LMŠ proposes EUR 1.8bn consumption boost
"The future will not be all that beautiful, especially if we again go about things the wrong way," former PM Marjan Šarec told press, arguing the largest opposition party did not want to only criticise but actively cooperate in efforts to deal with the crisis caused by Covid-19.
Šarec, accompanied by economist Jože P. Damijan, tore apart the government's first two stimulus packages, saying they had failed to come to life in practice.
"If we drift into the spiral of saving again and fail to encourage consumption, we'll have learned nothing from the crisis 10 years ago," Šarec said as the government is drawing up another stimulus package, meant to focus on support for part-time work and tourism.
Damijan, a professor at the Ljubljana Faculty of Economics, said that the government's first package had actually only been worth EUR 1.7 billion and not EUR 3 billion and that only about a fifth of the measures had been implemented by mid-May.
Underlining Šarec's claim that banks were still not lending and cooperating, he said that although over 22,000 applications for credit payment deferrals had been filed, banks only deferred EUR 267 million worth of payments or 1.3% of the total value of loans issued to the non-banking sector in January. The state guarantees scheme has also not taken off yet, Damijan added.
The key problem however is that the measures failed to address the demand shock that Slovenia is facing, with Damijan saying only EUR 337 million from the government's stimulus went for this purpose, compared to EUR 1.78 billion being proposed by the LMŠ.
Direct demand-side measures include a tourism voucher worth EUR 400 for everybody and the temporary introduction of universal monthly basic income of EUR 100, while Damijan also highlighted subsidies for household investment into energy efficiency and for a transition to renewables.
The party is also proposing a stepping up of investment in transport and other public infrastructure, including an energy overhaul. It wants to encourage technological development, restructure the economy, and boost the supply of locally produced food to public institutions.
The list of measures also includes and upgrade of the public health system, a proper long-term case system, an active housing policy involving a transformation of the bad bank into a housing fund, the scrapping of separate healthcare insurance and a demographic fund to support the pension system.
Damijan said that expenditure targeted this way would mean the country's GDP contracting by 3% instead of 7.5%, while the public debt rise would also be smaller. Damijan argued the state had enough liquidity for the measures, while ECB money was also available.