PM Dzurinda addresses parliament to earn support for austerity measures

Slovak Prime Minister Mikuláš Dzurinda took the floor at the parliamentary session on June 3 to ask deputies to support his cabinet's package of austerity measures to rescuscitate the Slovak economy. He asked MP's not to soften the measures, arguing that the Slovak economy hung in the balance.

"Inactivity would considerably weaken the Slovak crown, depreciate inhabitants' savings, make companies unable to pay their debts and would end in economic collapse," the Prime Minister said.

Dzurinda said that although the cabinet's measures would cost citizens another 350-390 Slovak crowns ($7-8) monthly, they would still not generate enough money to cover debts the previous government drew for the state-run power producer Vodohospodárska Výstavba Bratislava (VVB) and Slovak Rail.

The main problem of the Slovak economy, Dzurinida explained, is its extreme indebtedness and its artificially designed consumer price structure.

Dzurinda said that from 1995 -1998, the VVB was given state-guaranteed foreign loans in the amount of $500 million to finance the construction of water works in Gabčíkovo and Žilina. Now the VVB debt sits at 22 billion crowns, or 4,000 crowns ($90) per capita. "VVB planned to cover its debts through electricity price increases, but the previous cabinet irresponsibly revoked this plan," Dzurinda said.

The Prime Minister further explained that Slovak Rail's debt had climbed to 30 billion crowns under the previous government. In addition, the previous government had taken loans of 25 billion crowns for highway construction, and hade extended to energy generator SE 11 state-guaranteed loans worth 39.9 billion crowns.

At the beginning of June the Slovak Cabinet approved raising the import surcharge from zero to 7% and passed an increase of the lower VAT rate from the current 6 to 10%. Dzurinda's cabinet also decided to lower the costs of state administration to 1995 levels. The ministers decided on deregulation of electricity, gas and heating prices and also raised rental rates and prices for telecom services. Social benefits for poorer citizens should be cut from 55% to 40%.

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