In spite of its small size, a number of foreign investors are closely considering Slovenia as a target country for prospective investments, and Slovenia is in fact making every effort to attract them. Since 1991, on gaining independence from the former Federal Republic of Yugoslavia. The country has been granted membership in the IMF, IBRD, EBRD and GATT. In 1993, Slovenia signed a Cooperation Agreement with the EC. To assist progress towards full EU membership, new bills and amendments of existing regulations are being made more compatible with EU rules.

In addition to its political stability, Slovenia has been successful in avoiding excessive state budget deficits and hyper-inflation. Although public sector expenditure has remained rather high (almost 50 % of GDP), a budget surplus could be maintained so far. A GDP per capita exceeding USD 7000 marks Slovenia as a market with good potential in the Central European region.

Pursuant to the authorities' tight fiscal policy, the Slovenian currency, the Tolar (SIT), in addition to being internally convertible, has been kept relatively stable. The inflation rate has been gradually but consistently decreasing, reaching 19 % in 1994.

Recent facts and figures

Current exchange rates: USD 1 = SIT 113; DEM 1 = SIT 81.

The recently concluded free trade agreement with Poland has opened Slovenia's way to join the group of the Visegrad countries. Similar agreements with the Czech Republic, Hungary and Slovakia had already been in place. Slovenia is expected to enter the Central European free trade zone at the beginning of 1996.

Inflation continues to fall. Based on figures of the first six months of 1995, it went down to as low as 13 % per annum.

As 5 % growth in GDP has been recently forecast for 1995.

Taxation and Finance

There have been no major changes in Slovenian taxation. The corporate income tax rate has remained at 25 %. In order to provide favourable taxation treatment to foreign investors, Slovenia has undertaken to honour the double taxation treaties concluded by the former Yugoslavia.

As part of facilitating the transformation process towards an open market economy, Slovenian companies are free to borrow funds from abroad (except for short-term loans). Furthermore, interest paid to foreign entities is not subject to withholding tax in Slovenia.

A temporary tax exemption in respect of capital gains derived from securities transactions was scheduled to expire on 31 December 1994. The Slovenian Parliament, however, has extended this exemption until 1 January 1997.

A new Act on the rate of interest chargeable for late payment has been passed. Previously, this interest rate had been 5 % in addition to the national bank lending rate (20 %) thus amounting to 25 %. As this figure was considered to be excessive, the Parliament has decided to lower the figure to 18 %. This percentage is charged in respect of all public aged debt including income tax, sales tax or social security late payments.

Labour regulations

Slovenia still applies wage control measures. The amount of minimum as well as the maximum salary is determined from time to time by the Government, after consultations with the employers and trade unions. The amounts determined are absolute figures, therefore no employer is allowed to pay either less than the minimum or offer more than the maximum.

The amount of the minimum and the maximum salary is revised and adjusted every 3 months, subject to the inflation rate in the period concerned.

Current figures:

minimum SIT 45,000 (USD 398)
maximum SIT 700,000 (USD 6195)

If you require any further information on Slovenia, please call David Attrill or Gyula Hock at Price Waterhouse, Budapest:
tel: +36 1 269-6910
fax: +36 1 269-6938
or enter a text search 'Price Waterhouse' and 'Business Monitor'.