Economic News SUMMARY, October 19

20.10.2006, 06:33

Economic news released by SITA on Thursday, October 19

Bratislava Airport Serves 1.55 Million Passengers in Nine Months
M.R. Stefanik Airport in Bratislava served 1.548 million passengers during the first nine months of 2006, informed airport's spokeswoman Ivana Paulinyova. Compared to the same period of 2005 this means growth of 47.4 percent. The airport registered over 23,000 flights. In the last twelve months, from October 2005 to the end of September more than 1.8 million passengers used the airport. Over the last three years the airport registered a 400 percent growth in transport when it 2003 it served 480,000 people and this year the number of passengers should climb to almost 2 million.

Last Year's General Government Deficit was 3.13 Percent of GDP
Revised data of the Slovak Statistics Office show the general government deficit last year at 3.13 percent of GDP, which represents SKK 45.995 billion. General government debt achieved SKK 507.428 billion, representing 34.49 percent of GDP. This year the general government deficit should be 3.35 percent of GDP and the general government debt should achieve 33.12 percent of GDP.

Privatbanka Floats SKK 300 Mln. Mortgage-Backed Bond
Privatbanka, a. s., announced on Thursday its plans to float an issue of mortgage-backed bonds of SKK 300 million to finance mortgage lending. The bank will float the issue on October 25 2006. The bond will mature on October 25 2009. The par value of the security, consisting of 3,000 bonds, is SKK 100,000. The issue price will be 100 percent of par value. The bonds will bear a flexible interest rate equivalent to the three-month BRIBOR plus 0.25 percent p.a. The bonds will be issued in a private placement for investors selected in advance. Their number will not exceed 100.

Chirana Medical Reports 18.5% Growth in Sales Last Year
Chirana Medical, a.s., Stara Tura, reported sales of its products and services of SKK 371 million last year. Compared with 2004 this mean an increase by 18.5 percent. Production costs rose 11.8 percent to SKK 241.8 million. Added value was SKK 130.4 million, up SKK 22.2 million.

Minister Jurena Calls on Farmers not to Use Services of Some Banks
The Slovak Agriculture Minister has launched a campaign against banks, whose analysts criticizing the government's agriculture politics, the private TV Markiza reported in its main news program on Wednesday evening. Minister Miroslav Jurena appeals on farmers not to use services of ING Banka and Tatra Banka after their analysts have criticized the government's decision to increase direct payments to farmers to the maximum level permitted in the EU association agreement. The minister claims that Juraj Valachy from Tatra Banka and Jan Toth from ING Banka act against farmers. He also does not agree with statements that Slovakia would remain a rural country if it raises subsidies to farmers.

Former Minister Simon Calls on State Secretary Zahumensky to Resign
Former minister of agriculture Zsolt Simon says that the Agriculture Ministry state secretary Marian Zahumensky should step down. Mr. Simon claims that the ministry, at the initiative of Mr. Zahumensky, has revised its own subsidy rules and thus enabled an increase in subsidies to some companies. These include also Agrocontract Mikulas, a.s., in which the state secretary is a shareholder. Moreover, his wife Olga Zahumenska sits on its supervisory board. The tobacco producing company has received additional subsidies of SKK 4.4 million based on the revised rules. Mr. Simon claims that the change was purposive with a goal to help concrete individuals. "I'm convinced that the state secretary is in this case in a conflict of interest," said Mr. Simon.

Four of Nine Slovaks Oppose New Rules for 2 Pct. Tax Assignation
As many as 46 percent of citizens of Slovakia older than 18 are against repealing of the current right of corporate entities to donate 2 percent of their paid income tax to non-governmental organizations of their choice. This stems from a public opinion poll conducted by marketing agency ACRC between September 22 and October 4. The surveyed sample was representative from the viewpoint of age, gender, education, and domicile. Twenty percent of those polled did not notice the planned change, and 21 percent of respondents are not at all interested in this matter.

Slovakia Plans 20-Year Eurobond Issue Next Year
Slovakia plans to try to sell a 20-year eurobond next year as part of its foreign borrowing strategy aimed at preparing for euro adoption, the head of the Finance Ministry's Debt and Liquidity Management Agency (ARDAL), Daniel Bytcanek informed SITA on Thursday. Slovakia sold a benchmark 15-year eurobond worth EUR 1 billion in March, and by securing an interest rate of 4 percent, achieved the cheapest foreign financing ever for a new European Union member from ex-communist Europe. Mr. Bytcanek said that Slovakia plans to continue tapping foreign markets next year. "We want to do a eurobond again next year. If the conditions are good, we might try to do a 20-year issue, but this will depend on several factors. If we find out there is not enough demand for a 20-year bond, we would consider returning to the traditional maturity of 10 years," said Mr. Bytcanek.

GGP Launches Production in Poprad Industrial Park
POPRAD, October 19, (SITA) -- Global Garden Products (GGP) Slovakia, s.r.o., launched on Thursday the production of garden lawn mowers in the new production premises in the Poprad-Matejovce industrial park. Construction of the new plant on the area of 10,000 square meters took nearly six months. The cost of the new hall's construction reached EUR 10 million, GGP Slovakia director general Errico Biondi told a news conference held on the occasion of the plant's opening. GGP, a Poprad-based plant, is one of the four production units run by GGP in Europe.

Transport Minister Considers Selling Stake in T-Mobile Slovensko
The Minister of Transport, Posts, and Telecommunications, Lubomir Vazny, is considering the sale of the government's equity-stake in T-Mobile Slovensko, a.s. The state controls it indirectly through its 49-percent stake in T-Mobile's 100-percent holder, company Slovak Telekom, a.s., (ST). "Since the third mobile operator, Telefonica O2 Slovakia, should launch operations on the Slovak telecommunications market next year, competition on the market will increase and the state role there thus will no longer be that necessary. Therefore, I would like to present this idea to representatives of Slovak Telekom's majority shareholder, Deutsche Telekom, as well as to the Slovak government," Mr. Vazny told a news conference on Thursday. He said that Deutsche Telekom has an option to the T-Mobile's stake and that the state would thus offer its equity stake to the German firm at first.

Minister Rejects Opposition Criticism of Government's Balkans Policy
Slovak Foreign Minister Jan Kubis responded on Friday to the opposition's recent critical statements about the Slovak foreign policy towards the western Balkans. He said that the allegations are unfair that Slovakia has backed off from its support to the western Balkans. Mr. Kubis, who evaluated the ministry's work so far after a hundred days of this election term, said that the line that the Foreign Ministry follows is the same as under his predecessor, Eduard Kukan. Mr. Kubis thinks that the opposition most likely does not have enough information about the ministry's work when it criticizes it for reportedly having relaxed its support for the Balkans.

PSA Peugeot Citroen Officially Opens its Plant in Trnava
French carmaker PSA Peugeot Citroen officially opened its production plant in Trnava, western Slovakia, on Thursday. "We have reached all our goals. We needed less than two and a half years to successfully complete the whole project," the chairman of the PSA Peugeot Citroen board of directors, Jean-Martin Folz, told a news conference on Thursday. The main reason why the concern decided to build a plant specifically in Trnava was the advantageous geographic position of the region. "Trnava is an important transport junction that is situated close to several big automotive markets, such as Germany," explained Mr. Folz.

Deputy Immunity of Slovak Lawmakers to be Challenged at ECHR
Lawyer Pavel Hagyari intends to challenge the deputy immunity of Slovak lawmakers at the European Court for Human Rights in Strasbourg. The Slovak Constitutional Court dismissed his complaint in this matter as ungrounded. Parliamentary deputies rejected another attempt to reduce their immunity from criminal prosecution at their session earlier on Thursday.

MONEY MARKET: NBS Accepts SKK 500 Mln. in 84-Day Bill Auction
The National Bank of Slovakia's (NBS) auction of its 84-day bills enriched the interbank market trading on Thursday. Slovenska Sporitelna dealer Pavel Janosik said that banks' bids in the auction were SKK 7.1 billion. The central bank, however, only accepted SKK 500 million at a single yield of 4.75 percent p.a. "Banks probably demanded higher yields in the remaining bids, which the central bank was not willing to accept," Mr. Janosik commented. The banks neither deposited funds in the central bank's one-day sterilization nor did they refinance themselves. On Thursday, commercial banks deposited SKK 29.252 billion in their reserve accounts in the National Bank of Slovakia (NBS), meeting the minimum requirement for October on a cumulative basis at 113.55 percent.

Telefonica O2 Slovakia Starts Staff Recruitment
The third mobile operator on the Slovak market, Telefonica O2 Slovakia, already has started recruiting employees. The firm plans to employ 150 to 200 people in the first phase. "Our ambition is to win the best experts from the start to come up with the offer of our products to our customers as soon as possible," said Telefonica O2 Slovakia's director general Juraj Sedivy. Other experts from Telefonica O2 Czech Republic also will be involved in the project. Mr. Sedivy further stated that Telefonica O2 Slovakia started cooperating with the consulting firm Mercer in the initial phase of launching operations. Mercer has experience in the telecommunications sector consulting. Telefonica O2 Slovakia's spokesperson Hana Hejskova informed that Zuzana Reznickova became sales director. Juraj Kodydek will serve as the IT director.

STOCK MARKET: SAX Index Gains 0.04 Points
Slovakia's official SAX share index strengthened only insignificantly on Thursday. Rising share prices of the Slovak crude-oil refiner Slovnaft pushed up the SAX index 0.01 percent or 0.04 points to 404.22 points. Turnover on the Bratislava Stock Exchange (BCPB) increased from SKK 181.672 million on Wednesday to SKK 244.747 million on Thursday, with SKK 1.241 million in share trading.

Healthcare Supervision Office Reports on Disputed Client Recruitment
The Healthcare Supervision Office (UDZS) received 945 motions as of Wednesday from upset citizens who complained that they became policyholders of other health insurance companies against their will. UDZS spokesperson Radoslava Miklasova informed that in most cases people found themselves to become policyholders of other health insurance companies though they did not send any application form to become a client of a new health insurer, and that is why they demanded the contracts with the new health insurer be cancelled. Another big group of policyholders claim that they believed misleading information, for example, that a health insurer is going to be shut down or all citizens must be insured with another health insurer, and they expressed interest in switching the health insurer.

FOREX MARKET: Crown Again Rewrites Historic High on Thursday
The Slovak crown did not halt its strengthening and once again reached a new high on Thursday. Tatra Banka dealer Boris Somorovsky informed that the local currency opened at 36.680/36.710 SKK/EUR. Shortly before the close of trading, the exchange rate reached a new high of 36.560/36.600 SKK/EUR. "Foreign banks continue buying the Slovak currency in non-negligible volumes," Mr. Somorovsky commented on the development of the market. According to him, 36.500 SKK/EUR should be the new psychological limit, and the crown may attack it as soon as on Friday. "Should the crown manage to break this limit, profit taking and natural corrections of the exchange rate might arise," he added.

Approved Applications from EU Structural Funds Over SKK 88.8 Bln.
The Ministry of Construction and Regional Development registered 5,375 approved applications for project co-financing from European Union structural funds as of October 18. The value of those applications was SKK 88.8 billion, which is 44.6 percent of the volume of all received applications. As of October 18, 3,658 projects for SKK 57.4 billion were being implemented. As much as SKK 33.4 billion from the EU funds was set aside for these projects. At that date, SKK 11 billion of these sums was drawn. The ministry registered 4,071 rejected applications in a volume of SKK 80 billion.

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