The Slovenia Times

Referendums Can Put Slovenia Under External Administration


Šušteršič told the press in Brussels that if referendum rules are not tightened, Slovenia would need to ask for a bailout that would put it under external administration, which would surely mean a series of painful measures as well as changes to the referendum legislation.

He said that representatives from the eurozone, the European Commission as well as the European Central Bank had pointed during today's breakfast of EU finance ministers to the problem of "political blockade" or "political obstruction" with referendums in Slovenia.

"The referendum on the bad bank act was highlighted several times as possibly the key political problem in Slovenia in this moment."

He called on political parties in Slovenia to find enough wisdom and adopt the changes to referendum legislation recently proposed by an expert commission in parliament.

"This would be the most important thing we could do in this moment to increase credibility abroad," the minister said, while also singling out the pension reform - adopted today - as the first test.

In case it transpires in the coming months that Slovenia is not able to solve its problems, the question will not only be whether it needs funding for European bailout mechanisms, but also whether it should be "put under a kind of coercive administration and asked to start with much more painful things than seen this year".

"Definitely changes to the referendum legislation would be expected and only then we would maybe get the loans to finance not only the banking sector but current public expenses in general. And we know what this means," the minister said, warning against the Troika, which is demanding austerity in Greece, Portugal and Ireland.

Šušteršič did not rule out the possibility of Slovenia having to ask for aid even if the pension reform, the austerity budget and the bad bank and sovereign holding acts are implemented, but he said that in that case the country would only face a strictly financial question as to whether to borrow the money for a EUR 1bn worth injection into the banks in the market or ask aid from the European mechanisms.

"We'd like to take care of everything else first and then separately tackle the banking sector... I would like this to be purely a financial matter in the end. Until it's a question of confidence in the country, we'll do everything in our power so we don't need aid but we'll prove that we are solving our problems ourselves," the minister said.

Slovenia has financing secured by the middle of next year, but the minister would not cite any concrete dates so as not to fuel speculation.

The estimate is that Slovenia needs up to one billion euros to bail out its banks and another three billion to finance current spending; a billion is planned in the budget deficit for next year, while two billions are needed for repayment of debts.

The minister meanwhile said that the government had backup plans for the case that the bad bank act and the state holding act are defeated in referendums and that other ways would be found to privatise companies such as Telekom Slovenije and energy trader Petrol, as well as insurance companies and banks.

While the government has paved the way for the recapitalisation of state-owned banks without compulsory takeover bids, it will also demand - in case the bad bank act is defeated - that banks start selling assets aggressively and search for buyers ready to buy them along with their bad claims - at any price, fast and entirely.

"There is no more room for any kind of debates about national interest," Šušteršič said.


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