The Slovenia Times

Our State Must Become a Promotor of Sustainable Economic Growth and Development



Q: In September 2015, you marked your first year of government. On that occasion you said that, "Slovenia is recognised by the world as a successful country which is moving forward", which is also confirmed by the majority of international rankings on economic recovery and performance. How does the changing of our political culture, including the political bipolarity, influence progress?

A: The new Slovenian government committed itself to ensuring long-term sustainability of public finances by eliminating the excessive public deficit in a sustainable manner and by gradually reducing the structural government deficit." Those were my exact words when I addressed the participants at the FDI Summit in 2014 for the first time. The government has implemented measures and policies aimed at achieving long-term sustainable economic growth. Due to decisive action, Slovenia has regained the confidence of international investors, which is crucial for the revival of economic activity. The impact of government policies on the domestic economy is reflected in the improvement in the general trust and higher key macroeconomic indicators.

Much has been done to reduce unemployment, especially among young people. With the changes in the area of student work, the government has provided better social security for students. Most importantly, labour market conditions are improving for all generations. The government has, since the beginning, committed to act and foster those policies that will bring stability and a stronger political and legal culture. And finally, we are committed to working together with other stakeholders and exceed the senseless bipolarity and divisions with the goal of creating and providing a better life.

Q: Typically, governments in Slovenia employ new officials when taking on their mandate and, as a result, Slovenia has a disproportionate number of public officials. Professor Arturo Bris, Chairman of the IMD World Competitiveness Center, points out that a government is not in the position to create the jobs in a country, but creates the conditions so that the private sector can creates jobs. Will you be able to change the trend in Slovenia and how?

A: Our state must become, and must be perceived as, a key supporter and promotor of sustainable economic growth and development. It must be responsible and accountable in relation to our citizens, residents and business entities, and must act according to the legal norms, be proactive and be alert to the problems and needs of the economy and our people. One of the priorities of my mandate is to ensure a predictable and business-friendly environment. Therefore, the government has been preparing and implementing measures to lower the administrative burden, amend labour legislation and lower labour costs. On the other hand, we are creating better business conditions by building and maintaining the infrastructure, promoting and further developing our educational system and innovation-oriented ecosystems.

We are aware that the business environment, or private sector, is very much dependent on the organisation and functioning of the public administration. It is therefore necessary to create a quick, responsive and efficient administration and the first decisive steps have been taken also in this respect.

Q: Your government adopted the long-awaited strategy on state assets however, international ratings highlight weak institutional and corporate governance. What measures will be taken to avoid the corruption limbo that could obstruct the pace and effectiveness of the reforms your government has introduced?

A: For the first time in almost 25 years, Slovenia has obtained a document - the Asset Management Strategy for State Owned Enterprises - that details very clear objectives. First, is to improve the performance and quality of service of state-owned enterprises (SOE's) and second, to define a clear strategic direction for further privatisation. With this strategy, we have opened every state-owned enterprise to the participation of private capital; different sectors, mostly infrastructure and energy, are open for private investment and strategic partnerships. In strategic sectors, private capital can participate with up to 50% of equity.

Slovenia has many interesting assets to be privatised, among them some blue chip companies. We are committed to running a transparent, open and responsible privatisation. On the other hand, Slovenian Sovereign Holding (SDH) as the state asset management institution, should improve the performance of the remaining state-owned companies, increase the returns and dividend payments for the state and implement the highest standards of corporate governance. I do not believe that corruption is the main problem in SOE's. The key issue is how to improve the performance of these companies, make them more efficient and to increase the revenue and profit which these companies are generating.

Corporate governance is a constantly evolving process of setting the rules with the aim of ensuring the fair and equitable running of companies. The framework of corporate governance rules in Slovenia consists of laws and non-binding rules. The Slovenian government is a strong advocator of more effective corporate governance with more transparency and more accountability. Measures and actions taken in the last 12 months speak for themselves.

Q: Slovenia needs to boost investment and attract more foreign capital however interest in the country remains quite low. What would you say are the main attributes Slovenia could perform internationally to attract more potential investors and capital from abroad?

A: Slovenia is a politically stable country with functioning democratic institutions, including the judiciary, and with a favourable tax environment with the corporate nominal tax rate reaching only 17%. Our competitive advantages are location, excellent infrastructure, a highly educated, hardworking and skilled workforce, a high level of innovation in enterprises and lastly, geographical position, which is almost literally in the middle of Europe.

We are very well aware of the work we still need to do, especially in reducing administrative barriers, changes in employment legislation and restructuring the public levy burden with the aim of reducing the burden on labour and to have a more optimal taxation of income, consumption and wealth. One of our major aims is to organise all business-related activities in one place (in a so-called 'one-stop-shop') to assist the smooth entry into the market for potential investors. Our objective is to attract a sufficient number of high-quality foreign direct investments and put Slovenia on the map of attractive locations for investments, especially as a "R&D" hub, "logistics" hub and "green" hub.

Q: The stabilisation of the fiscal system has also been high on the agenda. Fiscal and debt metrics have improved and the budget for the next two years has been passed. What is the structure of budgetary intent for the refuges crisis in terms of domestic and European Union funds?

A: According to the records from August to 11 November 2015, the total amount for the reception, accommodation and care of refugees has been EUR 8.7m. This figure does not cover the regular labour cost, the cost of rail and bus transport or the costs incurred by municipalities as a result of the migrant flow which will be paid by the state.
The budget for 2016 provides an additional reserve of EUR 123m that will be allocated to ministries according to their generated costs. These funds are provided as additional revenue from the EU budget of EUR 73m with the rest additional to the general government deficit. We are positive that the European Commission will recognise this cost as a one-off expenditure that does not influence our structural efforts.

Q: Recent events, in terms of the refugee crisis, has positioned Slovenia as the gatekeeper of the Schengen borders. We are contributing to the functioning of Europe when tackling the situation of its external borders. What is the common response you expect from the European Union for managing and controlling this huge influx of people?

A: Slovenia is a responsible member of the EU and Schengen area while being well aware of the importance of solidarity, cooperation and co-responsibility in addressing the current situation. We have activated all the available forces who are working daily with the support of civil protection, humanitarian and non-governmental organisations but we are on the brink of our capacities.

For the European Union, it is essential to rapidly implement the decisions already taken by the Council at the Meeting on the Western Balkans Migration Route and to strengthen the cooperation between the EU and Turkey in the field of migration. The migration crisis in Europe is a sharp reminder that we have to strengthen our joint efforts to resolve the crisis in Syria. And what is more, we have to find a way to share the burden fairly between all the Member States, establish a clear timetable of concrete measures and closely work with each other in a coordinated, integrated and transparent way.

Q: The number of people entering European borders is increasing, also due to the economic migrants that are joining the real refugees. Demetrios G. Papademetriou, President of the Migration Policy Institute Europe said, "Europe must examine, more closely, the claims of asylum applicants from non-Syrians and be willing to make hard-headed determinations." Does Europe need to distinguish between refugees - people in need - and economic migrants when dealing with the new measures in the common migration policy?

A: The number of economic migrants has been increasing, particularly the number of migrants who are coming from North Africa, since the route through the Western Balkans has become easier than the one across the Mediterranean. It is necessary to send a clear signal that the path for economic migrants to Europe cannot remain open in such a manner and that they will be returned to their country of origin. But let me stress that the EU has to remain open to those people under international protection because of wars and open conflicts in their home countries.


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