Finance Minister Sergej Kozlík (left) and NBS Governor Vladimír Masár.
"We will try to pursue changes in the GDP [gross domestic product] structure in 1997, mainly by boosting exports of more sophisticated products with a higher added value and reducing expensive and unprofitable imports," Kozlík told an economic issues roundtable organized by the Economist Group in Bratislava.
Kozlík said the process, which will require financing from both domestic and foreign sources, should help the economy achieve a healthier structure in the long term.
"Economic restructuring will require around 1 trillion crowns in investments by the year 2000, and can come in all possible forms," Kozlík, also a vice-premier in the cabinet, said.
Many of these measures are also designed to combat the nagging slide in the country's trade balance.
The same day he announced the government's measures, Kozlík said that according to preliminary data, Slovakia's foreign trade deficit was 15.9 billion Sk in the first quarter of this year, compared with 15.7 billion Sk in the first quarter of 1996. Slovakia posted a 10.82 billion Sk trade balance deficit in first two months of this year and for all of 1996 the foreign trade deficit was 64.54 billion Sk.
"We consider trade balance development, with a deficit of 15.9 billion crowns from January to March as fully in line with our plans," Kozlík said.
Among the remedies that the cabinet is putting forth to keep the Slovak economy healthy is a 20 percent deposit requirement on imports of certain goods from all countries.
"This is our reaction to Czech measures, but our measures cannot be understood as only against the Czech Republic," Kozlík said. The Czechs announced on April 16 a package of economic measures to revive the economy. One measure was a requirement on all importers of consumer and agricultural goods to deposit sums equal to 20 percent of the value of their imports in non-interest bearing accounts at Czech banks.
The Economics Ministry further clarified the measure, saying in a statement on April 30 that the measure will start on May 1 and will mean that all importers of selected consumer and agricultural goods must deposit a sum equal to 20 percent of the value of the imports in non-interest bearing accounts in banks for 180 days. Ministry spokesman Jozef Šucha said the decree will affect volumes equal to around one third of last year's overall imports.
"After the first analysis based on last year's volumes and import structure we expect the import deposits to affect around 30 percent of the overall volume of 1996 imports," Šucha said. Slovakia's imports totalled 335.165 billion Sk last year.
Local banks have been awaiting decision on how the funds collected from import deposits will be used, saying that the money could increase liquidity in the banking sector if they are held in commercial banks. But National Bank of Slovakia Governor Vladimír Masár said last week the money should stay in the central bank to drain funds from the market.
Masár added that the NBS might ease its monetary policy by lowering minimum reserves requirements for commercial banks if the funds collected from import deposits were held solely in the central bank.
Kozlík also said he expected the country's real GDP to grow by around six percent year-on-year in 1997. "I think that the Slovak economy will be able to meet the planned target for GDP growth of around six percent, as stated in this year's budget," he said.
Slovakia has enjoyed strong economic growth led by domestic demand over the past few years, with the real 1996 GDP rising 6.9 percent year-on-year, after a 6.8 percent increase in 1995.
"This restructuring is the reason why we are pushing for such quick motorway construction and other infrastructure projects," Kozlík added, "since the infrastructure will create a solid basis for the entry of foreign investment."
Kozlík added that he saw enough political will to proceed with the privatization of so-called strategic industries after the 1998 general elections, but did not say whether the current government was already working on such sell-offs.
The government list of strategic companies includes some of the largest state enterprises, such as gas distributor Slovenský Plynárenský Priemysel (SPP) and Slovak Telecom.
Kozlík said the government was considering both direct sales and equity increases through strategic investors for privatization, adding that so far the latter option looked more favorable.
8. May 1997 at 0:00 | Peter Laca