Finance Ministry says country may have to cover big loan

The already tight Slovak budget may have to dish out 1.1 billion Slovak crowns ($27 million) on a state-guaranteed loan from Russia to Slovak power monopoly Slovenské Elektrárne (SE), Finance Minister Brigita Schmögnerová said on March 8.

The proposed 1999 state budget, with a 15 billion crown deficit, envisages 4.1 billion crowns in expenditures on state guarantees on loans. The ministry has estimated total government guaranteed debt at 109 billion crowns with 10.8 billion crowns maturing in 1999.

The SE is currently negotiating a possible write-off of the installment from Russia's 40.4 billion crown debt to Slovakia, but Schmögnerová said the planned deal may have been thwarted by discussion of the case in the Slovak media, which had undermined prospects of a deal.

"SE was to pay the first $27 million installment on the Russian debt on January 5... Since SE was unable to make this payment in time, I asked the Russian Finance Minister for a deferral and the possibility to write it off against Russia's debt to Slovakia," Schmögnerová said.

She added the payment had been deferred until the end of March, but unless the write off deal succeeded, the government would have to exercise the guarantees and pay the 1.1 billion crown debt itself to avoid SE defaulting.

The SE loan was for the construction of Slovakia's Mochovce nuclear power plant which came on stream last year.

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