The recommendation was issued Monday as part of the IMF's annual review of Slovenia's economy and mirrors the statements of the IMF review mission at the end of March that concluded Slovenia was on the right track but needed to continue structural reforms.
The IMF's board of executive directors concurred with the mission's recommendation and welcomed Slovenia's steady economic recovery, which it said was "fostered by decisive restructuring of ailing banks and prudent macroeconomic policies after the 2013 crisis".
At the same time, it emphasized the need to address fiscal and financial vulnerabilities by rebuilding fiscal buffers and completing the repair of bank and corporate balance sheets.
Stepping up structural reforms, particularly to improve the functioning of the labour market and accelerate privatization, would enhance efficiency and support medium-term growth.
Slovenia's intention to privatise the state-owned banks NLB and Abanka was welcomed, as high-quality strategic investors would facilitate business model adjustments to reduce pressures on profitability in the current low interest rate environment.
But the IMF cautions that the intention to maintain a controlling stake in NLB, the largest bank, could reduce investor interest.
On a related note, Slovenia is urged to expand the range of state-owned companies eligible for privatisation, which would "improve governance and strengthen enterprise viability, raise productivity, and reduce public debt".
The IMF also calls for a continuation of labour market reforms "to further increase the flexibility of employment contracts to boost long-term employment prospects for the young".