The rating agency Standard & Poor's (S&P) cut Slovenia's sovereign credit rating by one notch to A- from A on Tuesday, changing the outlook to stable from negative. The reason for the downgrade is the likelihood of an increase in the debt burden due to bank bailout plans coupled with weak prospects for economic growth.

"Despite the low potential for growth, the agency sees the expected stability of the rating in the future period mainly in the government's commitment to fiscal consolidation, the openness of the economy and the accessibility of European Central Bank funding," the Finance Ministry stated in a written response.

The ministry cites S&P's assessment that a continuation of reforms related to fiscal consolidation could stabilise Slovenia's public debt at 65% of GDP in the second half of the decade. It also notes that the agency does not expect Slovenia to ask for international financial aid.

"A prompt implementation of growth stimulating reforms should improve economic growth, speed up the reduction of public debt and reduce refinancing risks," the ministry maintains, adding that if Slovenia manages to reduce its debt below 60% of GDP or bring the deficit to pre-crisis levels, this could positively affect the future change in the country's credit rating.

Concern about the cut in rating was meanwhile expressed by the Chamber of Commerce and Industry (GZS), which said that S&P rightly noted growing risks as to the implementation of policies aimed at tackling pressures on the budget and the economy.

"We are facing a double crunch - that of credit and of jobs. Loans are lacking even for solid business projects, while at the same time many businessmen are not hiring due to uncertainty even when they could get orders," GZS stated.

"We believe that the S&P report clearly pinpoints the need for a more radical reform of the labour market and an effective health reform as soon as possible."

The chamber called on all political players to show responsibility and sober decisions. "While respecting the rule of law, this means urgent action to secure a stable government that would be capable of tackling public finances as soon as possible, and at the same time applying different resources to kick-start new investment and thus a new development drive."

The GZS praised the government for implementing five key tasks, the effects of which have been mainly positive: the pension reform, tax cuts, investment incentives, the successful US-dollar bond issue, a reduction in budget expenditure by around EUR 800m, and progress in the use of EU funding.

But the chamber is unhappy about the labour market reform, which has still not been implemented and which in employers' opinion does not sufficiently promote flexibility.

The GZS also complained of the prolonged credit crunch, lack of effects of the second economic stimulus package, the ongoing growth in unemployment, especially of young people, and the uncertainty produced by the government crisis.