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Economic Briefs

Minister says devolution of power to start 2001
Hugely improved trade gap at 45.7 billion Sk for 1999
Slovak jobless rate hit 20.1% in December 1999
Economy Minister vows quick sale of SPP and Transpetrol
Deputy PM says FNM bonds to speed privatisation

Minister says devolution of power to start 2001

Finance Minister Brigita Schmögnerová told a press conference on January 24 that her ministry was preparing a wide decentralization of public finances, which would give considerable powers to local self-governments.
The first part of the two-stage process - which should be concluded by 2001 - will include the establishment of larger regional administrative units and the transfer of certain powers to these units. In the second stage of the process, powers would devolve further from district and regional governments to municipal governments. Schmögnerová estimates that the whole process will cost 150 million Slovak crowns ($3.5 million), which would be taken from the state budget.
Schmögnerová said the decentralization of power would allow municipal governments to finance themselves, as they would be given additional powers to raise taxes, as well as larger transfers from the state budget and road tax incomes.
The decentralization will require changes to legislation, particularly to the law municipal property and to the state budget law. Schmögnerová has said that revision of the Constitution may also be necessary.


Hugely improved trade gap at 45.7 billion Sk for 1999

Last year's Slovak trade deficit totaled 45.7 billion crowns, almost 37.2 billion crowns less compared with 1998. Imports amounted to 468 billion crowns, up only 1.6% from 1998, while exports jumped an impressive 11.8% to 422.3 billion crowns. The Slovak Statistics Office provided these preliminary results on January 25.
Slovakia again had the highest trade deficit with the Russian Federation (51.8 billion crowns), followed by Japan (6.9 billion crowns) and the United States (6 billion crowns). The biggest trade surplus was posted with Austria (11.4 billion crowns), Poland (9.1 billion crowns) and Hungary (8 billion crowns).
Among its most important trade partners, Slovakia increased exports to Germany (up 7.4% for the year), Italy (38.3%), Austria (20.7%), France (56.4%), and Hungary (14.8%).
Concerning main economic groups, Slovakia increased its exports to European Union countries by 19.4% in 1999, meaning that EU countries now absorb 59.5% of Slovakia's total exports. Slovakia's exports to OECD countries rose 13.7% to comprise a 91.5% share of total exports. Exports to CEFTA countries dropped 2.7% and constituted 29.7% of total exports.


Slovak jobless rate hit 20.1% in December 1999

The unemployment rate in Slovakia stood at 20.1% at the end of December, up 0.9% compared to November and up 3.7% compared with the same period in 1998.
The National Labor Office said on January 20 that the November to December growth was the highest in the history of the independent Slovak Republic.
The average duration of unemployment also continued to grow and ended December at 14.4 months, which is 0.3 of a month longer than in November. The annual increase is 2.7 months.
The number of job seekers receiving unemployment benefits increased 18% (representing 144,796 people) from November to December, and the year-on-year increase was 20.7% (24,865 people). In December, there were 5,709 available jobs, down 598 compared to November or 5,397 when compared with December 1998. For every open job there were 55.8 jobless people, an increase of 40.9% or 16 people month-to-month.


Economy Minister vows quick sale of SPP and Transpetrol

The main priorities of the Economy Ministry for the year 2000 are the transformation and privatization of state-owned companies in the energy and gas sector, with crude oil pipeline operator Transpetrol and gas distribution company Slovenský Plynárenský Priemysel (SPP) being the most significant projects. Economy Minister Ľubomír Harach told journalists of the department's priorities on January 21.
Harach was unable to specify the market price or the book value of the companies, adding that they will be set by foreign consultancy companies, which should be selected by an international tender.
Harach said that 34% of the SPP would be sold to a foreign investor, while other minority shareholders are expected to hold a 15% share with the state keeping 51% as stipulated by law. However, Harach indicated that the share to be held by the state could decrease.
SPP chief Pavol Kinčeš estimated the state could receive $1.5 billion from the sale of a 30% share. Harach said that the privatization of Transpetrol would be preceded by the settlement of legal relations in the company, and its privatization should be wrapped up by the end of 2000.


Deputy PM says FNM bonds to speed privatisation

The necessity to pay out FNM (national privatization agency) bonds in cash will be a strong stimulus for accelerated privatization this year, Deputy Prime Minister for Economy Ivan Mikloš said on January 19. The government expects to receive 65 billion crowns from the sale of state property in 2000 and 2001, with the 2000 state budget counting on privatization revenues of 32 billion crowns for already launched projects. The remaining 33 billion crowns will be used for the redemption of FNM bonds.
Mikloš said he was not concerned about the monetary risk, saying it could be eliminated by sterilization as well as the use of other methods of bond redemption, such as the repurchase of bonds before maturity, their use for supplementary pension insurance, and the settlement of overdue taxes. Mikloš also admitted the possibility of an overlapping issue to replace part of the FNM bonds by other bonds with longer maturity for corporate entities that collected a higher volume of the FNM bonds on the open market.
The FNM bonds, which were issued by the former Mečiar government in 1996 in place of a cancelled voucher privatisation programme, will mature on December 31, 2000, and will be paid out until December 31, 2001. Mikloš said he did not consider the January 19 decision of the government to pay out the FNM bonds in cash to be "optimal", but added it was at least a good solution. "It's better to adopt a quick solution, although without the exchange for shares, than to allow further delays," he said.

Compiled by Keith Miller from SITA and Reuters

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