The Slovenia Times

Finance: Why give out hefty subsidies amid robust growth


The government will allocate EUR 482m in subsidies this year, of which EUR 420m to private companies, it says in Is It Really Sensible to Give Half a Billion for Subsidies?

This is 20% more than last year and the most since 2012, when EUR 502m was distributed as the country was still amid a severe crisis.

It does makes sense to inject fresh money into the economy during recession, when subsidies help revive companies.

But many things have changed since 2012 in Slovenia and abroad, economies are growing, the Slovenian even faster than the European average.

Finance says subsidies bring up many questions, such as their effects and the jobs they create, or about how many companies depend on them to survive.

It says that investors who invest in private companies get a stake in exchange and know what they want to achieve with the investment, but what about the state?

To give an answer, the paper quotes a statement by one of PM-designate Marjan Šarec's key people, Vojmir Urlep, a former senior executive of pharmaceutical company Lek.

He told Finance a few years ago when he was still far from politics that subsidies were welcome to encourage specific fields, such as development, or very demanding and more risky projects which private capital would not dare to fund.

However, they cannot be a means to get out of the crisis, and they should especially not be intended to keep zombie companies alive, according to Urlep.

Urlep, who is slated to coordinate key ministries as Šarec's aide, also said that subsidies were no guarantee of competitiveness, which had to do with an encouraging environment that stimulated companies to develop new products with value added.


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