The Slovenia Times

Fmr FinMin Mramor: New Cuts in Public Sector Needed


The finance minister in the 2002-2004 cabinet of Anton Rop told Saturday's edition of the paper that a 5% cut in public sector pay should suffice to retain jobs in the public sector and push ahead with efforts to consolidate the budget.

"It would make sense for an agreement to be reached, whereby the trade unions should be provided assurances that this will be the last pay cut," the dean of the Ljubljana Faculty of Economics said.

He argues that people should understand that a cut is needed, adding that it should be linear. "This would also be a signal to foreign creditors that Slovenia is serious about stabilising its budget."

Moreover, Mramor thinks that the government needs to make it clear that it intends to tackle the budget deficit by boosting growth. The quicker we will see growth, the quicker Slovenia will reduce its debt in relative terms.

"Personally, I would have nothing against populist ex-Yugoslavia measures to get the people involved," he said, giving working several Saturdays voluntarily without pay as an example.

The former finance ministers also told Večer that the government should send a supplementary budget to parliament to align the budget with its priorities.

While the government has discretion to move around up to 20% of spending without a supplementary budget, he said resorting to such a solution would not be politically unhygienic.

In addition to consolidating public finances, the government's main priority will be busting the ongoing credit crunch. While not a fan of the bad bank, Mramor thinks it may make sense keeping it now in a bid to restructure ailing banks.

But he tweak the strategy of the bad bank to make it only responsible for assets that are the result of one-off crisis effects and do not fall under the scope of services usually performed by banks.

He highlighted stalled construction projects as an example of this. "All other bad loans should remain with the banks. They need to deal with this alone," Mramor told Večer.

This needs to be coupled with recapitalisation of cash-strapped banks and the establishment of a loan guarantee scheme for healthy companies to kick-start the economy, Mramor added.


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