KNOCKING AT THE EU DOOR
Slovenia:By: Igor Mekina (Ljubljana)
According to economic indicators, even at the times it was a part of former Yugoslavia, Slovenia enjoyed the "western" status in comparison to other republics. Today, after having won its independence, with its 1,985,557 inhabitants and area of 20,273 square kilometers, although the smallest newly emerged states, it is closest to becoming a full fledged member of the European Union, and is already a member of WTO, SEFTE and other regional associations, which speaks enough of the results of transition.
Slovenia embarked upon the transition process in 1991 with 746,041 employed and 75,079 unemployed. The average pension was 6,872 Slovenian tolars (SIT)(somewhat over DM 200). After Slovenia became independent DM 100 was worth SIT 3,200 while that same year GDP amounted to 349,408 million SIT. Today, the price of a consumer basket is DM 430, which represents 39 percent of a net wage. The exchange rate for DM 1 is 108 SIT.
Improved Results
According to the Statistical Office of Slovenia, the average net wage amounts to some DM 1,100. Per capita GDP is USD 10,078, while in 1998 the public GDP was USD 20 billion. During depression, immediately after it became independent, Slovenia's production index fell to 82.1 percent in 1992 compared to the situation prevailing in 1989.
The private sector is still underdeveloped, but nevertheless manufactures about 55 percent of GDP and employs some 50 percent of the labour force. Its economic growth rate is around 4.9 percent annually.
The share of direct foreign investments in the national GDP is below that registered in some East-European countries (3 percent). In Slovenia it amounts to 1 percent. Until now Slovenia received about USD 2.7 billion in foreign investments, while on the other hand, Slovenia invested about USD 600 million abroad, mostly in former Yugoslav Republics.
At the time Slovenia became independent the average results of Slovenian economy (exports, imports, etc.) were 20 percent below their current level. According to the data of international organisations the corruption is relatively low. The Slovenian index is 6 in comparison to Denmark which has the index of 10 (the lowest corruption), Finland - 9.8, Belgium - 5.3, Hungary - 5.2, Greece - 4.9, Italy -4.7, Czech Republic - 4.6 and Poland - 4.2.
Currently the annual inflation rate is 7.9 percent and the number of unemployed ranges between 6.7 and 7.9 percent according to the ILO criteria or 12.2 percent according to the Statistical Office of Slovenia. In August 2000, there were 769,730 employed (labour active population) and 102,198 unemployed persons in Slovenia. From January to October, 2000 exports amounted to USD 7.2 billion and exports to USD 8.4 billion. Coverage of imports by exports was 86.6 percent. In 1999 there were 479,204 pensioners, while that same year the average income amounted to 109,279 SIT. As far as pensions are concerned this is what they amounted to on average: the old-age pensions - 82,856 SIT, disability pensions - 67,249 SIT, survivor pensions - 58,177 SIT and all pensions - 74,909 SIT (at that time DM 1 was equal to 105 SIT). The European Commission commended Slovenia for its anti-monopolistic legislation, educational system and reforms of the pension system, but criticised it for its legislative bottle-necks (36,477 undecided cases), for restricting foreign investments (last year only 78 million Euros have been invested), delays in shutting down duty-free shops and excessively complicated new Law on the media.
The Privatisation Hole
Approximately the same economic growth, as well as inflation rate and wages which have been registered in the previous year, are envisaged for 2001. Nevertheless, the situation will be harder; the new Law on Real Estate Taxes has been passed and as a result of attempts of getting the Slovenian regulations adjusted to the EU, state revenues from customs are being reduced and pressures for price and tax increases intensified. In the last couple of years, judging by economic results, Slovenia has left behind all other associate members and could even compete with some full-fledged members of the European Union.
Consequently, Slovenia already meets the strict European standards for joining the monetary union. The state still regularly pays its dues since there is practically no budget deficit, which according to the latest data of the European Commission, is a better result than in any other Union member state. The situation is similar with public debt. Slovenia's public debt amounts to only 24.6 percent of the gross social product which, according to the EU criteria, is still below the limit of 60 percent of allowed debt. The same applies to the inflation rate, which in associate member countries of the European Union, such as Poland, Hungary, Czech Republic, Slovakia, Rumania and Bulgaria amounts to 30 percent on average, while in Slovenia is mere 8-9 percent annually.
The foreign exchange reserves at end August 2000, after 40 months have for the first time fell below USD 4 billion and stand at USD 3,998 million. The external debt amounts to USD 5.99 billion. The privatisation process was launched in Slovenia already back in 1992. The Law on Privatisation of Enterprises envisaged three different solutions depending on the size of enterprise being privatised. The property of each social enterprise was assessed by an independent agency, while the enterprise management was obliged to decide within legally prescribed time limit on the type of privatisation chosen. All Slovenian citizens of age received envelopes with certificates. Depending on the year of birth of citizens/recipients,certificates were nominally worth between DM 2,000 and 4,000. It was left to citizens to choose into which enterprise (which has declared privatisation) they wanted to invest their certificates. The majority of smaller enterprises were mostly privatized by internal owners, while several large systems now belong, for the most part, to a host of scattered small shareholders.
At the end of the privatisation process it turned out that the citizens had more vouchers than there were enterprises offered for privatisation. Simply - there was no more property which those, who did not happen to be in the front ranks, could exchange for certificates. That is how the term "privatisation hole" was created. The hole was actually a sinkhole - some 185 billion tolars worth. It has been the concern of Slovenian politicians for the last couple of years, but without any result.
Additionally, Slovenia also passed the Law on Denationalisation (some 50 percent of the property was returned to their original owners), while privatisation of state banks and insurance companies was scheduled for this year. By the end of 1992 socially owned apartments had been all purchased at relatively realistic prices.