When Dzurinda gained office, the problems of the coalition were numerous. After six years of Meciar's rule, the economy, health care services, and educational system were on the verge of collapse. The industrial giant, VSZ Kosice, came close to bankruptcy in November 1998, when it was unable to repay a foreign loan of US $35 million. The Slovak Electric Energy Industry managed to go from a Sk6.33 billion profit in 1994, to a Sk2.55 billion deficit in 1998. Slovak universities accumulated more than Sk6 billion in debt, to which Sk0.6 billion was added in 1998. Many schools were forced to operate without heating in the winter. The health care department started 1998 with a Sk5 billion deficit, which increased to Sk12 billion by the end of the year. As a result, pharmaceutical companies refused to supply hospitals and pharmacies with essential medication.
The broad governing coalition was formed by four political parties, two of which were coalitions themselves. These parties represent views, agendas, and ideologies from across the political spectrum, and their policy preferences are often incompatible. Adding to the already unstable political situation was the fact that the Slovak Parliament was unable to elect a president after Michal Kovac's term expired in March 1998. The new president, according to the coalition agreement, was to be chosen directly by the electorate in the first half of 1998. In May 1999, Rudolf Schuster, the mayor of Kosice, became the first directly elected president of Slovakia.
Then another challenge to Dzurinda's leadership came from the ranks of his very own party. In 1999, Jan Carnogursky, leader of the ChDM, succeeded in splintering the SDC back into the five parties from which it was originally created. The coalition partners in the government, and most of the SDC leaders themselves, strongly opposed this fragmentation with the fear that it could lead to instability and eventually force early elections. In 2000, Dzurinda founded a new political party, the Slovak Democratic and Christian Union, of which he is also the chairman.
Even with little experience in governing a new nation, Dzurinda has risen to the challenges of building a strong democracy with the respect and support of the international community.