Summary of economic news released by SITA on Monday, July 3
Slovnaft Separates Petrochemical Activities into a New Subsidiary
Crude-oil refiner and petrochemical giant Slovnaft Bratislava, has separated its petrochemical activities to its 100-percent subsidiary Slovnaft Petrochemicals, s.r.o. Bratislava. The new subsidiary will concentrate on production and sale of olefin petrochemistry, mainly polyethylene and polypropylene. Slovnaft reasoned its step with growing importance of petrochemical activities within Slovnaft and the whole MOL group, continued consolidation of petrochemical activities in the group sheltering Slovnaft and TVK. Marian Jusko, head of the Slovnaft board of directors explained that another reason is the start-up of a new PP3 production unit that more than tripled the Slovnaft's polypropylene production capacity to 255,000 tons annually.
Employers Want Active Dialogue with Coming Government
The National Association of Employers (RUZ) calls on the new ruling coalition to lead an active communication with entrepreneurs. "We expect an active communication with entrepreneur organizations," said RUZ secretary Martin Hostak. RUZ also wants political parties that participate in preparation of the governmental program to consult its contents with the entrepreneur community. RUZ has capacities and experts to consult the preparation of the cabinet program statement and following adoption of concrete measures of government's economic policy. Business entities clustered in RUZ believe that the new cabinet will meet targets of business environment development in implementing its program.
Slovakia Reports H1 State Budget Deficit of SKK 10.245 Bln.
Development of the state budget in the first half of this year was better than the Finance Ministry expected. Slovakia ended the first six months of this year with a deficit of SKK 10.245 billion. This is a worsening by SKK 9.097 billion compared with the same period of the previous year; however, the Finance Ministry says that the deficit growth was caused exclusively by the legislative change. "While funds shifted from a previous year were included among expenditures of the ending year in the past, they became expenditures of the year 2006 according to new budgetary rules that were already in effect last December," said the ministry's spokesman Peter Papanek. The H1 state budget revenues reached SKK 138.036 billion: up 9.1 percent y/y. Thus they met the annual plan at 50.6 percent. Total expenditures stood at SKK 148.281 billion in late June: up 16.2 percent y/y. They made up 44.9 percent of the annual plan.
Serial Production Launched in PSA Car Assembly Plant in Trnava
Serial production has already been launched in the newly built car assembly plant of PSA Peugeot Citroen in Trnava, western Slovakia. The plant manufactured 1,000 cars in June. The director general of PSA Peugeot Citroen Trnava, Alain Baldeyrou, finds experience with production of Peugeot 207 model in two other centers, in French Poissy and Spanish Madrid, as guarantees blocking risks and complications. In 2006 about 60,000 cars should leave the Trnava factory. In 2007 the plant will put out 240,000 cars. At full capacity in 2008 the plant will put out 300,000 cars annually.
Slovakia's Jobless Rate 15.5 Percent in May, Reports Eurostat
A survey by Eurostat, the European Union's Statistical Office shows the seasonally adjusted unemployment rate in Slovakia in May remained unchanged from the previous month at 15.5 percent. Slovakia thus still reports the second highest jobless rate among EU countries, only Poland had worse results with 16.4 percent. According to data from the Slovak Republic's Labor Office, which uses different methodology from Eurostat, the registered unemployment rate in Slovakia decreased to 10.56 percent in May.
Kontinuita Poistovna's Q1 Written Premiums at SKK 364.2 Mln.
Kontinuita Poistovna insurance company reported written premiums of SKK 364.2 million in the first three months of this year. This represents y/y growth by ten percent. This result means for the insurer the sixth spot on the life insurance market and a 5.75-percent market share. Pretax profit represented SKK 7.6 million for the fist quarter while in the same period of last year it as SKK 3.8 million. Together with Kooperativa and Komunalna Poistovna, Kontinuita belongs to Austrian Wiener Stadtische group.
Forestry Firm Vojenske Lesy Fined SKK 200,000
The Slovak Environment Inspection (SIZP) has issue a fine of SKK 200,000 for Defense Ministry's forestry company Vojenske Lesy Pliesovce for damaging biotopes in the military training area Zahorie. Inspectors have found that the company did not have a permit from the respective nature protection authority for logging in a part of the military area Zahorie that is designated as an area of European or national importance. They exposed the biotope to the risk of damage or destruction.
Change in Cost Rate Calculation Will Not Make Loans More Expensive
The changed formula for calculation of the annual percentage cost rate in provided loans will not hit pockets of customers at all, said the external communication coordinator at GE Money, Rozalia Bajzikova. The amount of charged interest remain unchanged. "Effective as of July 1, customers will already get information on the annual percentage cost rate, which corresponds to financial reality and thus their actual cost of drawing the loan," said Mr. Bajzikova. The revision to the law on consumer loans stipulates calculation of the annual percentage cost rate, as well as other facts, whose interpretation was not unambiguous so far.
GovCo Plans to End this Year with SKK 214.4 Mln. Profit
State-owned power utility company GovCo, a.s. plans to close this year with a profit of SKK 214.4 million. From the planned profit the firm wants to settle last year's loss, amounting to SKK 2.85 million. "The economic result last year was influenced by the fact that the company was preparing itself for takeover of selected nuclear power facilities that were not a part of privatization of Slovakia's dominant power producer Slovenske Elektrarne (SE)," reads the Economy Ministry report on performance of GovCo company. GovCo has taken over responsibility for operation of the V1 nuclear power plant in Jaslovske Bohunice and VYZ processing facility for nuclear materials as of April 1.
Slovenske Elektrarne Likely Not to Pay Dividends until 2010
Slovakia's dominant power producer Slovenske Elektrarne, a.s. (SE) should pay no dividends from 2006 until 2010. The information stems from the Economy Ministry's material, elaborated based on negotiations between the ministry, government privatization agency the National Property Fund (FNM), and Italian Enel, SE's majority shareholder controlling 66 percent in the company. "The basic scenario of the SE investment strategy plan does not count with payout of any dividends between 2006 and 2010 in order to secure sufficient funding for investments that SE needs to build inevitable new power generating capacities," explains the Economy Ministry. Dividends can only be paid in this period if real revenues exceed revenues projected in the company's new investment plan.
MONEY MARKET: Trading Calms a Little at the Beginning of Week
The interbank market reported less hectic trading on Monday compared to the end of last week. On Monday, overnights and tom/nexts were quoted at 4.9/5.0 percent p.a., spot/nexts and one-week deposits at 4.0/4.1 percent p.a. and two-week money were traded at 4.0/4.2 percent p.a. Six-month funds were quoted at 4.8/5.0 percent p.a., nine-month money at 5.0/5.2 percent p.a. and the price of twelve-month deposits was 5.3/5.5 percent p.a.
STOCK MARKET: BCPB Starts New Week with Losses
The Bratislava Stock Exchange (BCPB) reported losses at the beginning of the new week. Out of SAX base titles only weakening VUB bank shares were traded on Monday pulling down the Slovak official SAX share index by 0.6 percent or 2.26 points to 374.95 points. Turnover on the Bratislava Stock Exchange (BCPB) increased from SKK 445.381 million on Friday to SKK 1.144 billion with just SKK 804,000 in share trading.
FOREX MARKET: Crowns Strengthens Along with Regional Markets
The exchange rate of the Slovak crown against its referential currency the euro remained almost flat in trading on Monday. The local currency opened at 38.440/38.460 SKK/EUR and remained at this level almost with minimal fluctuations all day and only moved to 38.380/38.400 SKK/EUR before the close of trading. The US dollar and the euro were traded at 1.280 USD/EUR (middle). The crown was thus calculated towards the US currency at 29.960/30.000 SKK/EUR. The cross rate of the Slovak and Czech crowns was 1.3470/1.3510 SKK/CZK.
Annual Shortfall of SKK 2.5 Bln. Due to Canceling of Healthcare Fees
The new government in Slovakia led by SMER-Social Democracy plans to cancel marginal fees for services related to providing healthcare introduced by the previous government as part of healthcare reform. However, this would mean a shortfall of funds in the system of SKK 2.5 billion annually. Association of Health Insurance Companies director Eduard Kovac said that though this is no a huge sum, for healthcare system, it means a certain income. "Moreover, fees represent a certain regulatory element for patients," reminded Mr. Kovac. He thinks that if the fees are scrapped, the new government should say how to cover this shortfall. In his opinion it would be an unfortunate solution if the fees were canceled without offering an alternative.