The Slovenia Times

Cerar's resignation not to affect economy


The economists, meanwhile, see the outcome of public sector pay talks, but also the Koper-Divača track and NLB, as the most uncertain.

Economist Marko Jaklič said the resignation will not have any major political or economic consequences, as the election is not far and the Slovenian financial market is not developed to the extent to cause stability or instability.

However, he is not sure what it means for the strike wave in the public sector now that the government will be attending only to day-to-day business.

But there is more uncertainty about the future of Slovenia's largest bank NLB and the Koper-Divača rail expansion, he said.

While Jaklič believes talks on NLB with the European Commission should continue, the second rail track is at stake, as drawing EU funds for the project is limited in time.

A similar view was expressed by senior economist at Alta Group Sašo Stanovnik, who also said the Cerar government is not "a government of reforms" and "it was in fact avoiding major decisions".

"The resignation in a way only confirms that many challenges such as the rail track, NLB and public sector pay will be transferred onto the next government."

However, Cerar's move could have a more direct impact on port operator Luka Koper, yet it is hard to say how the referendum issue could affect its value on the stock market. "For NLB, the resignation means status quo," Stanovnik added.

Economist Mitja Kovač said that by resigning, Cerar "cut the Gordian knot of threats and risks to Slovenia's financial stability", pointing to "totally unrealistic" demands by public sector trade unions.

While he believes that any political instability is bad for the economy, credit ratings and reputation abroad, he could not say what the resignation means for NLB or the Koper-Divača expansion.

NLB however expressed surprise with the prime minister's move but said that the decision would not affect the Slovenian financial market.

Meanwhile, economist Sašo Polanec was surprised by the move, saying the government was stable and seemed to "easily finish its term despite a number of problems".

He believes its attending to day-to-day rather than systemic matters until a new government is sworn in is good.

By not agreeing to a public sector pay rise, public debt will be lower than in case of a rise. This possibly means it could be repaid earlier, which is good for the country's credit rating, said Polanec.

That the prime minister was obviously under a lot of pressure was assessed by Slovenian Business Club executive director Goran Novković, who sees the resignation as both "expected and unexpected".

He pinpointed the prime source of the pressure in the failed Koper-Divača rail expansion and "excessive pay demands by public sector trade unions".

"It's tragic that while we need the investment into the rail track, the battle has been lost against stakeholders whom we believe do not have a true alternative."

Given that Slovenia is just about to go to the polls, Novković does not expect Cerar's resignation to affect the economy and businesses at the moment.

But it is a big opportunity for all political parties to see what to put in the focus of their election campaigns to stimulate the economy and companies.

Meanwhile, Jože Smole, secretary general of the Slovenian Employer Association, sees "big problems" in social dialogue as one of the main reasons for the resignation.

Speaking of "a total lack of understanding what social dialogue is", he criticized the government for agreeing to a pay rise for doctors last year without any clear financial plan, triggering a series of pay demands from other trade unions.

Smole believes it would be best for the Slovenian economy if the general election is held as soon as possible. "I don't think this situation is good for anyone."

The OZS chamber, which represents small businesses, believes the resignation can even bring positive results if looked at from the aspect of demands for higher pay.

"The OZS has been warning that a potential pay rise in the public sector will eventually have to be shouldered by businesses."

"This means the economy would be less competitive and economic growth would be hindered, which would be bad for the entire country," it said.

The OZS will continue to support the Koper-Divača project, which should be planned carefully and transparently.


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