Minister of Education, Culture, Science and Sport Žiga Turk told the press after the cabinet session that the project of organising the games "was poorly managed" and that the government was not willing to "fund ill-managed projects" in the current economy.

The announcement comes after the organisers, the Slovenian University Sports Association (SUSA) and the city of Maribor, stepped up pressure on the government to provide the missing millions to the Universiade budget in recent days.

The budget for the games has been set at EUR 33m, of which the state pledged to provide 30%. However, the organisers admitted recently that they would not be able to fund their share and that the construction of infrastructure was dangerously in arrears.

According to Turk, the government decided today not to prolong the false hope for the organisers of a state bailout.

The announcement was met with disappointment from the organising committee. Its head Tone Vogrinec, the long-time head of the Slovenian Ski Association, said that the decision meant that the games would not be staged in Slovenia.

Vogrinec announced that the organising committee would resign in the coming days and that the decision on the cancellation would be left up to SUSA and the Maribor municipality, who bid on the games in the first place.

"Once the Maribor City Council decided in late January to shift the bulk of the financial burden on the state it was more or less clear that we were up against an almost insurmountable obstacle," he added.

Maribor Mayor Franc Kangler expressed surprise at the decision in his first reaction, saying he had been hopeful after talks with Turk on Monday. "Somebody changed the tune overnight and let me know via the media that the money is not there any more."

Turk explained today that the state had already invested EUR 6.5m into the project and assessed that it would be irresponsible if it invested more by assuming the municipality's chunk given the current economic situation and need for austerity.

Turk said that the organisers could still push ahead with the games if they found financiers, such as by securing sponsors and selling TV rights. But Vogrinec suggested that the money could not be found this way.

Turk also announced that if the project was scrapped, the government would demand that the organisers repay the EUR 3.5m in state funds provided for the registration fee.

Asked about the possibility that the International University Sports Federation (FISU) seeks damages at the Court of Arbitration for Sport in the event that the Universiade is cancelled, Turk stressed that the organisers will carry all liability in such an event.

Vogrinec informed FISU of the decision today. "The FISU Executive Committee is due to hold a session at the end of the week in Lausanne and the delegates are bound to be shocked when they are faced with the question of what to do."

FISU said it would wait until it receives formal notification, but spokesman Dejan Susović said it was bound to decide on Saturday to refer the matter to the Court of Arbitration for Sport.

Vogrinec also explained that SUSA will have to take the official decision on cancelling the hosting of the games. SUSA president Otmar Kugovnik would not comment on the government's decision today.

Turk added that today's decision was also a "signal" to the organisers of the European Basketball Championship, which is to be held in Slovenia next year.

"The government budget is not a bottomless sack," warned the minister, adding that times were tough and rational spending was in order.

However, he stressed that there were important differences between the Universiade project and the basketball championships.

Asked what today's decision means for Slovenia's reputation in the world, Turk said it was positive if Slovenia shows that in can act rationally, cut costs and not embark on projects that are questionable and poorly-managed.