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In line with the agreement reached by parliamentary parties on Thursday evening, the details of the balancing of public finances will be set down in a separate implementing law.

The only party to stay out of the agreement was the Social Democrats (SD), which contributed the eight dissenting votes today as it does not believe that the balancing of public finances is possible by 2015. SD deputy Matjaž Han told today's session that 2018 was a more realistic year.

Despite this, Han hailed the agreement as a demonstration that Slovenian politicians can join forces, while wondering if this will be followed by a ratings upgrade for the country.

The show of unity was also highlighted by other parties, with deputy of the opposition Democrats (SDS) Romana Tomc congratulating the "prime minister for being able to take this step." Some SDS deputies meanwhile rued that such an agreement was not reached sooner.

The coalition Positive Slovenia (PS), whose decision to climb down from the demand for the rule to be implemented in 2017 allowed the agreement, indicated that it had made the decision with great difficulty.

The PS still believes that economic doctrine does not belong in the Constitution, said its deputy Maša Kociper, who added that Slovenian politicians were faced with having to introduce the fiscal rule or endanger the credibility of the country given that the two previous prime ministers had promised this.

Saying that 2017 would have been a proper compromise on the fiscal rule, Kociper added that the opposition was not willing to budge on its demand that the rule take effect in 2015.

Meanwhile, both the coalition and opposition agreed today that the enshrining of the fiscal rule in the Constitution on its own would not stabilise the economy, as this requires the restarting of economic growth.

Under the amendments to article 148 of the Constitution adopted today, budget revenues and expenditure must be balanced or in surplus over the medium term without the country taking on new debt.

The rule applies to the general government, which includes the national budget, the health and pension purses, local government budgets and direct beneficiaries of the national and local budgets for whom public finances represents more than 50% of all revenue.

Exceptions to the zero-deficit rule will only be possible in extraordinary circumstances that will be set down in the implementing law, along with the course of action that must be taken in such cases.

Among special circumstances envisaged by the EU's Fiscal Compact are unforeseeable events with a significant impact on public finances, such as natural disasters, and periods of significant economic contraction.

The implementing law will also have to be adopted by parliament with a two-thirds majority.

While the fiscal rule and the implementing law will first be applied in the drafting of the 2015 budget, budget policies until then are to be led in a way that will enable the meeting of the set goals.

In its Stability Programme sent to Brussels in early May, Slovenia committed itself to erasing the structural deficit by 2017.

Based on this pledge, the European Commission is said by unofficial sources to have extended the deadline by which Slovenia must reduce its government deficit to below 3% of GDP by two years until 2015.

The agreement among Slovenia's parties on the fiscal rule came after Prime Minister Alenka Bratušek ceded to the demands of the opposition despite arguing for months that 2015 was too early considering the present state of Slovenia's public finances, advocating 2017 instead.

In return, Bratušek's party appears to have convinced the other parties that the implementing law would be framed so as to allow gradual balancing of public finances.

In exchange for the PM backtracking on the year of implementation, the opposition agreed to vote in favour of tighter referendum rules, which were confirmed at a separate session of parliament in the afternoon.

With the two constitutional amendments in place, the government will be shielded from referendum challenges to reforms, which helped bring down the Borut Pahor government (2008-2011), as the new rules would make it impossible to request referenda on laws dealing with taxes, customs duties and other levies.

Bratušek addressed the press after today's session, reiterating that a gradual balancing of public finances was planned and that exceptions would be defined in the implementation act that would allow discrepancies with the fiscal rule.

She stressed that two-third majority would also be needed for the implementation act, that the rule adopted did not demand the budget to be balanced already in 2015 and that the 30% cut to pension, wages and social transfers she spoke about recently would not happen.

The European Commission welcomed today's constitutional changes, stressing that they were "a strong signal of Slovenia's commitment to sound public finances, which are an essential foundation for sustainable growth and job creation in the country".

A source close to the Commission moreover told the STA that the recent deal on public sector wage cuts, the fiscal rule and the tighter referendum rules were three very positive developments that would surely influence the European Commission's judgement next Wednesday of Slovenia's measures addressing macroeconomic imbalances.

While Slovenia can expect to get a two-year extension of the deadline for fixing the excessive deficit, it is too early to say whether the Commission will launch proceedings over excessive macroeconomic imbalances, the source said.

It added the Commission had doubts whether the EUR 900m envisaged for the recapitalisation of banks by the government will truly suffice, while it also has reservations with regard to whether the planned privatisation in the banking sector will be successful.