WORLD TRADE G/SCM/N/16/SVN
G/SCM/N/25/SVN
ORGANIZATION 24July1997
(97-3123)
Original: English Committee onSubsidies
andCountervailing Measures
SUBSIDIES
Updating Notifications Pursuant toArticle XVI.1 oftheGATT 1994
andArticle 25oftheAgreement onSubsidies andCountervailing Measures
SLOVENIA
Thefollowingcommunication,dated18July1997,hasbeenreceivedfromthePermanentMission
ofSlovenia.
_______________
PART I
Introduction
Thisnotification contains themainupdating information relevant to1996andtothesubsidies
notification ofSlovenia circulated indocument G/SCM/N/3/SVN on22October 1996.
Thepurpose ofthisnotification istransparency andclarification oftheadministration ofapplied
programmes without prejudging thelegalstatus, nature oreffect ofnotified programmes andmeasures
upon trade, under theAgreement onSubsidies andCountervailing Measures oftheGATT 1994.
Overview ofRealized Budgetary Expenditures in1996 asCompared to1995
Pertaining toSubsidies andOther State AidMeasures
(AlldatainSlovenian tolars atarateofSIT160foroneUSdollar)
1995 1996
I. Subsidies toenterprises, total
1. Railways price support
2. Agriculture16,302.2
5,370.5
5,940.512,605.7
5,668.1
6,937.6
II. Funds fortherestructuring oftheeconomy
andbanks, total
1. Rehabilitation ofbanks
(payments ofinterest onBonds issued bythe
Republic ofSlovenia; RS-4, RS-5 andRS-6)24,699.3
14,394.327,419.1
16,318.9G/SCM/N/16/SVN
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1995 1996
2. Restructuring andrehabilitation of
enterprises
- closure ofmines
- steelindustry
- railways
- other
(payments ofinterest onBonds issued bythe
Republic ofSlovenia; RS-1, RS-2 andRS-3)10,305.0
2,386.6
1,637.0
910.3
5,371.111,100.2
4,426.7
1,785.9
775.3
4,112.4
- thedevelopment ofsmall
business
- technological development447.0
1,953.6248.7
1,281.0
III. Employment-related programmes, total 12,242.8 9,343.6
IV. Guarantees onoutstanding debts, total 904.9 2,168.1
V. Capital investments, total
1. Investment inagriculture
2. Investments intodemographically
endangered areas
3. Other investments3,284.2
979.0
1,149.6
1,155.62,908.4
1,086.5
1,035.4
786.5
Source: Ministry ofFinance.
Thegeneral status ofcapital funds in1996
There were18separate funds inSlovenia in1996which werecreated onthebasisoftheLaw
onOwnership Transformation ofEnterprises andtheirmainsource ofcapital weretheproceeds from
thesaleofprivatized enterprises. Some proceeds were alsosupplemented from thestatebudget.
Directly economically-related funds wereTheDevelopment Fund, Fund fortheDevelopment
ofSmall Business, Regional Development Fund, Capital Fund, Fund forEnvironmental Development,
Technological Fund. These haveavaried legalstatus andfunctions. Some arelegalpersons intheir
ownrights,othersareunderthedirectauspicesofgovernmentministriesandguidedbyministrypolicies.
Under consideration isafundfortheprotection ofemployees intheevent ofinsolvency ofemployers.
TheDevelopment Fund oftheRepublic ofSlovenia (SKLAD)
Thisfundwastransformed intoashareholding enterprise withapaid-in capital ofSIT1billion
divided into1million shares ofSIT1,000. In1996 thesoleowner oftheshares wastheRepublic
ofSlovenia.
ThemaintasksoftheFundweretorestructure andmanage unprivatized companies withspecific
difficulties, tofindowners anddispose ofthecompanies ortransform them intoeconomically viable
units. TheSKLAD wasauthorized tobring theprivatization process toaclose.
In1996, SKLAD managed 27companies which ithadtaken oversince 1992 andtookover
50newcompanies, employing atotalof25,000 employees andassets ofDM400million. These wereG/SCM/N/16/SVN
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taken oversince 1994. Some ofthese companies haveundergone aprivatization process initsearly
stages buttheprocesses were legally disputed andareunder review duetoirregularities.
TheSKLADwasadditionallyauthorizedtoassistalreadyprivatizedcompanieswithmanagement
services andtoseeknewbuyers, ifnecessary. TheSKLAD alsoplayed akeyroleinprocurement
anddisbursement offunds necessitated byitsactivities, especially toprovide operational capital to
companies indifficulties, which donothavenormal access tocommercial credits. These services were
provided tocompanies withestablished markets fortheirproducts, withsignificant production capacities
andasubstantial number ofemployees.
Realized transfers tocompanies through theSKLAD fromtheMinistry ofEconomic Affairs
sources were:
1. Short-term credits: DM145million
2. Long-term credits: DM144million
3. Credit guarantees: DM64.8million
4. Cancelled debt: SIT4.6billion
5. Recapitalization: SIT2.2billion
TheFund forEnvironmental Development
ThisFund became fullyoperational in1996. Itisorganized asashare-holding non-profit
enterprise withaninitial capital ofSIT10million, withshares entirely owned bytheRepublic of
Slovenia. Themain purpose istheprocurement anddisbursement offinancing forsoftloans to
companiesinvestingintoprojectsdealingwithenvironmentallyfriendlytechnology,suchaswaste-disposal
andwater treatment plants, industrial filters, etc.
Financial sources ofthisFund in1996 were:
SIT6,991 million proceeds from privatization
SIT 249million budgetary transfer onthebasis oftheLawonUrban Development
SIT 510million other sources (including DM30million from theWorld Bank)
TheFundparticipates inprojects withupto80%offinancing oftheproject value forinstallation
ofcleaner technology. Italsoprovided funding forlocal public services suchaswater andwaste
management, development ofwaste disposal sites. ThisFund contributed upto50%towards the
installation ofgasdistribution systems. Italsocovered partofthecosts forthedisposal ofspecial
types ofwaste andforconversion tonon-ozone-depleting materials.
Theleveloffunding forenvironmental purposes inSlovenia amounted to0.99% ofGNP.
A. Restructuring oftheSteel Industry
Support forurgently needed reconstruction ofproduction capacities continued in1996 toa
more limited extent, i.e.thebudgetary assistance amounted tolessthan13%ofthetotalinvestment
value orDM7.6million. Further expenditures werecovered bytheMinistry ofFinance intheform
ofinterest ratesubsidization oncommercial credits. Thetotalamount provided forthispurpose was
SIT1,785.9 million.G/SCM/N/16/SVN
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B. AidtothePaper Industry
Policy aimsinthissector havebeenachieved in1995andthisaidprogramme ceased in1996.
C. Restructuring ofMines
Total subsidies fordecommissioning operations ofthemercury, zincandleadmines amounted
toSIT1,368.1 million. Afurther long-term programme fortheprevention oflong-term effects of
mercury mining wasadopted in1996 providing alegalbasis forthecontinuation ofstateassistance
inthisarea.
Thecostofdecommissioning ofcoalmines amounted toSIT3,058.6 million.
D. Restructuring oftheManufacturing Sector andTechnological Development ofIndustry
Subsidies fornewtechnologies incompanies amounted toSIT1,281 million or30%lessthan
in1995. Partofthefunds were diverted forthepurposes offunding research inagriculture. The
basicelementsofprogrammesaswellaspolicyobjectivesandthemannerofexecutionoftheseobjectives
under theabove heading havenotchanged in1995. Thispartoftheprogramme wasadministered
bytheMinistry ofScience andTechnology through itsFund fortheDevelopment ofTechnology.
TheMinistry ofEconomic Affairs paidSIT417.9 million insubsidies forthemaintenance
ofemployment incommercial companies through investment intoproductive employment. Theindustry
thatwasthemainbeneficiary oftheprogramme wastheleather processing andthemetals processing
industry.
CompanyrehabilitationanddevelopmentofnewcompetitionstrategiesreceivedSIT6.5million.
SIT19.4million wassetaside forharmonization oftechnical regulations incompanies withthe
regulations applied intheEUandEFTA member countries.
State loanguarantees
Thelegalbasisforthistypeofguarantee bytheRepublic ofSlovenia istheLawonGuarantees
forObligations ofEconomic Enterprises Stemming fromtheRestructuring ofDebts (Official Gazette
No.69/94, 13/95, 35/96). Thisspecific typeofstate-aid wasprovided tobanks forthepurpose of
facilitating thereprogramming oflong-term debts ofseveral industrial andagricultural processing
companies. Theguarantees covered 80%ofthetotalrestructured debt. In1996 theamount paidto
banks wasSIT2,034 million or9%ofthetotalavailable guarantee potential. Theaidwasprovided
onthebasisofapublic notice andopeninvitation tobidfortheavailable funds under transparent rules
andcriteria.
E. Employment-Related Support Measures
In1996 thefollowing policy changes havetaken place:
- redundancy payments werelimited tonon-privatized andstate-controlled enterprises;
- emphasis wasgiven onassistance fortraining andretraining oftheunemployed and
theirreintegration intotheworkforce;G/SCM/N/16/SVN
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- anewprogramme wasintroduced, namely thesubsidization ofpublic works.
Thetotalamount ofexpenditure wasSIT9.3billion which isa30% decrease offunding
compared to1995.
F. AidtoSmall andMedium Business
In1996allformsofaidinthenameofpost-privatizationassistanceceasedtobeapplied.Support
forthedevelopment ofsmall business waschannelled through theappropriate Fund. Newlegislation
wasadopted forthefacilitation ofthisprogramme, i.e:
- LawonProcurement ofFunds ontheBasis oftheLawonOwnership Transformation
ofEnterprises (Official Gazette No.45/95 and34/96);
- Decree Determining theCriteria andConditions andProcedures fortheApproval of
Funds forthePromotion ofSmall Business (Official Gazette No.62/95).
TheFundfortheDevelopment ofSmall Business disposed ofSIT2.9billion inlong-term credits
andSIT224.7 million inshort-term credits.
G. TheSlovene Export Corporation (SEC)
TheSlovene Export Corporation, Inc.,Ljubljana, wasestablished inOctober of1992, onthe
basis oftheLawontheExport Insurance andFinance Corporation ofSlovenia (Official Gazette No.
32/92, 37/95, 34/96). Themajority shareholder istheRepublic ofSlovenia withminority shares of
banks, insurance companies, theChamber ofEconomy ofSlovenia, andanumber ofcompanies.
OnbehalfoftheState,SECinsuresexportcreditsandinvestmentsabroadagainstnon-commercial
risks andmedium-term export credits against commercial risks. SEC, onitsownaccount, insures
short-term export credits andissues guarantees andperformance bonds. Asanagent oftheStatethe
SECexecutes theinterest ratesubsidy programme andperforms other duties stipulated bylawand
itsstatutes.
TheRepublic ofSlovenia guarantees theliabilities oftheCorporation, should theyexceed its
guarantee capital. Concerning thesubsidization ofinterest rates aninterministerial commission
determines theconditions andcriteria andapproves thefinancing ofbusiness operations which exceed
5%oftheguarantee capital oftheCorporation andinsurance policies which exceed 10% ofthe
Corporation 'sguarantee capital.
Performance oftheSECin1996
Netprofit: US$787,407
Subscribed capital: US$74.78 million (50% increase on1995)
Reserves: SIT896.2 million
Number ofshareholders: 93
Number ofpolicies: 213
Value oftotalinsurance: US$305.9 million (riseof254% on1995)G/SCM/N/16/SVN
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Share ofexport insurance
coverage compared tothe
totalexports ofSlovenia: 3.7%
Rateofpremium income growth: 241%
Premium income: US$1,209,342
Amount ofclaims: US$117,200
TheSECcooperated with30banks and327exporting companies. Inexport credit refinancing
itapproved 699requests. Thevalue ofrefinancing increased by90%in1996 toUS$178.7 million.
Theturnover intheareaofguarantees wasreduced in1996 by36%, compared to1995, to
atotalofUS$10.2 million. 52requests wereapproved. Guarantees forworking capital wereissued
onthebasis of15requests, equivalent toSIT6.4billion.
Onaccount oftheState theSECprovided thefollowing services:
Interest ratesubsidies :theSECreceived SIT400.2 million fromthestatebudget anddistributed
thefunds intheform ofinterest ratesubsidies.
Export credit insurance against non-commercial andmedium-term commercial risks:
41insurance policies
90insurance contracts (atcommercial premium rates)
atatotalbusiness volume coverage ofUS$306 million
Share ofhighriskcategories: 19.72%
Thetotalexposureintheareaofinsuranceagainstnon-commercialandmedium-termcommercial
riskswasUS$121.4 million.
Servicing ofstateguarantees :initscapacity asanagent theSECissued 15guarantees ata
cumulative riskofSIT6.4billion.
Export credit insurance against short-term commercial risks(limited to180days-ontheSEC's
account):
66contracts (atcommercial premium rates)
Total business insurance coverage: US$142.7 million
Total exposure: US$64.6 million
Refinancing ofcredits :
717requests weresubmitted and699wereapproved, ofwhich 694submissions were made
byindustrial companies. Coverage: US$178.7 million.
TheSECissued 52performance bonds andother service guarantees.G/SCM/N/16/SVN
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H. Transport Service Subsidies
Subsidies intheareaofroadandrailtransport services havebeenincreased in1996.
Railpassenger service subsidies amounted toSIT5.6billion.
Combined transport services received SIT250.8 million, i.e.
- container transports received SIT8,440 perunitoftransport
- piggy-back transports received SIT5,550 pertruck.
PART II
Agriculture
Theinformation provided inthissection includes Article 8.3typeofassistance inagriculture.
Intheareaofagriculture therehavebeenthefollowing substantial changes inpolicies ofstatesubsidies.
Under theprogramme "structural changes inagriculture andfoodindustry", support forthe
renewal ofvineyards hasbeenexpanded withtheintroduction offunding forthefollowing purposes:
1. subsidy forthepurchase ofgrafted grapevines;
2. subsidy forinterest onfinancing ofcurrent production invineyards (purchase ofgrapes
andsupplies).
Funds forthedefence against hailhavebeensubstantially reduced.
A"National Programme -Gene Bank inAgriculture" hasbeenadopted in1996 andonthat
basisfunding forthesupport ofgenebanks hasbeenincreased. Itamounted toatotalofSIT26million,
which isanincrease of100% onthebasis of1995.
Intheareaof"Regional Aid", funding foravariety ofmeasures wasprovided fromtwosources.
Onesource wastheMinistry forAgriculture, Forestry andFood, andtheother source wastheMinistry
forEconomic Relations andDevelopment. Theprincipal purpose ofthisaidremained thesame as
in1995, i.e.economic assistance todemographically endangered areas. Thetotalexpenditure was
SIT1,753 million.
Intheaddendum tothisnotification abriefoverview ofspending onprogrammes inagriculture
under titles from AtoTisprovided. These programmes include Article 8.3typeofassistance.
Other programmes notified indocument G/SCM/N/3/SVN on22October 1996haveremained
substantially thesame.G/SCM/N/16/SVN
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ADDENDUM
A. Subsidies forLivestock Production
Total amount in1996: SIT281.0 million
B. Grants forLivestock Production
Total amount in1996: SIT2,583.4 million
C. Co-financing ofLivestock Production
Total amount in1996: SIT1,239.2 million
D. Subsidies forthePurchase ofCrop Seeds andSeedlings
Total amount in1996: SIT368million
E. Expert Tasks inPlant Production
Total amount in1996: SIT133.6 million
F. Co-financing ofVegetable Growers 'Cooperative Centres
Total amount in1996: SIT11.7million
G. Co-financing ofExperimental Fruit andViticultural Centres
Total amount in1996: SIT152.0 million
H Gene Bank
Total amount in1996: SIT26.6million
I. Subsidized Interest onLoans forCurrent Production inAgriculture
Total amount in1996: SIT601.5 million
J. Structural Changes inAgriculture andtheFood Industry
Total amount in1996: SIT963.1 million
K. Restructuring Support totheFishing Industry
Total amount in1996: SIT41.3million
L. Forest Management Programmes
Total amount in1996: SIT548.5 million
M. Regional Development AidandAgricultural Land Management Operations
Total amount in1996: SIT1,752.8 million
N. Defence Against Hail
Total mount in1996: SIT17.9million
O. Research Activities
Total amount in1996: SIT252.3 millionG/SCM/N/16/SVN
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P. Promotional andMarketing Assistance
Total amount in1996: SIT1,637.0 million
Q. Education andTraining Support Programmes inAgriculture
Total amount in1996: SIT80.7million
S. Information Systems inAgriculture
Total amount in1996: SIT76.1million
T. Advisory Support inAgriculture
Total amount in1996: SIT1,111.1 million