The European Commission has warned Slovenia is running ever greater risk of delays in implementing its recovery and resilience plan. It urged the country to adopt decisions on announced reforms without delay.

"The implementation of Slovenia's recovery and resilience plan is underway, however with increasing risk of delays," the Commission wrote in its country report released on 24 May as part of the spring European Semester process.

"To advance faster with the implementation of its recovery and resilience plan in the current challenging environment, it is necessary to strengthen Slovenia's governance structure and administrative capacity, as well as to ensure that the necessary decisions are taken without delays," the report adds.

Call for structural reforms

The Commission highlighted the need for structural reforms in the areas of healthcare, long-term care, pension policy, and taxation.

The Robert Golob government has set out a number of reforms in those areas but concrete steps are yet to be taken as talks with trade unions and other stakeholders have not made much progress.

The European Commission urged Slovenia to submit an updated recovery plan as soon as possible to avoid further implementation delays. Among other things, the plan should include a realistic timeline regarding future payment requests.

Last week, Finance Minister Klemen Boštjančič said that discussions with the Commission regarding the plan's update were still ongoing. He was confident that an agreement will be reached in the coming weeks, but said the Commission was "relatively rigid" in this regard.

Discussing Slovenia's delays in the phasing of funds from the Recovery and Resilience Facility, he reiterated that the government's hands were more or less tied. Therefore, the focus is on implementing measures, milestones, and reforms.

According to calculations published by the European Commission last June, Slovenia will be entitled to €1.49 billion in grants from the recovery fund by the end of 2026, in addition to €705 million in loans. Slovenia has received EUR 281 million so far.

More effort needed in green and digital transition

The Commission pointed out that the implementation of the recovery plan is crucial for Slovenia's green and digital transition.

Slovenia is advised to continue with efforts to diversify gas imports and reduce dependence on fossil fuels by increasing the use of renewable energy. It is also urged to simplify and accelerate permitting procedures in this field, and to strengthen the power grid.

Brussels called for more measures in energy efficiency, particularly in the construction sector, and the promotion of electrification in the transportation sector.

Public spending and debt should be reduced

When it comes to fiscal policy recommendations, Slovenia was told, like other member states, to gradually phase out fiscal measures aimed at supporting households and businesses in dealing with high energy costs. The savings should be used to reduce public debt.

The Commission noted that, even without expenses related to high energy costs and other consequences of the war in Ukraine, public spending in Slovenia is increasing. Slovenia was urged to limit the nominal growth of net public expenditure in 2024 to a maximum of 5.5%.

In budget planning Slovenia was called to take into account the Commission's announcement that it will trigger excessive deficit procedures next spring if needed. The general opt-out clause, which entered into force at the start of the Covid-19 pandemic, will be lifted next year.

In the Stability Programme, which served as the basis for the report, the government announced plans to reduce the public deficit below the 3% of GDP threshold in 2024 and further decrease it in the following years.