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EBRD still sees challenges in Slovak Republic
Bank adopts new country strategy
Bold economic reforms have been rewarded with strong growth rates in the
Slovak Republic over the past years. Real GDP growth was 5.4 and 6.1 per cent
in 2004 and 2005, respectively. Nevertheless, the country is still faced with
a number of challenges, as the EBRD says in its new
strategy for the Slovak Republic.
Sectoral challenges, which the EBRD can address and influence, are:
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The creation of employment opportunities is key to addressing the continued
high unemployment rate, especially outside the capital Bratislava. Local SMEs
should get more attention in terms of financial instruments and improvement of
the business environment.
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The size of capital markets is comparatively small, financial institutions
need improvements to deal with Basel II.
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Energy intensity remains high. The market for energy conservation is in its
infancy and the market for renewable energy projects has not been developing
at the pace required by EU directives. Private sector participation is very
limited.
Based on these findings the EBRD’s objectives for the strategy period will be:
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Provide equity and structured debt to fund the growth of local companies and
support foreign direct investment by medium-sized companies with higher risk
products not offered by the private sector;
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Develop a finance facility for energy efficiency and renewable energy
investments in cooperation with local banks and the Slovak authorities;
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Work on public private partnership projects in infrastructure, if possible in
conjunction with EU Funds;
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Offer capital market products such as bonds and asset backed securities.
As of to-date, the EBRD has invested €1.2 billion in 97 projects in the Slovak
Republic. The new country strategy was adopted after the launch of the Bank’s
new overall strategy in May, which envisages the cessation of new investments
in the new EU member states by 2010.
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