At a November 23-25 conference to discuss the Organization for Economic Cooperation and Development (OECD) report on Slovakia, senior OECD officials refused to be pinned down on when Slovakia would be admitted into this exclusive club of developed nations.
It's "in process," said Stephen Potter, the director of the OECD countries studies economic branch. "There remain committee stages that Slovakia's application has yet to go through, and it would be presumptuous to say at this point." Potter's comment was echoed by three other OECD officials who participated in the conference with Slovak representatives from the Ministry of the Economy, Finance, the National Bank of Slovakia (NBS), and the state-run privatization agency, the National Property Fund (FNM).
Potter did say that there were no outstanding issues and that "negotiations should be completed sometime next year." This contrasts with former OECD leader Jean Claude Paye's statement during a visit to Slovakia a year ago that Slovakia would be a member by the spring of 1997.
Although Slovakia's precise entry date remained unspecified, the conference at the Hotel Kyjev in downtown Bratislava did provide an opportunity for those driving the Slovak economy to defend their positions against some of the criticisms and concerns raised in the OECD report that was released in September. It also gave others not affiliated with the Paris-based organization the chance to vent their longstanding concerns with certain aspects of the country's economic transformation.
Privatization concerns
Regarding the OECD survey's comments about a "lack of transparency" in privatization, Jaromir Cekota, who heads the European Bank for Reconstruction and Development (EBRD) in Slovakia, said that it was more than a matter of transparency. Speaking of the EBRD's celebrated pullout just 15 months after the bank invested $59 million in a 10.5 percent stake in the Slovak oil and gas refinery Slovnaft, Cekota said "information was intentionally withheld" by the FNM, at that time Slovnaft's largest shareholder. Soon after the EBRD purchase, the FNM sold its remaining 39 percent in Slovnaft to a group of the company's managers for one-sixth of what the London-based bank paid, an action Cekota described as "both immoral and illegal."
The FNM was represented at the conference by vice-president Ján Porvazník, who said that out of some 1,700 contracts signed by the FNM, only about 100 are no longer valid either because of non-payment or failure to comply with investment requirements. He described this rate as "not so tragic."
Porvažnik added that state property worth around 330 billion Sk ($11 billion) have passed through the FNM's hands, and he defended the agency's practice of favoring Slovak businesspeople, who he said were "the ones who revived growth in the Slovak economy and found new markets after the collapse of [the former Warsaw Pact trade union] COMECON."
NBS's opinions
The banking sector also attracted much attention in the report and at the conference, which was attended by National Bank of Slovakia's vice-governor, Jozef Mudrík, and chief executive director, Elena Kohútiková.
Mudrík said that if it wasn't for the bad debts in Slovakia's banking sector, the current interest rates consumers pay of about 16 percent could be lowered by up to 3 percent, and he again urged the government to produce effective bankruptcy legislation.
Kohútiková warned that an infusion of foreign capital was not the panacea for the Slovak economy that the OECD report indicated. She said that if too much foreign investment came in too quickly, it would lower the Slovak crown's value.
The OECD report raised concerns about too much concentration in the industrial sector, with vice-chair of the Party of the Democratic Left (SDĽ) Brigita Schmögnerová echoing these concerns. She said that the problem will only get worse as much of the deficits in foreign trade and the current account balance (both expected to be in excess of 50 billion Sk in 1996) are being racked up through investments in the giant nuclear power station at Mochovce.
On the new amendment to the Securities Act which Parliament passed last month amid an outcry from market organizers and dealers, Joaquim Oliveira Martins, the OECD report's principal author, admitted he was not up to scratch on the issue but nevertheless said the OECD was concerned with any measure that "interfered with transparency" in market trading. But Martins added that the struggle of "protecting the rights of minority shareholders" is not unique to Slovakia.
