Weekly review

Fico has first budget
In all probability Slovakia has its budget for the coming year, since its draft proposal was supported by all the ministers at Wednesday government meeting. "None were opposed, and no-one abstained, although many ministers certainly had other ideas for the money," Premier Robert Fico announced. According to him however, the Government has limited financial opportunities if it wishes to meet
the 2,9-percent public finances deficit in relation to gross domestic product necessary for Euro acceptance in 2009.
Yesterday's budget approval was completely different from similar negotiations in former years since one single Government meeting was sufficient for its problem-free approval. Political scientist Juraj Marušiak stated: "It clearly confirms that Robert Fico is a strong premier." The accepted draft budget, which should be presented to Parliament, is on the economical side. Ministers contented
themselves with less money and did not fight for increases, despite signs that Transportation or Social Affairs had earlier planned such strategies. "More is always better, but I'm satisfied," was the reaction of Minister of Transport Ľubomír Vážny following the discussions, but he added that his ministry will still have to find other resources for motorways. October 12

Catastrophe hasn#146#t happened
100 DAYS OF THE GOVERNMENT. Political decisions are foremost, and are influencing all changes
More politics than economics - this is the assessment of economists after 100 days of the Fico government. Political decisions have indeed affected all the changes - tax structure reforms, supervision over the regulation office, support for mortgages and pensions. Until now however the catastrophic scenario the analysts were predicting have not been quite fulfilled. "Back in July in seemed that the changes would be more widespread and with a much worse effect," commented Tatrabanka analyst Robert Prega.
For the moment the value Added Tax will be lower only on medicines and certain health aids. Not even the special tax on monopolies has been introduced, and nor will dividends be taxed. On the other hand the millionaires#146# tax will affect even the less rich; the government is also taking from non-profit organizations and free licence traders.
However the government did inherit an economy in its historically best ever shape. "And right now we#146#re moving into a period when these changes will be negligible. Precisely the coming two years will be the most successful from the standpoint of macroeconomic development, and thus the maneuvering room for the new government will be greater," Prega explained.
Thanks to this government representatives can afford to distribute, for example, contributions for pensioners at Christmas or for parents on the birth of their first child. Premier Robert Fico still continues to stress that everything is subject to the Maastricht criteria, and that the Euro will surely come into validity in Slovakia in 2009. "Also because of this the radical changes scenario is not happening, as a part of the market expected after the announcement of the formation of the present coalition," Viliam Pätoprstý, an analyst at Unibanka, remarked.
Thanks to the Euro, the budget will arrive at the government#146#s door with a public finances deficit of 2,94 percent. Meanwhile the result of the budget debate will be key, according to Ministry of Finances spokesperson Miroslav Šmál. The acceptance of the budget is considered as an important result of the government#146#s first hundred days.
As the chief economist at Slovenská sporiteľna Juraj Kotian warns, the majority of the measures implemented up to now have affected the income side of the budget. On the revenues side the slight, although harmful, tinkering with the equal tax is encouraging, as well as the positive trend of making expenditures more effective," commented analyst Ján Tóth. In his opinion, along with these, negative trends are being established: The Government is not taking advantage of the possibility to re-orient its policy towards the education economy, and it is giving the largest increase in above-frame spending to a non-effective and non-perspective sector - agriculture. At the same time it is cutting spending on science and research, and projects like Infovek are being limited in regional schools," he added.
October 11

Into Schengen next year
Together with the rest of the new EU states, Slovakia could become part of the Schengen area next year. A definitive decision should come down in December. This was announced yesterday by the Commissioner for Justice, Liberty and Security, Franco Frattini following the first round of Interior Ministers discussions in Luxemburg. The Finnish Chairmanship of the Union will complete by December a new study in which will figure the definite date for the inclusion of the new member states in Schengen. According to a Portuguese proposal, the new EU countries should be joined in the present system until a new SIS II version is prepared for summer 2008. October 6

English translation by Kevin Slavin