government took several measures that were helpful in the field of revenues, such as the re-introduction of the import surcharge, grants and transfers in the volume of about 10 billion crowns, and increased transfers from the National Bank of Slovakia (NBS)," he said.
2000 trade deficit projected at 20 billion crowns
Štefan Burda, director of the foreign trade policy department at the Economy Ministry, said on December 29 that Slovakia's trade deficit of 38.2 billion crowns in the first eleven months of 1999 - 36 billion crowns less than in the same period of last year - was the result of the tough fiscal and monetary policies pursued by the Slovak government and the central bank.
The Economy Ministry expects Slovakia to close 1999 with a trade deficit of 43 billion crowns, which is less than 6% of the anticipated GDP for 1999.
For 2000, the Economy Ministry forecasts growth from 11.5% to 12% in Slovakia's exports to a total of 460 billion crowns. Imports are expected to grow by 1%, or 4% in case of an economic recovery. The final trade deficit is projected at 20 billion crowns.
Compiled by Keith Miller from SITA and Reuters
