"The Slovak government has an excellent record for responsible fiscal policy. It really doesn't need to borrow money."
Robert Rocha, World Bank economist
Sipko added that the government has yet to decide on specifics because it is deciding how much the loans will be and in what areas they will be used. To date, the Slovak government has eschewed any loans from the World Bank, saying they were unnecessary. "The Slovak government has an excellent record for responsible fiscal policy," said Robert Rocha, principal economist from the World Bank's regional office in Budapest. "It really doesn't need to borrow money."
However, as is the case with Hungary, where the World Bank is most active in the region, it is the total package - the technical expertise in various fields - that is the most desirable, Rocha said, a conclusion confirmed by Sipko.
The Washington-based World Bank, which manages more than $200 billion worth of loans around the world, sent a team of 16 experts to Bratislava last week to assess the performance of the economy from a policy perspective, and to analyze Slovakia's progress in approximating its legislation with that of the European Union, Rocha said. The officials, who dealt with enterprise reform and privatization, the financial and capital sector, agriculture, foreign trade, the environment and the social sector, are writing a report on Slovakia to be released early next year.
One of the areas that World Bank officials delved in most during their 10-day visit that concluded December 12 was the capital market. "We have reviewed ways in which the capital market in Slovakia could be made more attractive," said Michel Noel, chief of the bank's country operations for Central Europe.
"For example, we suggested delisting some of the smaller companies in order to concentrate on the larger and stronger firms. We also think it's a good idea to unify the Bratislava Stock Exchange and the RM-System (over- the-counter market). Furthermore, we think a new supervisory body - something resembling a securities commission - needs to be established here."
Noel added that the government will decide which recommendations "are most suitable for Slovakia." between now and next month.
No help for Mochovce
Luca Barbone, the lead economist for the World Bank's central Europe department, said that the Slovak government is interested in the bank's capacity for providing loan guarantees. For example, if a private investor is going to loan a government millions of dollars for a power plant the World Bank can provide a guarantee on that loan, she said.
However, this will not include the Mochovce nuclear power plant, Barbone said. "For environmental and political reasons, the World Bank has no involvement in any nuclear projects. The Ukraine, as a prime example, would dearly love to borrow money for the reconstruction of the Chernobyl nuclear plant, but we can't do it." Slovakia is already one of the 162 countries that contribute (through the International Development Association) to the operation of the World Bank, which is the "developmental arm" of the International Monetary Fund (IMF).
"We lend money at slightly above the LIBOR (London Inter-Bank Offered Rate)," said Rocha, a Brazilian national. "We are able to make a profit of more than a billion dollars a year because of volume."
The World Bank has four principal agencies: the International Bank for Reconstruction and Development, the International Development Agency, the International Financial Corporation and MIGA, which is the agency that provides insurance against political risk.
18. Dec 1996 at 0:00 | Terry Moran