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NBS, IMF oppose company revitalization plan

The National Bank of Slovakia (NBS), the International Monetary Fund (IMF) and a leading economist in Slovakia are against the proposed company revitalization law, saying its enactment will undermine free trade, bankrupt the state budget and hurt the country's chances to join the European Union (EU).
In a letter to the government leaked to the Slovak daily Národná Obroda on April 2, NBS officials indicated that it would not participate in the law's implementation if approved.
"It is not suitable that the governor of the NBS should be on the revitalization committee and sign decisions about revitalization," the bank's statement read, adding that "representatives of commercial banks" should not be appointed to revitalization boards, either. The proposed revitalization panel, which will decide which financially-strapped companies will be picked to be propped up, will be made up of government ministers, the NBS governor, and the directors of Slovakia's four largest financial institutions.

The National Bank of Slovakia (NBS), the International Monetary Fund (IMF) and a leading economist in Slovakia are against the proposed company revitalization law, saying its enactment will undermine free trade, bankrupt the state budget and hurt the country's chances to join the European Union (EU).

In a letter to the government leaked to the Slovak daily Národná Obroda on April 2, NBS officials indicated that it would not participate in the law's implementation if approved.

"It is not suitable that the governor of the NBS should be on the revitalization committee and sign decisions about revitalization," the bank's statement read, adding that "representatives of commercial banks" should not be appointed to revitalization boards, either. The proposed revitalization panel, which will decide which financially-strapped companies will be picked to be propped up, will be made up of government ministers, the NBS governor, and the directors of Slovakia's four largest financial institutions.

The NBS further noted that the law runs counter to criteria set by the EU for Slovakia's accession to its structures, and that it will object to the plan. The law will also have a strong negative impact on the state budget, the NBS said.

IMF representatives also warned that the bill represents a step towards immense state influence over the economy, according to an IMF statement published in Národná Obroda,. The state,ement also said that the organization knew of no such law in other countries.

Ivan Mikloš, the vice-chairman of the Democratic Party (DS) and also director of M.E.S.A 10, a privately-funded economic think-tank, argued that the law will establish an exclusive regime of commercial, financial and political interests in Slovakia.

"It's clear the government is trying to organize very non-standard methods to resolve the insolvency of big Slovak companies," Mikloš, a former privatization minister, told The Slovak Spectator "The proposed regime will be non-standard, selective, and based on choosing companies for revitalization by the state administration, probably through commissariats with heavy representation by the ministries and the government's lobbies. [What this represents is] a non-standard connection of political and economic power in very narrow groups."

Sounding a warning that the bill could also damage future foreign investment in Slovakia, Mikloš said: "The state created this regime of highly insolvent banks and companies. Big banks will participate in this process even if they are taken over by large insolvent companies. But if the banks are privatized by foreign investors, [the latter] will of course reject this process."

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