Slovenia’s request for new recovery funds likely in spring

Photo: STA

Brussels – Slovenia is expected to submit a request to get further EU recovery funds in the spring, Finance Minister Andrej Šircelj said in Brussels on Tuesday. The amount of the new funds is unclear at the moment as it depends on how many goals under Slovenia’s recovery plan are met by then.

Taking into account its progress in achieving the targets set in the recovery plan, Slovenia will submit request to the European Commission twice a year to draw additional funding.

After receiving a pre-financing payment of EUR 231 million in September, the country is expected to submit the first request for regular disbursements in the spring.

Some EU member states, including Spain, have already received the first regular disbursements. This process is determined by the country’s requests, which in turn depend on success in attaining the set goals, Šircelj said.

“This is not a competition, nor a World Cup or Olympic Games,” the minister added in a telephone conversation with Slovenian correspondents in Brussels.

It is not possible to talk about the amount of the new funds, he said, as it is not yet clear how many or which objectives will be achieved by the time the request is submitted.

Slovenia’s recovery plan is worth EUR 2.5 billion in total.

During the Slovenian EU presidency in the second half of 2021, the EU endorsed 22 national recovery plans, and so far EUR 54 billion has been disbursed. Bulgaria, Sweden, Poland and Hungary are still waiting for a decision by the Commission. Meanwhile, the Netherlands has not yet submitted its plan.

The post-pandemic economic recovery after has been marred by rising inflation, which is having a negative impact on people’s living standards. In December, annual inflation rate in the euro area reached a record high of 5%.

While the US Federal Reserve has announced a tightening of monetary policy in the face of inflation, the European Central Bank (ECB) does not intend to raise interest rates for the time being.

“Inflation and its effects are the most talked-about issue, and rising prices, especially of energy, are a cause for concern,” Šircelj said, highlighting that inflation was, above all, a monetary problem, and that it was the ECB that regulates monetary policy in Europe.

EU finance ministers have addressed the problem of inflationary pressures also from the point of view of price hikes, an issue to which politics must respond. For example, it should prevent huge increases, particularly of energy prices, by cutting taxes, a measure Slovenia intends to implement, the minister said.

He dismissed concerns about the impact of rising inflation and expected interest rate hikes on Slovenia’s debt repayment and the stability of public finances. Slovenia is in a very good position for the time being, and the Finance Ministry has planned the country’s borrowing programme very well, he added.

The minister expects the monetary authorities to pursue an interest rate policy that avoids any shocks. The Federal Reserve has announced interest rates for the year ahead so that everyone can prepare, he said, adding that the ECB forecast a reduction in inflation in 2023.

The pandemic has caused a rise in public debt and general government deficit, which needs to be taken into account when discussing efforts to revise fiscal rules, Šircelj noted. Public debt has increased by nearly 20 percentage points on average, so a new reality must be faced, he added.

A way out of the crisis must be found, such that would not put at risk the recovery or investment. Fiscal rules should be simpler and more effective, clearer and more transparent, the minister said, pointing out that the current ones were unrealistic for some countries.

It would be reasonable to scrap some current criteria and put in place some new standards, distinguishing between a number of categories of expenditure, for example expenditure inclusive of and exclusive of green investments, he said.