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Slovenian report Slovenian report
by Euro Reporter
2012-10-03 10:33:27
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Slovenia debt to rise but no bailout needed

Slovenia's economy, saddled by a banking crisis, does not need a financial bailout, even though public debt levels will likely breach European Union rules in two years, Prime Minister Janez Jansa said on Friday. Jansa expects government reform programs, such as increased public-sector wage cuts, job cuts, an increase in the retirement age and consolidation of a privatization program, if executed in time, will boost economic growth and make a bailout unnecessary. "If we do what we planned, we won't need a bailout," Jansa told Reuters on the sidelines of the United Nations General Assembly meeting. Slovenia is struggling to avoid becoming the sixth euro-zone member to need some form of financial aid. Jansa said he hopes that all of the reform programs will become law within the next 45 days. He said that if there was a call for a referendum by opposition politicians, it would only serve to delay the process by two months, not stop it.

"Of course, if we run the same debt next year, the bailout is the only solution. But we are determined not to do it. This is why we had early elections and why we changed course," he said. Slovenia's public debt to gross domestic product ratio rose to 47.7 percent in the first quarter of 2012, but it could cross above the 60 percent threshold set by European Union rules in 2014, Jansa said. "2014 maybe," he said on the debt threshold, adding: "2014 is also the year when we count on all these measures to start growth will also have some impacts." The overall public debt to GDP ratio for the 17-member euro zone rose to 88.2 percent in the second quarter, up from 87.3 percent in the prior period. Jansa said Slovenia's budget deficit stood at 3.4 percent, and required smaller cuts, despite plans to place bad loans in the banking sector - equal to 17.5 percent of economic output - into a so-called "bad bank." That move would require more government spending, but Jansa said it would not just be bad loans that are transferred.

"We will also transfer the shares of the companies," he said, referring to loans, the majority of which are tied to corporate assets. "But with all of the other measures we are implementing, the value of those shares after two or three years will rise," Jansa said, referring to plans for more sales of state assets to raise revenues and reduce Ljubljana's ownership of enterprises. He rejected criticism that consolidating the five agencies in charge of privatizations into one overseen by the government was a recipe for increased political influence and selling of assets on the cheap. "We have five different agencies which are dealing with this and the transparency is very low. Now we are creating a system with 100 percent transparency," he said. Jansa reiterated plans to start the process of selling a $1.5 billion Eurobond in October with the aim of finishing the sale before the end of the year to help finance the reform programs. Slovenia postponed a similar issue in Euros in April because the yield demanded was above 5 percent.

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Police question Ljubljana mayor

Ljubljana, Slovenia’s capital, has gained a reputation for personal honesty. In a Reader’s Digest experiment in 2007 citizens in this picture postcard city returned 29 of 30 seemingly “lost” mobile phones to their owners – the highest number of 32 such tests in cities around the world. But many Slovenes despair that such praiseworthy rectitude seems less apparent at the higher levels of politics and corporations. The latest senior figure to be suspected of wrong doing is Zoran Janković , leader of the centre-left opposition Positive Slovenia party and mayor of Ljubljana. Janković was detained this week by police investigating suspect property transactions.

Released after four hours of questioning, Janković took to the airwaves on Thursday night to defend himself and denied wrong doing. The police declined to comment on the case. Slovene media have been reporting on a number of property deals involving Electa, a real estate development company, owned by Jure and Damijan Janković – the mayor’s two sons. The reports claimed Electa had unfairly benefitted from insider information regarding the city authorities’ land-zoning regulations. Zoran Janković said on television: “The tax office and their experts have been investigating a small company like Electa for 11 months, without keeping official notes. Something is not right here.”

He also said that “the same tax office conducted an inspection in the Ljubljana Municipality for the period from August to December, only to conclude there were no wrongdoings.” Zoran Janković admitted that he had been detained by police from approximately 6am to 10am on Thursday, and that the police had questioned him about the Stožice Sports stadium, a 16,000-seat complex built in 2009-2010 as Slovenia’s flagship football home. The police had “behaved correctly,” with him, and he was “totally calm”. But he questioned why there was public pressure on his sons. “Is this pressure on my two sons really necessary?”

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Minister reiterates Slovenia's commitment to KFOR

Slovenia is committed to NATO's KFOR mission, which plays an important role in the stability of Kosovo, stressed Defence Minister Aleš Hojs as he concluded on Tuesday his two-day visit to KFOR by meeting Slovenian soldiers serving in Peć and Novo Selo.


     
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