The European Investment Bank (EIB) is involved in Slovakia in major investment projects. Wolfgang ROTH, president of the Luxembourg-based EIB found himself in Late February in Slovakia. We used his presence to ask him several questions.

On which projects is the EIB currently working?

We are preparing to do in 1999 and 2000 in the area of transport, road and rail transport more than in the preceding year. Our activities will be related to direct investments in various industries. I estimate that we will enter into obligations totaling 400 million EURO. We also want to enter into the continuation of construction of the highway network. It however strongly depends on decisions made by the Slovak Government and private investors.

What tasks do you see ahead of the Slovak Republic?

It must quickly decide. Following the elections in the autumn of 1998, a new government was long being formed. Now it is necessary to take determined decisions on tax and budget policies, public administration financing in transport and the environment.

What would foreign investors appreciate most?

Most important is a clear tax policy. I do not think that subsidies should be too spread. Slovakia is highly attractive by quality labour and labour costs. Not subsidies but clearly laid down tax rules on the use of profit. Positive proposals need to be submitted in order for money in the form of reinvestment to remain in the country. Slovakia's overall orientation is good.

For economy competitivess, a strong currency is of importance. The Slovak National Bank (NBS) in cooperation with the cabinet by the autumn of 1998 had advocated a fixed crown exchange rate in relation to the German mMark and the U.S. dollar. This collapsed on controversies in budget and monetary policies. A decision on "floating" crown rate followed.

I consider the exchange rate "floating" a transitory measure necessary during the period until stability has resumed. Currently a consistent budget policy is being applied and fiscal and monetary policies are being coordinated. The Slovak Republic's trade balance can be called "European", "European" are all large-scale commercial flows, in imports and exports alike.

Despite this Europe should seek Slovakia's rapid return to the policy of fixed exchange rates, just like Austria in the 1970's. It is a highly challenging and difficult goal. Stability must not be too early. Arising may be new deficits, so-called backdoor deficits, which occur during formal fiscal stabilisation when a new deficit arises due to massive cutoffs.

It is necessary to maintain the investment activity and contain the consumption, which is very complex task for the government. The Germans and Austrians may have been satisfied with a surplus in trade balance. Through trade with Eastern Europe these countries have created more jobs than they have lost.

How do you view the country's developments toward integration into the European Union?

Today I consider the short-term decision on the division of candidate countries into two five-member groups and their subsequent separation much more fatal than two years ago. Slovakia is proving in the democratic process that she ranks among European member countries. No positive decision on the reinclusion from the 2nd into the 1st group will be made before December 1999. Though any such decision entails a discrimination against Latvia, Lithuania, Bulgaria and Romania. There are 10 countries facing democratic and economic difficulties. Let us test on an annual basis who is best developing, but the division into the two groups makes no sense. I constantly meet with investors who say that they cannot come over to Slovakia, because she does not belong to candidate countries. I do not think it happy.

Does the problem has a solution?

It would be best if the EU would correct its decision and say that we have 10 partners, are negotiating with them all, and best will be advancing most quickly. We will get rid of a new division of Europe.Neither the European Commission nor the Council of Ministers nor any government in the world will choose a best solution but a second best one. It would rest in the following: No later than the Finnish presidency in December must it be clearly said that the reason for Slovakia's non-inclusion in the firts group was democratic problems, which have all been removed and new arguments cannot be looked for. I know what I am saying; the magnitude of the deficit is to be that latest argument for Slovakia's non-inclusion in the first group. I do hope that the Austrians will definitely make sure that the Finns can be persuaded that the Slovaks deserve to be in the first group.