The Slovenia Times

Slovenia to Exceed 3% Deficit This Year Due to Bad Bank

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Some issues with regard to Slovenia will have to be resolved, in particular the attitude between the deficit and the bank bailout, he said, adding that "we need a debate on how we will treat that in terms of the achievement of fiscal targets".

Asked whether Slovenia plans that the deadline for deficit reduction will be extended, which is what the EU has already done for Spain, Portugal and Greece, Šušteršič expressed the hope that Brussels will "not treat the one-off deficit increase as a breach of commitments".

He said the additional deficit should be "considered as something which is urgent in order to resolve the problem that the European Commission is always warning Slovenia about: the banking sector, financing of companies and the credit crunch," he said.

Šušteršič also hopes the deficit assessment will take into account the poor economic circumstances which limit revenue, and the substance of the government's actions, most notably the adoption of the pension reform.

Nevertheless, Šušteršič still thinks that the baseline deficit will remain below 3% of GDP this year. "If there is a tenth of a point difference, in particular due to revenue, there should be no drama about it," he said.

The act establishing the bad bank, which took effect this year, projects Slovenia issuing guarantees worth up to EUR 4bn to mop up banks' non-performing loans.
 

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