Construction output in Slovakia in August grew 9.1 percent y/y to SKK 8.7 billion. Compared with July, it rose SKK 246 million. Output in new construction, modernization and reconstruction increased by 6.6 percent, output in maintenance and repair works by 11.4 percent, and export of construction works swelled 67.2 percent, the Slovak Statistics Office informed SITA on Tuesday.

Labor Minister Says KOZ Turned into a Political Party

On Tuesday, in response to the initiative of the Trade Unions Confederation (KOZ) to launch a petition for referendum on early elections, Labor Minister Ludovit Kanik said that KOZ has turned into a political party. „The trade unions in Slovakia thus do not represent the interests of employees anymore, but the interests of political parties. It is unlikely that the social dialogue, represented also by KOZ, will continue, since in the tripartite misses a social partner representing employees, “ reads the stance of the labor minister provided to SITA by Peter Huska from the Labor Ministry press department.

Industrial Output in Slovakia Up 2.2 Percent y/y in August

The industrial production in Slovakia increased by 2.2 percent y/y in August. The development mirrored a 4.1 percent growth in output of the manufacturing industry. The production and distribution of electricity, gas and water decreased 5.1 percent y/y and the decline in mining and extraction of minerals reached 12.7 percent. In July industrial output showed a 2.1-percent growth y/y, the Slovak Statistics Office informed SITA.

Socialna Poistovna Expects to End 2004 with Surplus of SKK 3.4 Bln.

On Tuesday the board of trustees of the social security provider Socialna Poistovna approved its draft budget for 2004, according to which it should end with a surplus of SKK 3.4 billion. Along with carryover from this year at SKK 6.65 billion plus transfer of money from the basic unemployment insurance fund and the guarantee fund of the National Labor Office of SKK 9.9 billion, Socialna Poistovna should report an aggregate surplus of about SKK 20 billion at the end of the next year. The end-year deficit of the basic old-age pension fund should amount to SKK 12.75 billion; however, Socialna Poistovna should cover it from surplus from its other funds.

State Budget Shortfall to be Covered from Financial Assets

A transfer of SKK 10 billion from state financial assets into budgetary revenues could partly eliminate a shortfall in this year’s state budget, estimated at SKK 16.8 billion. The remaining shortfall in revenues would then be solved by savings in individual budgetary chapters, according to the Finance Ministry’s midyear performance report of the state budget, okayed by the cabinet on Wednesday. “The expected shortfall in budgetary revenues must be settled now, and we need to adopt effective measures to keep the state-budget gap at the projected level of SKK 56 billion,” reads the material.

Shareholders of Some Bidders Uninterested in SE’s Nuclear Facilities

Privatization of nuclear power plants of power producer Slovenske Elektrarne (SE) is a special issue within the privatization of the power utility. Peter Mitka from PricewaterhouseCoopers, the government’s advisor in the privatization of the SE, said at an energy congress in Bratislava on Wednesday that some investors are reluctant to also buy the nuclear facilities of SE, and those investors who would also invest in the privatization of the nuclear power plants despite opposition from shareholders could face the risk of falling share prices.

EU Entry won’t Affect Slovakia’s Installment Purchase Finance Market

Slovakia’s accession to the European Union should leave the domestic market in installment purchase financing without considerable changes. Silvia Susorova from Home Credit Piestany, a company providing installment purchase financing, told SITA that Slovak legislation related to this form of financing has been approximated to European Union law. ”Nevertheless, small changes to the law cannot be ruled out,” she added. The Slovak market is open to competition.

Parliamentary Social Committee Reviews Five Cabinet Draft Bills

The parliamentary committee for social affairs and housing recommended on Tuesday to parliament to approve five cabinet draft bills drawn by the Labor Ministry, which concern assistance to persons in material need, providing child benefits, increasing the subsistence level, and changes in public administration.

Ten Competitors for Highway Construction Financing Advisor Contract

Ten entities enrolled in a contest to win the contract of a government advisor in selecting a method and terms of financing and co-financing highway construction from private funds in Slovakia. The selection commission opened envelopes bearing applicants’ names on Wednesday. Applicants have until December 8 to send their bids to the Slovak Road Administration. Afterwards, the commission will evaluate bids and the winner should be known by the end of the year. The advisor should elaborate the terms of a tender to finance highway construction next year, the Transport Minister’s spokesman Tomas Sarluska informed SITA.

A Share Swap between CEZ and SE May be a Problem

A share swap is one of standard methods in privatization. Peter Mitka, representing the government’s advisor PricewaterhouseCoopers (PwC) stated this regarding a potential share swap between Slovak and Czech dominant power producers, Slovenske Elektrarne (SE) and Czech CEZ. But such a deal would bring no cash into the state pocket. On Tuesday, Czech Minister of Industry and Commerce Milan Urban and Slovak Economy Minister Pavol Rusko did not rule out this form of SE privatization. Under this deal, Slovakia would obtain 16 percent in CEZ while the stake in SE to be transferred to CEZ has not yet been specified.

Cabinet Finalizes Work on Next Year’s State Budget Draft

Next year, the Economy Ministry should get additional SKK 300 million from the state coffers for investments incentives, originally planned for valorization of teachers’ salaries. Farmers should get compensation of direct payments up to 50 percent of the average level farmers get in European Union countries and not 55 percent on which one of the member of the governing coalition, the Party of Hungarian Coalition (SMK) insists. These are the main conclusions of the cabinet’s final discussion to the draft state budget for next year.

On Wednesday, the Slovak cabinet increased budgetary expenditures in some chapters, but the deficit should not exceed the planned level of 3.9 percent of the projected gross domestic product (GDP). The cabinet is scheduled to hold the final voting on the draft next Tuesday.

PHARE Support for Tourism was SKK 86 Mln. in 2001 and 2002

At its regular session on Wednesday the cabinet approved the National Tourism Development Program report elaborated by the Economy Ministry. The report states that in 2001 and 2002 the ministry had EUR 2 million (SKK 86 million) for tourism development as part of the PHARE program and its project called ”Pilot Tourism Development Grant Scheme.” Three-quarters of that sum was provided by European Union funds and the remaining 25 percent were made up of state budget resources.

Bratislava Stock Exchange Reports SKK 90.9 Bln. September Turnover

Securities worth SKK 90.9 billion changed hands in 26,148 transactions on the Bratislava Stock Exchange (BCPB) in September. This is the record number of transactions concluded in a single month. The highest-ever figure can be ascribed to the share buyback bid of former steel maker VSZ, BCPB analyst Stefan Molnar informed Slovak news agency SITA.

Opposition Warns against Further Privatization of Strategic Companies

In its Wednesday statement, the second strongest opposition party in Slovakia, the People’s Party – Movement for a Democratic Slovakia (LS-HZDS), restated that it disagrees with the government’s plan to continue to privatize strategic companies. It most vehemently objects to the privatization of energy businesses, based on the Slovak Republic having suffered losses amounting to billions of crowns in absolutely non-transparent sales of 49-percent state stakes in gas utility SPP and Slovak Telecom, suggests the LS-HZDS.

Government to Start Repaying Debts to Pharmacies

On Wednesday the Slovak cabinet introduced a new method to settle health insurance companies’ debts to pharmacists. Under this plan, instead of health insurers, a state-owned joint-stock company Veritel (creditor) financed from privatization proceeds will settle pharmacies’ invoices for drugs and medical aid under the health insurance scheme.

Money Market with Excess Liquidity and Low Activity Midweek

After the settlement of Tuesday’s sterilization repo deals with the central bank and the T-bill auction, the banking sector found itself in a moderate liquidity surplus. According to Tatra Banka dealer Jozef Bozek, the liquidity surplus on the market exceeds SKK 1 billion. Some banks, says the dealer, made use of the opportunity to sterilize excess liquidity using overnight contracts with the central bank. On Wednesday, SKK 71.127 billion left the market through the central bank’s repo tender on Tuesday and SKK 3.626 billion from the T-bill auction. On the other hand, SKK 68.285 billion matured from repo contracts and SKK 2.145 billion returned to the sector from a matured T-bill issue. Banks deposited SKK 22.347 billion in their reserve accounts in the central bank, meeting the minimum reserve requirement at 108 percent.

FOREX MARKET Posted Lively Trading on Wednesday

The Slovak crown firmed moderately towards the euro on Wednesday. According to CSOB dealer Richard Brza, the crown opened at 41.340 SKK/EUR (middle) to immediately weaken to its daily low of 41.380 SKK/EUR. But by the end of the session the currency bounced back and was quoted in a narrow band of 41.310/320 SKK/EUR. „Currently the market reports enough liquidity and small differences in purchase and selling prices,“ explained Mr. Brza. On the euro-dollar market the US dollar was quoted at 1.1813 USD/EUR on Wednesday and according to the dealer, the dollar might weaken even further. The Slovak crown thus dipped below 35 SKK/USD at 34.950/35.000 SKK/USD. The Slovak crown firmed towards the Czech currency to 1.2880/1.2910 SKK/CZK due to the Czech crown’s weakening against the euro to above 32 CZK/EUR.

STOCK MARKET: Slovnaft Shares Drag SAX Index Down to 174.07 Points

On the stock exchange on Wednesday, shares of Slovnaft crude oil refiner pulled the official SAX share index down by 0.78 percent, or 1.37 points to 174.07 points. Turnover on the Bratislava Stock Exchange (BCPB) dropped from Tuesday’s SKK 124.5 million to SKK 114.6 million. Of this amount, share trading was worth SKK 36.9 million.

FNM Expects Higher Income from Dividends Next Year

Income from dividends of the government privatization agency the National Property Fund (FNM) in 2004 from its holdings in companies should increase by SKK 100 million to SKK 8.3 billion. This income should be used to strengthen the government’s financial assets and the FNM will transfer the money to the Finance Ministry. The cabinet approved the increase at its session on Wednesday as suggested in conclusions from a meeting of ministers with economic portfolios. Total FNM revenues in 2004 are budgeted at SKK 22.26 billion while expenditures should not exceed SKK 21.12 billion, leaving the FNM in a positive balance of SKK 1.14 billion.

OTP Banka Sells SKK 500 Mln. Mortgage-Based Bond

OTP Banka Slovensko, a.s. will sell a mortgage-backed bond issue at a total value of SKK 500 million. The bank will issue 500 mortgage-backed bonds at a nominal value of SKK 1 million and a fixed interest yield of 4.7 percent p.a.

Teachers‘ Trade Union Protests against State Budget Transfer

The Trade Union of Employees in the Education and Science Sector expressed their disagreement with Wednesday’s cabinet decision to transfer SKK 300 million from the educational sector to the department of economy. Trade union leader Jan Gasperan said he will wait for cabinet’s official position at the tripartite meeting of social partners next week.