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as in a desperate need of a Keynesian boost to its economy. The construction of a modern highway network was an opportunity for Slovenia to spend its way out of a looming recession.

Crunch time

Today the journey from the rolling vineyards of Štajerska to the shores of Adriatic takes less than three hours. But at what cost to the taxpayer? Since 1994, when the flagship highway development programme started, DARS, the government-owned highway operator, accumulated EUR 3.4 bn in debt. Strictly speaking, the loans DARS takes out and the bonds it issues to finance the construction and maintenance of the highways do not add to Slovenia's public debt. However, the government acts as the guarantor of the company's debt. Thus, DARS can access credit more cheaply, but it is the taxpayer that is left holding the bag if the company ever becomes insolvent.

Judging by the words of Žan Jan Oplotnik, vice-president of the highway operator's board, this moment may be perilously close. As soon as next year, Oplotnik said recently, DARS could be unable to service its debt. As the operator's main source of revenues are the tolls it collects, it is understandable that the government is in a hurry to introduce a new toll system that should bring in more than the EUR 200 m the current one brings in now. Because the plans to set up an electronic free flow toll system are stalled due to unresolved technical, and some say political, issues, the transport minister Radovan Žerjav thinks that the so-called vignettes are, for the time being, the best way to address the problem of highway financing.

Sticky questions

A vignette is small, coloured sticker affixed to a motor vehicle as an indication that a road toll has been paid. It dispenses with the need for toll booths, allowing for the smooth flow of traffic. Vignettes, therefore, seem like a good idea, especially before the autumn general elections. However, observers point out that even with a one year-vignette costing EUR 140 and under fairly optimistic assumptions about the number of them sold DARS would probably still not be able to pay the interest on its loans and bonds.

Doubts about the equity of the scheme have also been voiced. The current system of toll booths and electronic tolling for cars means that the drivers pay as they drive. With vignettes, however, those who use highways only sporadically will still be forced to buy a one-year vignette, thereby subsidizing those who use the highways every day. Moreover, according to the government's plan, the vignettes will be introduced only for passenger cars and not for trucks which are a much heavier burden on the roads as well as on the environment. Truck drivers will therefore continue to pay the toll at the toll booths.

This curious arrangement only makes sense if one looks at it from the vantage point of the EU regulations. These do not allow any discrimination between domestic and foreign drivers meaning that the latter must be able to buy vignettes valid for less than one year, e.g. three months or a week. However, with the price of vignettes capped for trucks in transit, the highway operator would face a loss of revenue, if vignettes were introduced for all types of vehicles.

Get your motor runnin'

Although the government will present a more detailed proposal on vignettes later this month, it is already clear that it has not thought it through properly. Then there is a question of why has the government decided to go forward with such a scheme right before the elections. Printing the vignettes promises to be a profitable business, at least until the free flow toll system is introduced in a year or two. Or so the government promises. In Austria, it seems that vignettes are there to stay - more than ten years after they were "temporarily" introduced.

According to unconfirmed information, the government plans to set the price of a yearly vignette in the range between 50 and 60 euros and that of a half-yearly vignette in the range between 30 and 40 euros. Different calculations show that with these prices DARS would be able to service its debt until 2009. In 2010, a sizeable proportion of the debt would have to be paid from the government's budget.