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Fitch: Slovakia speculative

Ratings agency Fitch decided not to follow Standard & Poor's and Moody's, which last year moved Slovakia to investment grade. The agency elected in a ratings report published on February 4 to leave Slovakia at speculative grade with a positive outlook.

Fitch cited concern over Slovakia's record trade deficit, the recent forced departure of Finance Minister Brigita Schmögnerová, and the determination of the ruling coalition SDĽ party to halt the privatisation of gas utility SPP.

A tender for a 49 per cent stake in SPP is in its final weeks. The sale is expected to fetch $3-4 billion, with the proceeds to be used to pay down Slovakia's debt and jump-start pension reform. Analysts have warned that if politicians manage to torpedo the deal, Slovakia's investment reputation will be hurt.

Fitch also cited September 2002 elections as a risk, noting the possible return to power of three-time Prime Minister Vladimír Mečiar, whose authoritarian behaviour in the 1990s saw Slovakia dropped from both Nato and European Union front-runners.

In response, National Bank of Slovakia Governor Marián Jusko said the ratings agency had been "one-sided" in its evaluation of Slovakia, adding he was "disappointed" Fitch hadn't raised Slovakia to investment grade.

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