national populism and slovak – hungarian relations in - MEK

Zsolt GálNational Populism and Slovak – Hungarian Relations in Slovakia 2006 – 2009. Forum Minority Research Institute Šamorín – Somorja, 2009government and public institutions that had to be disencumbered later on (e.g.various health service establishments).There were three principal sources of implicit indebtedness: first,grandiose investment projects financed from loans with government guaranteessuch as construction of highways, the Gabèíkovo hydroelectric powerplant or the Mochovce nuclear power plant; second, soft budgetary restrictionsapplied by government and quasi-government institutions as well asby state-run and privatized banks; last but not least, one must not forgetabout poor law enforceability and flawed bankruptcy legislation. Table 3shows a rapid growth in the volume of classified (i.e. overdue) claims thatoccurred as the result of soft budgetary restrictions and poor rule of lawinstitutions.Table 3Implicit form of fiscal expansion: growth in total volume of overdue claimsin Slovakia between 1995 and 1999 (billion SKK) Note: * As of September 30, 1999.Source: “Poh¾adávky po lehote splatnosti v SR” [‘Overdue Claims in the Slovak Republic],Trend No. 15/2000, April 12, 2000, 4A.Classified loans accumulated by Slovak banks turned out to be the greatestsource of debt. During subsequent consolidation of the country’s bankingsector, a substantial part of this debt was converted into public debt; thecosts of consolidation (1999–2000) exceeded 200 billion crowns (€6.64 billion)and were five times higher than revenues generated by privatizationof banks. 11 These costs did not inflate public finance deficits and public debtuntil 1999–2001; but although this indicator of expansive fiscal policy wasmanifested belatedly, it was a direct consequence of implicit deficits producedby the previous Vladimír Meèiar administration that ruled between1994 and 1998. The second indicator of populist policies indicated the economicgrowth’s unsustainable nature from the very outset. “The deficit ofthe current account in the period of 1996–1998 averaged 10% of GDP and194