The Challenge Is to Continue with Reform, IMF and Slovenian Officials Agree


Sharing this view, a Slovenian official said Slovenia can be happy with the work done, but still has a lot to do.

Gerson, deputy director from the European Department, said that after Slovenia had recorded the second biggest drop in GDP in the eurozone at the hight of the crisis, the country took a number of measures over the past year so that the situation could improve.

Listing the achievements of the Slovenian government, Gerson mentioned the bank stress tests and bank recapitalisation, the drafting of a list of companies to be privatised and a tighter fiscal policy.

"Growth started to pick up, financing conditions are better and the sentiment in Slovenia is generally better, but the government should continue with the reforms it has started," he said at a news conference at the spring meetings of the IMF and World Bank in Washington on Friday.

Gerson believes that to preserve the reform drive, Slovenia should speed up the transfer of bad loans to the bad bank and start selling the companies it has short-listed for sale last year.

"Non-performing loans remain a problem. Many of the large banks still have a high level of bad loans…and the transfer of bad loans to the bad bank is not as quick as one would have hoped. This process should be speeded up."

Gerson believes privatisation is important because it will increase the financing for the budget and the efficiency of the economy, which will encourage growth. He also still misses detailed measures with which the government will achieve the fiscal goals set for this year.

Largely echoing the IMF's view, State Secretary at the Slovenian Finance Ministry Mitja Mavko believes Slovenia has left the spring meetings in Washington happy as the IMF has improved its economic outlook for this year, yet warnings remain: "There is definitively a lot of work ahead."

Mavko told the STA on Sunday that the IMF and WB spring meetings had confirmed that globally, the situation was improving and risks for deterioration were slowly disappearing. "This has partly influenced Slovenia, mostly from the aspect of the external environment."

He agrees that the privatisation of the 15 companies from the government list, of which two have already been sold, should be carried out professionally and without delay. "We expect the three biggest companies from the list – Telekom Slovenije, airport operator Aerodrom Ljubljana and No. 2 bank NKBM – to be largely sold this year."

He also considers it vital for parliament to pass the law on the Slovenia Sovereign Holding, the emerging custodian of state-owned assets, on the basis of which the government intends to send to parliament a strategy on the management of strategic state assets before summer.

The strategy will set down which companies are of strategic importance for Slovenia. These companies will need to get subjected to "a robust corporate management system", while the non-strategic companies could be sold at the right moment, according to Mavko.

He believes that the IMF and the World Bank have acknowledged Slovenia's efforts to sort things out. In its April economic outlook report, the IMF has projected 0.3% growth for 2014 and 0.9% growth for 2015, after forecasting as much as 1.1% contraction for this year even in its January forecast.