The Slovenia Times

FinMin: National Interest Slovenia's Biggest Stumbling Block


National interest, espoused by "political parties, so-called serious economists, the media and trade unions", is currently evident in demands to retain the shares of state or para-state funds in domestic ownership.

"As long as people try to win elections in order to preserve their capital interests...we cannot have a modern market economy open to the world, or foreign investments that are crucial for the sustainable financing of development," he said.

According to Šušteršič, the laws establishing a bad bank and a Slovenia Sovereign Holding (SSH) are "the basis to break the link between the management of state capital assets and politics, allowing a more transparent and faster withdrawal of the state."

Šušteršič has been advocating an all-out sale of state-owned banks, but he lacks support for that even in the ranks of the coalition. "It seems the situation in the coalition will force us to retain a controlling stake, which will probably limit the circle of investors."

"But the positive side is that after the Constitutional Court decision rejecting the referendum on the bad bank, we now have the opportunity to quickly clean up the balance sheets of banks and push through with privatisation until the end of the year."

Just last week Belgian KBC sold its 22% stake in NLB bank for one euro per share, whereas in June it was still in talks on participating in NLB recapitalisation at the price of 41 euros per share.

Šušteršič says that the price "does not reflect the real value, it is the result of the negotiating process and KBC's time constraints". But the favourable price "allows the state to subsequently sell its stake with a positive margin".

Asked about cooperation with the central bank, Banka Slovenije, Šušteršič says it shares the blame for the credit bubble that was being inflated prior to 2008.

"The government should have generated a budget surplus in good times...but the fact is that the private sector had increased borrowing prior to 2008...Banka Slovenije had the instruments with which it could have limited the credit bubble, but it did not use them."

Commenting on criticism of the government's austerity measures, Šušteršič said "the dilemma between austerity and stimulus is artificial." "As a member of the eurozone, Slovenia has no choice but to reduce the deficit until 2015."

Were it not for the spending cuts and the law establishing the bad bank, Slovenia would have been unable to issue the dollar bond and would have had to ask for aid. However, it would not have gotten aid had it not reduced the deficit and taken other measures.

"When I went to the US to showcase the bond, there was already a team ready in Brussels to write a programme for Slovenia in the event we did not succeed in selling the bond. It makes no sense to dwell on the alternative between austerity and stimulus."


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