ECONOMIC BRIEFS

New government criticizes Mečiar cabinet program to revitalize banks

One of the priorities of the new government will be to speed up restructuring of the loan portfolio of the Slovak banking sector, along with the restructuring of Slovak companies, But according to Brigita Schmögnerová, vice chair of the reformed communist Party of the Democratic Left (SDĽ), the project approved for this purpose by the outgoing Cabinet on October 20 is not acceptable in its current shape.

Cabinet approved a draft program to revitalize selected banks. The project proposes to cure the four partly state-owned banks (Slovenská Sporitelňa, a.s. Banská Bystrica (SLSP), Všeobecná Úverová Banka, a.s. Bratislava (VÚB), Investičná a Rozvojová Banka, a.s. Bratislava (IRB), and Komerčná Banka, a.s. Bratislava). Over the 1999-2000 period, direct state contribution to this process should be 4 billion Sk (2 billion Sk per year).

As far as indirect state participation in this process is concerned (exemptions from the laws on creation of reserves and provisions and income tax) the negative impact on the state budget over 1998-2000 is calculated at 6 billion Sk, or 2 billion Sk annually. All told, the total negative impact of the restructuring process on the state budget would be some 12-13 billion Sk.

Schmögnerová said the new government will support the revitalization of Slovak banks as much as the budget allows. But she remarked that the National Bank of Slovakia and the banks' shareholders must also support the process.

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