Economic Briefs

FNM promises to speed up privatisations
ING forecasts sharp interest rate fall in 2000
Real industrial wages down 4% in latest figures
Energy policy debate stalled over Mochovce
Machinery industry deal reached on wages
Slovak tourism group asks for more money
FDI less than 7 billion Sk during 1-3Q99

FNM promises to speed up privatisations

Slovakia's privatisation agency said on January 10 it would accelerate the privatisation of strategic enterprises to enable the state to pay off up to 33 billion Slovak crowns of state bonds to citizens.
"Preliminary estimates say that everything that can be privatised under the law needs to be privatised, and then we can meet these obligations," said Jozef Kojda, head of the National Property Fund (FNM), Slovakia's main privatisation agency.
The bonds, which mature on December 31, 2000 were given to Slovak citizens as compensation after former Prime Minister Mečiar cancelled an entire wave of voucher privatisation that began before Czechoslovakia split apart in 1993.
They are commonly known as privatisation bonds and officials have long debated how the state would be able to repay them.The Slovak government has an ambitious programme of privatisations for 2000 and 2001 including planned stake sales in banks and major utilties.

ING forecasts sharp interest rate fall in 2000

Ján Tóth, chief economist at ING Barings investment bank in Bratislava, predicted that one-month interest rates would fall from close to 11% in January to 7% by June and 6% in December. One-year rates are predicted to fall from 13.1% to 10.3% by June and 8.2% by December, while three-year rates are forecast to decline from 13% to 9.3% in June and 7% in December.
Tóth added that the main risks for his forecast lay in the potential misuse of privatisation revenues for current expenditures, higher inflationary expectations among the public leading to wage growth, a slowdown in state bank restructuring and inadequate use of new bankruptcy laws.

Real industrial wages down 4% in latest figures

Average real wages in Slovakia dropped significantly in November, particularly in construction, where they fell by 13.2% compared with November, 1998. Real industrial wages fell by 4%, while real wages in the retail business and transportation increased moderately.
Average nominal monthly wages in November rose on an annualised basis in industry by 9.3% to 10,926 crowns, in retail by 14.1% to 8,665 crowns, and in transportation by 14% to 10,678 crowns.

Energy policy debate stalled over Mochovce

At its regular session on January 12, the cabinet reviewed a draft energy policy document for Slovakia. However, the discussion was cut short by the fact that the Economy Ministry has yet to come up with alternatives for the completion of the third and fourth reactor blocks of the nuclear power plant in Mochovce, which it will submit to cabinet in March.
The most debated point of the draft was the question of spent nuclear fuel. Economy Minister Ľubomír Harach said that the government does not see building deep long-term deposits for spent fuel as an effective project at the moment.
"The current medium-term deposits will be sufficient for the next 30 to 40 years, at which point science will have made significant progress in this area or the economic situation will have changed, allowing a definitive solution to this problem," Harach said.
Harach emphasised that Slovakia's current official energy policy followed the European trend towards ending dependence on nuclear energy and gradually moving towards alternative power sources such as co-generation units or small hydro-power plants.

Machinery industry deal reached on wages

An increase in wages in the machinery industry has been secured, and will prevent the real incomes of employees from decreasing any further, said Emil Machyna, head of the KOVO metalworkers union at a January 11 press conference. The conference followed the signing of an amendment to the collective agreement between KOVO and the Engineering Industrial Association.
The amendment revises several obligations ensuing from the collective agreement, such as increasing average nominal wages from the minimum of 9% set last year to 10.5% as of January 1, 2000. The aim of this measure is to ensure that real wages in 2000 do not decrease compared with 1999.

Slovak tourism group asks for more money

The Slovak Association of Travel Agencies (SACK) said on January 10 that the weaker Slovak currency, the difficult economic situation and the prevalence of offer over demand were the main reasons behind last year's poor tourism business results in Slovakia.
The agency also complained of the lack of state support for tourism, saying that the official Slovak Tourism Agency received only 40 million Slovak crowns ($952,000) from the state for the promotion of tourism, compared to the one billion crowns worth of funding given by the Hungarian government for the same purposes.
The SACK is a voluntary, independent association uniting 162 tourism operators, travel agencies and other firms and institutions. It represents its members in negotiations with state institutions, and is lobbying hard for the founding of a national tourism bureau to work as a senior coordination authority.

FDI less than 7 billion Sk during 1-3Q99

Foreign direct investments (FDI) into Slovakia during the first nine months of 1999 amounted to only 6.96 billion Slovak crowns ($165 million), less than half what it was during the same period in 1998.
Germany was the biggest foreign investor in Slovakia from January to September, 1999 (2.04 billion crowns), followed by Great Britain, the United States and Austria. Investments in the volume of 4.77 billion crowns (69% of the total) went to Bratislava and Bratislava region. Foreign business entities invested 2.28 billion crowns in the Trnava region, but only 167 million crowns in the Prešov and Košice Regions.

Compiled by Keith Miller from Reuters and SITA

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