The Slovenia Times

FinMin Announcing New Reforms, Cuts in Public Spending


Addressing a business breakfast hosted by AmCham Slovenija on Wednesday, Čufer said that Slovenian companies were mostly unable to enjoy the benefits of expansive monetary policy in the eurozone as yet.

The companies are still overindebted and bank balance sheets remain weak even after first bad loans have been transferred onto the Bank Asset Management Company (BAMC), the factors that are preserving the credit crunch.

If Slovenia manages to restructure companies and open up financing channels, growth can soon be renewed, which is why the minister highlighted company restructuring as a priority, but which he says must be done in a comprehensive fashion and only partly through loan modifications and moratoriums.

A key tool for achieving that is according to Čufer BAMC, which he believes has the financial and staffing capacity to restructure companies.

He believes banks' key job at the moment is helping with company delaveraging, rather than new lending. Unless company restructuring succeeds, the cleanup at banks will not either.

Delaveraging will in his opinion gradually help alleviate the credit crunch and reduce interest rates on loans, considering that the banking system has enough liquidity.

The other key task is stabilising public finances and reversing the negative trend in the public debt, which he says has surged in recent years with virtually no effect on growth.

He would like Slovenia to reduce its debt back to 60% of GDP sooner than in 20 years time, which means faster than demanded by the EU, even though the debt is to increase to around 80% of GDP from 73% currently.

But to achieve that goal, serious structural measures would be needed, with Čufer listing pension reform, adjustments of the cost and employment in the public sector, a municipalities reform, a review of subsidies and social transfers and an overhaul of how EU funding is used.

However, Čufer also says that he is aware measures in the public sector should not come too fast, until borrowing channels are renewed and the economy takes a breath.

The third key economic policy task is in Čufer's view improving the corporate management in state-owned companies through the adoption of the Sovereign Holding act and the strategy to manage state assets, and privatising certain state assets.

State asset management must be made uniform and decision-making centralised, Čufer said, criticising coalition partners for wanting to keep their own "little hedges". If politics fails on this project, the international public will not take Slovenia seriously.

In that light the minister believes the politics must not call the privatisation of any of the 15 companies on the list endorsed by parliament into question. There will be no second privatisation list, as the same role will be played by the asset management strategy.

The ministry has drawn up the first draft of the strategy and public consultation period is likely to follow in March, after the holding act is passed in parliament.

Čufer also underscored the need for foreign direct investment and announced more thorough changes to reduce the tax levy on labour and reduce the burden on property would follow after a few years' time.


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