While Slovenia had such a scheme in the early stages of the economic crisis, it was not effective because the banks were not made to use up the guarantee quota assigned to them, Dušan Mramor told the daily Maribor-daily Večer.

"Banks have a lot of capital now, but lack motivation to lend to businesses," he said, assessing that bankers were scared to give out loans. "The banks are waiting, the bankers are afraid of signing loan deals because of the witch hunt against them."

Mramor, a former finance minister, believes that banks must therefore be encouraged to give out loans with the help of state guarantees. "This way we could reduce the psychosis that reigns at the moment."

While admitting that such a scheme would need European Commission approval, he highlighted that Germany operated a scheme of the kind, which means that it could be done.

Moreover, Mramor believes that better insolvency legislation and a friendlier business environment are need for the revival of the business sector in Slovenia.

"We have been saying for quite a long time that we are being dragged down by red tape," he told Saturday's edition of Večer, adding that the utility sector was also not helping.

Mramor also assessed that Slovenia had hit a ceiling for tax rates.

"Following an improvement in the fiscal situation, the question of lowering taxes which would help growth will have to be examined."

However, he said that that a balance which would contribute to reducing debt would have to be sought. "If we manage to restart the economy, the pressure on reducing public spending will drop," he added.