Government crisis upsets economy, fate of privatization projects uncertain

Since the first signs of crisis in the Slovak government coalition emerged on February 6, the Slovak currency has lost 40 basis points and slipped to SKK37.70 against the euro, its reference currency.

The fate of several major privatization projects is also unclear in the wake of the fall of the government. Economy Minister Jirko Malchárek has said that the further privatization of Slovakia's two energy distributors, Stredoslovenská energetika (SSE) and Východoslovenská energetika (VSE), will be halted, while the sale of Slovakia's railway freight transporter, Cargo Slovakia, is also seen as unlikely to be completed, the daily SME reported.

The completion of the sale of power utility Slovenské elektrárne is also in limbo, although the government has already signed a contract with the Italian Enel as well as transaction documents on the sale.

For the privatization of Slovenské elektrárne to be completed, parliament must first pass an Act on the National Nuclear Fund. However, the remains of the ruling coalition is more than 20 votes short of a majority in the 150-seat house, and the opposition Smer has already it will not support the law.

It is also possible that the central bank will increase interest rates far sooner than the markets had expected.

Compiled by Beata Balogova from press reports. The Slovak Spectator cannot vouch for the accuracy of its flash postings.

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