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Slovenia Business Week no. 06/2005: D&B Expects Significant Boost from Announced Tax Reform

International rating firm Dun&Bradstreet (D&B) expects that the announced reform of tax legislation will curb the large grey economy and provide a significant boost for the fiscal balance in the run-up to eurozone membership

International rating firm Dun&Bradstreet (D&B) expects that the announced reform of tax legislation will curb the large grey economy and provide a significant boost for the fiscal balance in the run-up to eurozone membership.

Quoting an OECD estimate that informal economy accounts for 26 percent of GDP, the rating firm stresses that lowering the tax burden "implies widening the tax net to catch those "entrepreneurs" who until now have been able to operate outside the tax system".

In its report for February, D&B maintains Slovenia's risk rating at DB2c, the highest in Eastern Europe. The risk report still bears a mark indicating that Slovenia's rating could be upgraded in the coming months.

D&B maintains the inflation forecast for 2006 at 2.7 percent, or 0.3 percentage points lower than in 2005, and expects unemployment to fall by 0.3 percentage points year-on-year to 10.2 percent. The GDP growth estimate remains unchanged as well: 3.8 percent for this year and 3.9 for 2006.

The rating firm also welcomes the trend towards increasing consolidation as the country seeks to compete on the single European market, in particular in the food industry.

The recent acquisition by Istrabenz (a tourism and energy conglomerate) of food company Kolinska "is a sure sign of the seriousness with which Slovenian companies are taking the increasingly competitive EU environment".

According to D&B, Slovenian food companies are now "positioning themselves as one of the EU's major investment and acquisition forces in Southeast Europe". Success in this strategy will have a positive effect on the country's commercial and external risk profile over the medium term.

Source: Slovene Press Agency STA

Author: STA