Aside from Slovenia, the Commission on Wednesday recommended to the Council of the EU to close the excessive deficit procedure also for Cyprus and Ireland. The deficits are forecast to remain below 3% of GDP in 2016 and 2017.

In country-specific recommendations issued today, the Commission issued four recommendations to Slovenia with several concrete proposals for budgetary and reform action this year and the next.

The Commission reiterated challenges in pensions and health systems, while also calling for measures in the labour market and to improve financing conditions for businesses.

Following the correction of the excessive deficit, the Commission recommends Slovenia to achieve an annual fiscal adjustment of 0.6% of GDP towards the medium-term budgetary objective in 2016 and in 2017.

The country is also advised to set a medium-term budgetary objective that respects the requirements of the Stability and Growth Pact and to strengthen the fiscal framework by appointing an independent fiscal council and by amending the public finance act.

In its first recommendation, Brussels also calls on Slovenia to complete and implement the reform of the long-term care and healthcare systems, making them more cost-efficient to ensure long-term sustainability of accessible and quality care. By the end of 2017, Slovenia should also adopt a pension reform.

The Commission warns that public expenditure on long-term care is projected to more than double by 2060 due to population ageing, which poses a significant fiscal sustainability challenge.

The second recommendation is to, in consultation with social partners, increase the employability of low-skilled and older workers, including through targeted lifelong learning and activation measures.

The third recommendation is to improve the financing conditions for creditworthy business, including by facilitating durable resolution of non-performing loans and access to alternative financing sources. It should also ensure the proper implementation of the Bank Asset Management Company (BAMC) strategy.

"While progress has been made by the BAMC in the work-out of its loan book, it remains a significant risk to the sustainability of public finance. In 2015 its activities contributed 1% of GDP to the general government deficit of 2.9%."

The final recommendation is that Slovenia take measures to modernise public administration and reduce the administrative burden on business, as well as improve the governance and the performance of state-owned enterprises.

The Commission has established progress in the reduction of bad loans, but warns that they remain high comparing to the pre-crisis levels. It also finds that state involvement in the economy remains high.

"Slovenia's business environment remains hindered by ongoing deleveraging and a high level of administrative burden, particularly in the areas of construction, spatial planning and tax compliance, but also due to restrictive regulation on access to and exercise of regulated professions, which impedes the inflow of investment."

The recommendations, which among other things are based on the National Reform Programmes and Stability Programmes submitted by member states, are part of the European semester, a cycle of close coordination between the member states introduced in response to the crisis.

Commenting on the report, Slovenia's member of the Commission Violeta Bulc highlighted the exit from the excessive deficit procedure and exceptional changes taken by the country in 2015.

However, she also made it a point of saying that the Commission had warned Slovenia that the process to ensure the country's in the shape of long-term sustainability in the long run was not yet over.

As key reforms Bulc highlighted the public finance act, but said hardest work ahead was in structural efforts in healthcare, education, public administration and in improving the efficiency of corporate governance. She emphasized investment as key to the country's economy.

Slovenia has been in the excessive deficit procedure since 2009.

More information: http://ec.europa.eu/news/2016/05/20160518_en.htm