Floods that hit large parts of north and central Slovenia in early August are estimated to have caused damage to homes, infrastructure and business of around €5 billion, the equivalent of a third of the national budget or around 8% of GDP, show the latest government estimates.

The figure was revealed as the government presented on 24 August the second emergency bill aimed at facilitating the reconstruction effort, after the first emergency bill dealt with the immediate clean-up effort.

"The destructive power of torrential streams and landslides caused damage that preliminary estimates put at €5 billion," said Public Administration Minister Sanja Ajanović Hovnik.

The reconstruction will be spearheaded by a special facility, called the Slovenia Reconstruction Fund, which will be set up in the next two months and will pool together various types of finance, from budget allocations to EU funds and special contributions levied on business and households.

Finance Minister Klemen Boštjančič said it would be modelled on similar funds set up by other countries. The main reason why the government has opted for such a solution is compliance with EU rules on borrowing, more specifically the impact of such funds on the budget deficit.

The minister could not yet reveal the details, but unofficial information reported by several media indicates that the fund would manage around €3 billion.

One way the fund will be financed will be a special contribution from all employees, farmers, the self-employed and businesses, the amount of which has not been revealed yet.

The EU will contribute €400 million from the Solidarity Fund and Slovenia plans to leverage some of the €2.7 billion in Next Generation EU loans that it had not planned to draw. Existing cohesion funds totalling €3.3 billion can be reprogrammed to help the relief effort.

Measures to help households, business

The emergency bill adopted on 24 August brings a variety of measures to help households and business hit by flooding.

Households will receive special social assistance of up to €11,466 for a four-member household and rent subsidies, while those over 65 who lost their homes will be entitled to a free place in a care home. Electricity and gas bills will be temporarily waived.

For businesses, the aid includes furlough subsidies, faster hiring of foreigners, a loan moratorium, and certain tax waivers.

To aid in the reconstruction effort, the unemployed will be financially incentivised to join public works programmes while pensioners will be allowed to work up to 90 hours per month, up from 60.

Permitting will be simplified for reconstruction of damaged homes and certain administrative procedures relaxed to make sure new homes are built quickly.

"We will introduce a new facility that will speed up the acquisition of land in affected areas and thus facilitate the construction of new homes for the affected people," Minister of Natural Resources and Spatial Planning Uroš Brežan said.

Watercourse clean-up a major priority

In terms of reconstruction on the ground, watercourse clean-up will be the main priority since many rivers have created new riverbeds and in some places there are still massive amounts of debris.

Brežan said enough people and machines would be deployed to do the work in the watercourses, not least to make sure that the country is better prepared for new extreme weather events.

The government said the reconstruction would not be focused just on the acute damage caused by the latest floods but would be interdisciplinary to future-proof vulnerable infrastructure.

"We are focussed on smart urban reconstruction that takes into account the realities of climate change. We need modern watercourses and riverbanks, 21st century infrastructure, modernisation of these areas," Ajanović Hovnik said.