Economic news released by SITA on Wednesday, December 13
October Employment Growth Was Highest in Wholesale Businesses
In October, employment grew most in the wholesale business, where y/y increase of 10.5 percent was reported. According to the Slovak Statistics Office report the number of employees in the building industry went up 7.9 percent, in hotels and restaurants 7.7 percent and in retail sector 6.1 percent. On average industry reported the strongest labor force over the first ten months of this year, employing 568,100 people, thereof industrial manufacturing employed 520,700 people. Employment in the building industry reached 155,400, while it was 146,200 in the retail sector and 142,300 in the real estate and rental sector and other public services. The wholesale business registered 130,700 employees, the transport sector 86,400, hotels and restaurants 48,200, distribution and maintenance of motor vehicles 23,100, postal services 17,800 and the telecommunications sector 9,900 employees.
Sales of Slovakia's Industry Continued Significant Growth in October
Significant growth of sales in industry in Slovakia continued in October. Industrial sales went up 20.5 percent y/y in fixed prices to SKK 177.1 billion. A 21.4-percent increase in industrial manufacturing sales was largely responsible with production of transport means showing the highest sales growth of 55.6 percent, followed by production of electrical and optical equipment (up 51.5 percent) and production of chemicals, chemical products and chemical fibres (up 41.8 percent). Sales for electricity, natural gas, and water production and distribution rose 16.7 percent. Sales in the mining sector fell 24.2 percent. Ten-month sales in industry were 14.5 percent higher than a year ago. Of this, industrial manufacturing sales rose 16 percent y/y and sales for electricity, natural gas and water production and distribution mounted by 3 percent y/y. On the other hand, sales in the mining industry declined 7.6 percent and, the Slovak Statistics Office informed SITA on Wednesday.
Ingeo Zilina Withdraws its Shares from Public Trading
Zilina based company Ingeo, providing complex solutions to geological tasks, is obliged to announce a mandatory buyout bid. Shareholders decided on termination of trading in the company shares at their extraordinary general meeting on December 7. Ingeo now has to announce a bid to buy out the shares from those shareholders who did not vote for withdrawal of the shares from public trading or those who did not attend the meeting. The company's share capital of SKK 178.7 million is divided in 178,729 shares with a face value of SKK 1,000.
Central Bank Shows SKK 2.6 Bln. Loss Eleven Months into 2006
The National Bank of Slovakia (NBS) posted an SKK 2.6 billion loss at the end of November 2006. The central bank informed that this figure does not include differences from the valuation of financial assets or assets and liabilities in foreign currency. In line with new accounting laws effective from January 1, 2006, differences from valuation affect equity of the NBS. Losses from the valuation of financial assets and assets and liabilities in foreign currencies will affect the NBS' economic result as of December 31, 2006. As at the end of October, losses from valuation reduced NBS' equity by SKK 35.5 billion.
INESS Says Cabinet Wasted Chance to Save and Reduce Payroll Taxes
The government of Robert Fico did not use a unique chance of record economic growth for further reduction of taxes and compulsory levies. The Institute of Economic and Social Analyses (INESS) writes this in its reaction to the approved state budget for next year. It points out that in 2007 tax revenue will increase significantly, but also government expenditures will grow at a rate exceeding inflation. "Planned tax revenues of the budget for 2007 are 15 percent above revenues budgeted for 2006. Thus, the Slovak government will collect in 2007 in taxes by SKK 6,000 more per capita when compared with the 2006 budget," writes INESS. Expenditures of the state budget are projected to rise 5.7 percent, i.e. 2.6 percentage points above the inflation rate estimated for next year.
DSS Aegon has over 200,000 Clients
The pension fund management company (DSS) Aegon reported more than 200,000 old-age pension savers in mid December. This figure puts in third position among pension fund management companies on the market of old-age pension saving according to statistics of the social security provider Socialna Poistovna as of December 11. "The number of savers and the achieved position on the market means that we have not merely achieved our goals but exceeded them, which DSS Aegon shareholders set during its launch," wrote the company.
Parliament Passes Electronic Toll Bill
Drivers of motor vehicles weighing more than 3.5 tons will have to pay toll on highways, dual-carriage ways, and parallel first-category roads as of January 1, 2009. This duty was enacted in the electronic toll bill, which the Slovak Parliament passed on Wednesday. Specially marked vehicles of the Interior Ministry, vehicles of the Defense Ministry, the Slovak army and NATO, ambulances, vehicles of the toll administrator, and vehicles used for road maintenance will be exempt from payment of the toll. The National Highway Company (NDS) will be the toll collection administrator while revenues from collection of tolls will be its income. Revenues from the new system are estimated at SKK 4.8 billion during the first year of its operation.
Matador Rubber Estimates its 2006 Sales at SKK 14.483 Bln.
The rubber arm of Matador, the group Matador Rubber, estimates its 2006 sales at SKK 14.483 billion. Vice-president of Matador, a.s., and the chairman of the board of directors of the Rubber group Miroslav Rosina, said that this means a year-on-year increase by 12.6 percent. The Pneu division producing tires will contribute to the sales of the group with SKK 11.563 billion, the Machinery division's contribution will be SKK 1.311 billion and the Dopravne Pasy division that makes conveyor belts will add SKK 976 million. Joint-stock companies of Matador in Russian Omsk and Ethiopian Addis Ababa have contributed to the sales too. Matador Rubber estimates the year-on-year increase of its pretax profit at 40.9 percent to SKK 733 million.
KPMG Slovensko to Audit Slovakia's Preparedness to Draw EU Funds
BRATISLAVA, December 13, (SITA) -- Auditing company KPMG Slovensko, s.r.o. will carry out an external system audit of entities that will join the system of implementation of the European Union (EU) funds in the years 2007 to 2013. "The main goal of services of an independent auditor is provision of sufficient assurance that Slovakia is prepared to receive the EU assistance from the viewpoint of fully functional management and control systems, created at the national level," stated the Finance Ministry as a procurer. Total final value of the contract is SKK 42 million without value-added tax (VAT).
Tax and Customs Revenues at SKK 220.852 Bln. in Eleven Months
Tax and customs offices in the Slovak Republic collected SKK 220.852 billion in revenue for the state budget in eleven months of 2006, fulfilling the annual budget at 99.33 percent. Tax revenues made up SKK 215.134 billion of that sum, and their collection represented 99.76 percent of the 2006 plan. Non-tax revenues were met at 85.4 percent, amounting to SKK 5.719 billion. Local tax collection on goods and services of SKK 166.196 billion dominated tax revenues in ten months of 2006, constituting 96.68 percent of the annual target set by the Finance Ministry. Value added tax (VAT) collection was SKK 118.677 billion, and excise tax was SKK 47.519 billion, the tax administration's spokesperson, Adriana Pleskova, informed SITA News Agency.
Slovak Construction Firms Employed 159,800 People in October 2006
Construction companies in Slovakia employed 159,800 people in October 2006, up 7.9 percent y/y. The number of blue collar workers was 135,900. Labor productivity measured by construction output per employee reached SKK 93,850 in October 2006, up 1.2 percent y/y. The average nominal monthly wage per employee rose 6.2 percent to SKK 15,125. Real wage went up 2.4 percent y/y.
NBS Governor Verbally Intervenes Against Currency Strengthening
The Governor of the National Bank of Slovakia (NBS), Ivan Sramko, said on Wednesday that he consider the strengthening of the Slovak crown too steep. "Our analyses show that the gains of the Slovak currency are excessive. We will see how the situation will develop further," Mr. Sramko said after the Cabinet session. As he added, the traded volumes that are causing the exchange rate movement of the Slovak crown are low. "Because the liquidity is low, they are moving the crown forward," he explained. The Slovak crown started significant strengthening a few days ago, and it did not stop at the beginning of trading on Wednesday. The local currency once again reported a new record level against the euro when it opened at 34.820/34.840 SKK/EU, and improved up to 34.620 SKK/EUR under the influence of crown purchases.
President Gasparovic Visits Kia Motors Factory near Zilina
Slovak President Ivan Gasparovic on Wednesday visited and took a look around the Kia Motors factory near Zilina, one of the most modern car production facilities in Europe. Marek Trubac, the spokesman for the Slovak president, informed SITA News Agency that President Gasparovic appreciated that Zilina gained this important investment because the unemployment in the town exceeded the average rate in Slovakia. "The car factory is of great importance for Slovakia's economy with regard to exports as well as to employment," Mr. Gasparovic said. Annual exports of the car factory should reach 300,000 cars. The Kia car plant currently employs 1,600 people; their number should rise by other 1,400 employees until 2009.
MONEY MARKET: Liquidity on the Market Improved on Wednesday
Liquidity on the interbank market rose midweek after SKK 112.763 billion from the NBS repo tender on Tuesday left the market together with almost SKK 1 billion from government bond auction on Monday, and SKK 119.907 billion from maturing sterilization returned. Commercial banks deposited SKK 28.685 billion in their reserve accounts in the National Bank of Slovakia (NBS) on Wednesday meeting the minimum requirement for December on a cumulative basis at 95.64 percent. Overnights were quoted at 4.2/4.4 percent p.a. before the close of trading on Wednesday. Two-month money was traded at 4.65/4.8 percent p.a., and three- to twelve-month funds were quoted at 4.65/4.85 percent p.a.
Cabinet Approves Investment Stimuli of SKK 1.3 Bln. for Six Companies
The Slovak Cabinet approved at its regular session on Wednesday state aid for six companies totaling SKK 1.3 billion. The Economy Ministry proposed to provide these investment incentives to companies CRW Slovakia, s.r.o, Sitem Slovakia, s.r.o., Visteon Slovakia, s.r.o., Uno-medical s.r.o., SCA Hygiene Products Slovakia, s.r.o., and Johnson Controls Lucenec, s.r.o. The government will provide these incentives in the form of eligible costs related to initial investments into tangible assets, income tax breaks and as a contribution for general and specialized education. Economy Minister Lubomir Jahnatek informed about the approved incentives after the cabinet session.
Government will Classify Bratislava Airport among Strategic Companies
The company Letisko M. R. Stefanika -- Airport Bratislava, a.s. (BTS) will be classified among strategic companies, according to a resolution that the Cabinet passed on Wednesday. Initial proposal of the Transport Ministry suggested amending the Large-scale Privatization Act. "We are not going to amend the act, we will just define it in the Cabinet's resolution," Transport Minister Lubomir Vazny announced after the Cabinet's session. He added that within the classification of the airport as a strategic company the permanent state property-participation of at least 51 percent must be sustained.
STOCK MARKET: BCPB Sheds Gains from Beginning of Week
The Bratislava Stock Exchange (BCPB) gave up most of its gains from the first half of this week after trading on Wednesday. Slovakia's official SAX share index lost 4 points or 0.96 percent to close at 413.12 points, when shares of VUB bank and the power-engineering firm SES Tlmace pulled the SAX down. Turnover on the Bratislava Stock Exchange (BCPB) dropped from SKK 1.612 billion on Tuesday to SKK 1.269 billion on Wednesday with SKK 8.597 million in share trading.
Cabinet Approves Procedure for Negotiations over Samsung Investment
The Slovak Cabinet at its regular session on Wednesday approved a preparatory phase of a Samsung project, which it will follow when negotiating with the Korean company over a possible investment into a plant for the production of LCD modules in Slovakia. "For now it is not clear whether Samsung will decide to land its investment in Slovakia. Today we adopted only a procedure for negotiations," Economy Minister Lubomir Jahnatek said after the cabinet session. The Cabinet will allocate more than SKK 142 million for preparation works within this project. According to Minister Jahnatek, the Korean producer of LCD modules plans to invest SKK 15 billion to SKK 16 billion. He does not know when the company will decide whether it will place the investment in Slovakia.
FOREX MARKET: NBS Remarks Slow down Crown's Strengthening
Remarks by the National Bank of Slovakia's (NBS) representatives moderately slowed down the strengthening of the Slovak currency on Wednesday. The crown started significant gains a few days ago and was breaking record levels. The local currency opened at 34.820/34.840 SKK/EUR, and it later improved up to 34.620 SKK/EUR. The NBS Governor Ivan Sramko, however, said after the Cabinet's session that in his opinion the crown's gains were too steep. The then exchange rate moved to 34.770/34.790 SKK/EUR. The U.S. dollar was traded against the euro at 1.3215 USD/EUR (middle). The Slovak crown was quoted at 26.280/26.290 SKK/USD, while it registered a new record level against the US currency of 26.120 SKK/EUR during the day. The cross rate of the Slovak and Czech crowns was 1.2440/1.2450 SKK/CZK.
Amendment to Car Liability Insurance Act is in the Second Reading
Minimum limits of indemnity payment with the car liability insurance in Slovakia should gradually grow until the year 2009. In case of injury or death, the indemnity limit should grow from current SKK 19 million to EUR 2.5 million per accident regardless of the number of persons injured or killed. It should constitute up to EUR 5 million from the beginning of 2012. These limits will be enacted by the draft amendment to the car liability insurance act which parliament advanced to the second reading on Wednesday. The proposed amendment aims to achieve a complete harmonization of Slovak legislation with the European Union (EU) directives concerning insurance against responsibility for damages caused the use of a motor-vehicle. The amendment was presented by Finance Minister Jan Pociatek and should become effective on March 1, 2007.