News of Slovakia Newsletter

Do you know that the hill Krahule at historical town of Kremnica, Slovakia, has been proven to be the geographic centre of Europe ? So is the Slovak Republic with its population of 5,367,700 (1995) which ranks her twenty-third in Europe. The population density is about 108 inhabitants per sq km. According to last census as of December 31, 1992 there are 85 % Slovaks, 10.8 % Magyars, 1.4 % Romany, 1.0 % Czechs, 0.3 % Ruthenians and 0.3 % Ukrainians living in Slovakia, of them 60.4 % are Roman Catholics, 9.8 % profess no religion, 6.2 % are Slovak Evangelics, 3.4 % are Greek Orthodox, 1.6 % are reformists, 0.6 % are Orthodox and 18.2 % profess other beliefs. The official language is Slovak. Bratislava is the national capital (population 445.089). Currency is Slovenská koruna (Slo- vak Crown) Sk (SKK). The international car code is SK. The international aviation code is OM.

With an area of 49.000 sq km Slovakia is larger than Switzerland, Netherlands or Denmark. It borders with Austria, Czechia, Poland, Ukraine and Hungary. The climate is generally mixture of continental and oceanic with the lowest mean annual temperature of - 3.7 C (Lomnický Štít) and the highest mean annual temperature of + 10.4 C (Štúrovo). The highest altitude is 2,655 m (Gerlachovský štít), the lowest is 95 m above sea level (Bodrog).

The Slovak Republic in its present form has been established on January 1, 1993 as a Constitutional Democracy. Slovakia is member of all major international organisations including UNO, CSCE, CE, GATT, ILO, IMF, IBRD, INTERPOL and associate member of EU. The head of the Slovak Republic is the President, elected by the National Council of the Slovak Republic (Parliament), the sole constitutional and legislative body. The Government of the Slovak Republic is the supreme executive body headed by the Prime Minister

What is Slovakia offering to the Canadian investors ?

- Well qualified labour force with high percentage of university graduated workers.
- Lower labour costs than those of Western Europe. .
- A precision engineering and manufacturing tradition in many cases going back to the Medieva Period.
- Free access to the European market as an Associate Member of the European Union.
- Excellent industrial relations responsive to modern management techniques.
- Excellent quality of life for expatriate management with outstanding cultural & recreational opportunities.
- First rate location to support traditional trading ties with the developing economies of the East, providing low cost base for supplying the European Union.
- First class road, railroad and river communication to both market areas.
- A stable macro-economic enviroment within Eastern Europe based upon very low per capita foreign indebtededness, a stable currency.
- Up to 100 % company ownership.
- Up to 100 % repatriation in convertible currency of all post tax profits.
- Liberal regulations permitting importation of goods and components used in further production process.
- Levels of taxation may be lower than those in the home country, and are fully creditable under double taxation treaties.
- Tax reliefs and tax holidays.

Basic Development of the Slovak Economy (1995 -1996)

GDP
In 1995, in common prices, the gross national product (GDP) reached 518 billion Sk, i.e. 17.31 bn USD. Compared with previous year it was higher by 17.4 %. In comparable prices it reached the value of 416.7 billion Sk, i.e. 13.93 bn USD, and increased by 7.4 % against 1994. It was the highest GDP increase among the Central & Eastern European countries but still represents only 89 % of the 1989 output.

Foreign Trade Balance
The total turnover of the Slovak foreign trade in 1995 represented amount of 17.03 billion USD. The export was 8.545 bn USD and import 8.485 bn USD. The continuous foreign demand was manifested in active balance of the exported and imported goods and services, in amount of 12.7 bn Sk - i.e. 424 million USD.

Employment and Average Monthly Wages
The average number of people employed in the economy of Slovakia in 1995 was 2,019,800. In comparison with 1994 the employment in 1995 increased by 2.2 %. The average monthly wage including employees in small businesses in 1995 reached 7,195 Sk - i.e. 241 USD. It was by 14.3 % higher than in 1994. After projection of the living costs development the real growth represented 4.4 %. The rate of unemloyment (4Q) was 13.7 %.

Investment
In 1995 149.7 billion Sk (USD 5.0 billion) were invested. Comparing with 1994 the growth of investment was 20 %, and 9.2 % when taking into account the price development. From total amount of investment, 97.8 % was represented by tangible investment. As to their structure, in comparison with previous year, the ratio of investment and the purchase of machines and equipment increased by 4.9 point to 50 %, and ratio of investment for building and construction procurement was increased by 1.3 point to 46.5 %.

Foreign Investment
Direct foreign investments in Slovakia since inception of the market economy was as follows: 1992 - 231.2 mil.USD, 1993 - 366.2 mil.USD, 1994 - 562.1 mil. USD. As of December 31, 1995, total of 21.882 billion Sk (USD 729.4 million) had been invested in Slovakia by foreign investors´sources in 8,740 companies. Out of this as much as 43.4 % (9,5 billion Sk) has been invested in industrial sector, 32.4 % (7 billion Sk) in retail sector and 15.7 % (3.4 billion Sk) in banking and insurance.

Ranking by Countries in the Foreign Investment in Slovakia (Dec 31, 1995)
Austria 21.4 %
Germany 17.5 %
Czech Rep. 16.2 %
USA 11.4 %
Great Britain 7.2 %
Netherlands 6.4 %
France 5.9 % (Canada with its 0.8 % is one of the lowest)

Inflation (consumer prices)
Slovakia has one of the lowest rate of inflation in the Central Europe. Whereas the 1993 rate was 23.2 % and 1994 13.4 %, the 1995 inflation rate was only 10.0 %. The present ( May 1996) rate is 7.2 %.

Gross External Debt
represents the amount of 4.8 billion USD and is the lowest debt per capita in the Central Eastern Europe.

Foreign Exchange Reserves
The National Bank of Slovakia has 3.8 billion USD of foreign reserves. Total convertible currency reserves including those of commercial banks, amounted to 5,05 billion USD (1995).

State Budget Deficit
Compared to 1993 when deficit amounted to 23,0 billion Sk (769 mil. USD) the deficit at the end of 1995 was 8.2 billlion Sk (274 mil. USD) only.

Standard & Poor´s Rating
In May 1996 improved from BB+ to BB- . Equals to BB- of Fitch, D&P and Baa3 of Moody´s. The same rating is assigned to Greece, Indonesia, Poland, Rep. of South Africa, India, Tunisia

Commodity Structure of the Slovak Foreign Trade 1995 (SITC 0-9)

Discount Rate
Being 12 % for 1993 and 1994, in 1995 the rate has been adjusted to 11.0 and then to 9.7 %. The present discount rate of 8.8 % has been lowered by the National Bank of Slovakia on January 13, 1996.

Exchange Rate SKK-USD
Compared to the rates of 1993 (33.21) and 1994 (31.28) the 1995 rate was 29.57 Sk per US$.

Monetary Policy Objectives for 1996
Annual 1996 inflation rate target has been determined within the range 6.5 - 7.5 %. GNP is assumed to grow at the rate of 5.8 % and the exchange rate to USD/DEM basket within an enlarged fluctuationband of 3 % (formerly 1.5 %)

Privatisation - 2nd Wave
Following the alteration in the second wave of privatization (cancellation of voucher privatisation), each of the 3,329,630 citizens who registered for the second wave have been assigned Sk 10,000 of principal amount of 5 year bonds issued by the National Property Fund. The bonds, which mature on December 31, 2000, pay interest annuallly at the rate equivalent to the discount rate as it varies from time to time, occasionally.

Structure of Companies in Selected Industry Branches

Big Companies
By the end of December 1995 there were 333 registered big companies in Slovakia (0.8 % from the total number). These big companies realised 60.9 % in the industry, 24.4 % in the civil engineering construction, 8.2 % in road freight transportation, 7.9 % in the retail, and 3.5 % in selected market services. They represent 53.6 % of the total investments.

Medium Companies
According to the register, there were 5,123 medium companies by the end of 1995 (11.7 % from the total amount of companies). Medium companies realized 23.3 % of the industrial production, 37.7 % in civil engineering, 34.3 % in road freight transportation, 10.9 % in retail, and 31.3 % in selected market services. The share of medium companies in total investments reached 37.7 %.

Small Companies
According to the Register, there were 38,180 small companies by the end of 1995 (87.5 % of the total amount of companies). From the total production, the small companies realized 4.8 % of the industrial production, 16.8 % in civil engineering, 16.1 % in road freight transportation, 23.8 % in retail, and 31.6 % in selected market services. The share of small companies in the total inestment represented 37.7 %.

Individual Entrepreneurs (Small Scale Business)
By December 31, 1995 there were 248,200 small-scale businesses registered with the Register of the Slovak Bureau of Statistics. From total production of correponding industry, these small businesses participate 11.0 % in industry, 21.0 % in civil engineering construction, and 41.3 % in road freight transportation (in tkm). From total revenue in the retail they realized 57.4 %, and 33.6 % in selected market services.

Financial Output of Companies
From the total number of 5,737 big and medium companies, 42.5 % were profitable. Those companies created profit in the amount 71.9 billion Sk (2,4 billion USD), and it was by 16.4 % more than in 1994. In 1995 the non-profitable companies presented losses in the amount 29.1 billion Sk (i.e.972 million USD). It was by 8.2 % lower than in 1994.

Demographic Development
In 1995 61,400 children were born, and 52,700 persons deceased. In comparison with 1994, the number of born children was lower by 4,900, and number of deceased persons was higher by 1,300. The number of born children per 1,000 inhabitants decreased by 0.9 point to 1.15 %. By foreign immigration Slovakia gained 2,842 person ( 3,055 persons immigrated and 213 persons emigrated ). By December 31, 1995 Slovakia had 5,367,800 population. Ratio is 949 men to 1,000 women. The population increased by 0.2 % against 1994.

Common Income in Households
In 1995 the total common income in households was 403,9 billion Sk (13.5 billion USD) and in comparison with 1994 its nominal value was by 18.2 % higher. The real growth of the living costs was 7.9 %.

Gross Savings from the Income
represented 48.2 billion Sk (1,61 billion USD). They were by 22.0 % higher than in 1994. The ratio of savings (ratio of gross disposable income) in comparison with 1994 increased by 0.9 point to 16.0 %.

Slovak - Canadian Trade and Technical Assistance Cooperation (1992-1996)

Technical Assistance (CIDA)
The technical assistance for Slovakia has been provided since 1992 by the Bureau of Assisstance of the DFAIT (RZC). From April 1995 on the assistance is managed by the Canadian International Development Agency) - CIDA. The total number of projects for Slovakia (including common projects for Slovakia and Czechia before 1993) from November 1990 to December 1994 was 61.
Allocations for Slovakia (apart from fiscal years - in mil. CAD)

1992/93........................ 1.3
1993/94........................ 2.0
1994/95........................ 2.3
1995/96........................ 1.5
1996/97........................ 1.5

Technical Assistance (DFAIT-RBT) Renaissance Eastern Europe
The number of projects approved for Slovakia since November 1990 has been 14.

Significant Projects 1990-1996 (Bureau of Assistance - CIDA)

(1) Closed Geomagnetics International, Pratt & Whitney Canada, Babcock & Wilcox, Power Smart Inc., CANAC,Saint Mary´s University Halifax, Department of Justice Canada, Montreal Stock Exchange, Canada Fund, Klohn & Crippen Consultants, Agriculture Cooperation in Livestock Management, AMTRA Worldbusiness, Programme d´Aidé á la promotion des exportations - APEX, CNIB, Privatization of Airports (APA),

(2) Major projects proceeding Canada-Slovakia Dairy Development, Joint Public-Private Enterprise Development Project Spišská Nová Ves, Police Cooperation Program (RCMP), Energy Efficiency Promotion (Power Smart - EBRD), Nuclear Regulatory Training Program (AECB)

(3) Planned projects Žilina Dam Project, Management Training, Novacorp International, National Bank of Canada, Bratislava International Commodity Exchange, Nuclear Spent Fuel Storage (AECL), GWN-GIS System, Fruit & Vegetable Production, Training Public Service TDC, Establishment of the National Housing Authority, Training for the Ministry of Finance, Interships Programme, Training for the Export Insurance (SPE), Federation of Canadian Municipalities, Human rights,

Significant Projects 1990-1996 (DFAIT-RBT) Renaissance Eastern Europe

(1) Closed Abugov Kaspar, CMiC, Captive Air International Inc., SCCC-Slovak Canadian Chamber of Commerce, Cumming Cockburn, Hemisphere Engineering Inc., Merfin Hygienic Products Inc., Novamann International Inc., Pratt & Whitney, Project Planning Inc.,

(2) Under proceeding Novamann International Inc., Okanagan Dried Fruit, Simtech Consulting, Veikle International,

(3) Planned projects Argosy Mining Inc., Isobord Enterprises Inc., Canadian Post Corp., Babcock & Wilcox Cambridge, VSŽ Steel Mills,

Other Institutions Involved in Projects for Slovakia

CESO (Canadian Executive Services Organisation)............................ 25 projects
CBIE (Canadian Bureau for International Education)............................ 3 projects
TFOC (Trade Facilitation Office Canada)............................................ 3 seminars

Slovak Canadian Trade (1991 - 1995 in mil. USD)
(By Slovenský štatistický úrad - Slovak Bureau of Statistics and Statistics Canada)

Year Export Import Total Balance
1991 8.5 9.0 17.5 - 0.5
1992 8.57 9.07 17.64 - 0.5
1993 8.35 17.16 25.51 - 8.81
1994 37.3 11.5 48.8 +25.8
1995 19.86 19.71 39.58 + 0.15

Main commodities of Slovak export to Canada are:
(Statistics Canada - 1995)

72 Flat rolled steel 30.60 %
62 Apparel 11.84 %
84 Machinery parts 11.09 %
29 Penicillins & derivates 8.03 %
64 Footware 6.32 %
94 Furniture 5.75 %
41 Swine leather 5.67 %
70 Glassware 5.66 %
27 Petroleum oils 3.92 %
95 Sports equipment 3.71 %
-- Others 7.41 %

Commodities & Investments Slovakia May Seek from Canada

Frozen fish, utility vehicles (vans, pick-ups), telecommunication equipment, wheat, canola oil, gypsum board, computer hardware & software, paper, pharmaceuticals, passenger aeroplanes, cooperation in heavy machinery and power plant boilers, equipment for gardening and woodworking, etc.

Information about News of Slovakia is prepared by
The Slovak Trade Commission in Canada

Embassy of the Slovak Republic.
Jozef Horsky
50 Rideau Terrace, Ottawa, Ontario K1M 2A1


All contents copyright © 1996. All rights reserved.

All comments should be forwarded to Ondro Mihal at omihal@slovak.com. 
Last Update: August 14, 1996