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    Copyright: The following text is for personal information only. Any professional use or publication in written or electronic form is subject to an agreement with AIM, 17 rue Rebeval, F-75019 Paris, France

    SAT, 26 OCT 1996 23:15:24 GMT

    Economic Situation in Slovenia


    A month before the Slovenian parliamentary elections, there is a lot of talk about economic success of the young Slovenian state. Just a few months ago, Prime Minister, Dr Janez Drnovsek, while speaking about good economic results, said that it was a "story of success". Ever since then, various political parties have been disputing about the extent to which this is really the story of success, while foreign delegations of politicians and entrepreneurs are marvelling and wondering at Slovenia having managed in such a short time to achieve such good results.

    How It All Began

    It all began back in former Yugoslavia, where the Slovenians gradually reached the awareness that the federation of six republics was slowing then down in their economic development. It is hard to say when such contemplations began, but the roots certainly reach back to the period of the so-called Kavcic's liberalism in Slovenia. Those were the seventies when the then prime minister of the Slovenian government, which was called the executive council of the socialist republic of Slovenia at the time, Stane Kavcic, started promoting blashemeous ideas for the time that Slovenians should have primarily been engaged in banking, trade and rendering services. The communist party headed by France Popit and supported by Edvard Kardelj, immediately removed Kavcic from the political scene and his ideas were for ever buried in the dark.

    But, the Slovenes were still dissatisfied. Inflation flared up and in the period between 1987 and 1989 reached a rise of more than 200 per cent. Foreign currency reserves were disappearing, and majority of export was achieved by individual successful firms, most of which were from Slovenia. Slovenian exporters complained at the time that most of their money was taken by under-developed Yugoslav republics. But, there is the other side to the story. Many Slovenian exporters lived quite comfortably, because they received a series of export stimulations. Apart from it, these very same under-developed Yugoslav republics were a "promised land" for Slovenian merchants (and Slovenian enterprises), because purchasers over there were buying absolutely all Slovenian products, although they were quite expensive. After that, the federal government was taken over by the Croatian entrepreneur and economist Ante Markovic, who cleared the dark clouds on Yugoslav economic scene, but it was too late, just before Yugoslavia fell apart. By then Slovenia had already intensely thought about economic, and political independence. But, the Slovenians took first resolute measures in this direction only after Milosevic's authorities in Serbia invaded the monetary system of the National Bank of Yugoslavia and when the Mint started issuing piles of worthless money (dinars) all day long.

    Pro et Contra

    Independence in the monetary field began when the Bank of Slovenia issued monetary coupons in October 1991, and later Slovenian currency - tolar. The tolar was not, of course, in the beginning recognized as an international currency and it was a long way off to convertibility of the tolar. The inflation rate was still in the partially (primarily economically) independent Slovenia in 1991 quite high - 247 per cent. However, in 1992 it already dropped to 92.2 per cent, a year later to 22.9 per cent and in 1994 to 18.4 per cent. Last year, 1995, with the inflation rate of nine per cent, was the first serious attempt of approaching monetary situation in the European Union, which is especially true for this year, when inflation is expected to drop below this figure.

    Before the mentioned changes in Slovenia, like in the whole of Yugoslavia we had a planned market economic system. Its characteristic was that there was an enormous gaps between the legislature which it prescribed how the system was expected to operate and how it actually operated. Both alternatives of the economic system are consistent regardless of the fact that one of them (centralized-planned) was non-democratic and ineffcient. And the Slovenian, i.e. Yugoslav system was inconsitent and pure utopia.

    The current Slovenian Prime Minister, Dr Janez Drnovsek and his party, the Liberal Democratic Party of Slovenia, chose for the main objective of the newly established state - economic prosperity of Slovenia. While they partly succeeded in it, one should be realistic and see the other side of the coin, too. Is this really a "story of success" when in the period between 5 June 1991 (the day Slovenia proclaimed independence) and 5 November 1993, more than 400 legal persons (and now there are double that figure) proclaimed in the Official Gazette of the Republic of Slovenia a call for tenders, procedure of forcible settlement of accounts or bankruptcy? And is it really a success when we see that in 1988 there were only 21,341 unemployed persons, and in 1990 there were already 44,227 of them, a year later 75,079, and in 1993 the most - 129,056 unemployed persons? In the year of 1994 this figure decreased by two thousand, while last year and this year the unemployment rate is somewhere around 14 per cent. Or more precisely, in May this year in Slovenia there were 118,321 registered unemployed persons, and at the same time there were 585,538 employed citizens of Slovenia.

    Success of an economy is measured by gross social product per capita. Past summer in Slovenia it amounted to 9,352 American dollars. Foreign currency reserves amounted to 3,356 million dollars, export to 670,261 million dollars, and import 853,352 million. This implies that only 78.5 per cent of import is covered by export. It should also be said that Slovenian foreign debt amounts to 2,975 million dollars.

    Despite all these difficulties, Slovenia is receiving significant compliments for economic success from various foreign entrepreneurs and politicians, and it is acquiring the reputation in Europe of one of the most stable (in all respects) of countries in transition. All things considered, Slovenian economy has resolved a lot of problems, but many things it has not, and in establishing the limit between a winner and a loser, one would feel the refreshing smell of capitalism which sometimes, after all, leaves a very bitter taste.

    Milan Povirk, Aim