Companies to pay FNM debts with bonds

Starting in the first week of August, Slovak entrepreneurs and entities that acquired property during Prime Minister Vladimír Mečiar's term with as little as a 10 percent down payment will be able to pay back the Fund for National Property (FNM) with bonds distributed during the government's switch from coupon to bond privatization last summer. But while many companies are interested in the scheme, only a handful have been given a license to engage in it. In July, the FNM announced that fourteen physical persons or entities had obtained a license to buy the approximately 3.5 million bonds that citizens got in exchange for their coupon booklets. Rastislav Zbořil, director of the FNM's section for organizing the bond market, said there were 600 companies with debts to the agency.

Starting in the first week of August, Slovak entrepreneurs and entities that acquired property during Prime Minister Vladimír Mečiar's term with as little as a 10 percent down payment will be able to pay back the Fund for National Property (FNM) with bonds distributed during the government's switch from coupon to bond privatization last summer.

But while many companies are interested in the scheme, only a handful have been given a license to engage in it. In July, the FNM announced that fourteen physical persons or entities had obtained a license to buy the approximately 3.5 million bonds that citizens got in exchange for their coupon booklets. Rastislav Zbořil, director of the FNM's section for organizing the bond market, said there were 600 companies with debts to the agency.

Out of that number, 142 have requested the license, he added. However, only 14 filed the request properly so far, Zbořil added, though the FNM hopes to give indebted firms as many licenses as possible. "We want to develop the bond market as much as possible," Zbořil said. "Therefore we want all the brokers, licensed by the Finance Ministry, to be active there."

Zbořil estimated that companies owing the FNM will be able to pay back 60 percent of their debts due in 1996 with the newly-purchased bonds. If true, that would translate into an active bond market. şşI suppose some 20 percent of the entire bond issue will be traded through licensed entities in 1996, worth approximately 7 billion Sk,'' Zbořil said.

Ask father FNM

However, trading FNM bonds requires special FNM permission. According to Rudolf Lahkovič, president of the Association of the Investment Funds and Companies, some 70 brokers requested the license to trade FNM bonds, all without success. Asked why, Zbořil attributed it to "a lack of demand."

Bond privatization was ushered in by the Mečiar Administration in June 1995 and replaced voucher privatization that had existed under previous governments.

While the Premier said his government made the switch to be more equitable in creating a class of domestic entrepreneurs, critics said it was designed to help businesses owing the FNM, most of which they claim are cronies of the ruling coalition, pay back their debts towards the agency.

In March, the government set the minimum price for which a bond can be purchased from a citizen at 7,500 Sk. However, the FNM buys the bonds from the debtors for 10,000 Sk, the value at which the government said the bonds would be worth if left to mature to 2000. Critics said this reinforced their view that Mečiar is using bond privatization to reward certain individuals and companies.

"The privatizers first cheaply obtained the property, then had various abatements, and now they are enabled to pay their debts cheaply back,'' said Brigita Schmögnerová, economist from the opposition Party of the Democratic Left and deputy prime minister of the economy in the interim government led by Jozef Moravčík in 1994.

Top stories

“My Sunny Maad”, a Czech-French-Slovak animated drama about a Czech woman married to an Afghan who decide to live in post-Taliban Afghanistan, is now screened in Slovak cinemas.

Weekend: German adventurer is walking to Iran, with his stubborn donkey

Jazz music is taking over Bratislava this weekend.


22. okt
Opening of the time capsule of Michael's Tower.

Time capsule stored in Bratislava's St Michael statue 176 years ago reveals its secrets

The public can see the items found in the box in the Bratislava City Museum at the Old Town Hall this weekend.


22. okt
About 100 to 110 Tatra chamois live in the NAPANT national park, central Slovakia, but only two are white.

New Low Tatras attraction fascinates and worries hikers

Two white chamois have been observed in the national park, but their colour exposes them to danger.


21. okt

News digest: Slovakia marks anniversary of one of its biggest accidents in water transport

People are obliged to show Covid passes, the Bratislava's Old Town promotes its most beautiful trees and construction of the traditional ice house in the High Tatras has started.


22. okt
Skryť Close ad