Slovenia can avoid bailout, PM-designate says

Thu Feb 28, 2013 5:40am EST
 
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By Zoran Radosavljevic

LJUBLJANA (Reuters) - Slovenia's new prime minister-designate pledged on Thursday to heal its banks and avert an international bailout, taking the reins of the once-thriving euro zone member at the height of its worst economic crisis in 22 years of independence.

Legislators dismissed conservative Janez Jansa's cabinet on Wednesday night after just a year in office and handed the baton to Alenka Bratusek, a center-left finance expert tasked with preventing the fourth financial rescue of a member of the currency bloc since 2008.

"Considering that Slovenia is still under the EU average in terms of public debt, I still believe that with the steps we will take Slovenia will solve the position of its public finances on its own," Bratusek, leader of Positive Slovenia, told Reuters in an interview on Thursday.

Slovenia's public debt is well below the EU-tolerated ceiling of 60 percent of GDP, at 46.9 percent at the end of 2011, but its banks are heaving under 7 billion euros ($9.18 billion) of bad loans, equivalent to 20 percent of GDP.

A member of the EU since 2004, the country of 2 million people has gone from economic trailblazer for the rest of eastern Europe when it joined the euro zone in 2007 to the latest ailing member of the 17-nation currency bloc.

With Slovenia's biggest export markets ravaged by a downturn in Europe, data released on Thursday showed a worse-than-feared contraction of the 35-billion-euro economy in 2012 of 2.3 percent, including a 3 percent year-on-year fall for the fourth quarter. Unemployment is at a 14-year high of over 12 percent.

Spending cuts and allegations of government corruption have fuelled angry protests of a kind not seen since Slovenia split from federal Yugoslavia in 1991 and escaped the bloodshed that would tear apart the rest of the region over the next decade.

Speculation is rife that without urgent reform Slovenia may be unable to find affordable financing and repay some 2 billion euros of outstanding debt due in mid-2013.   Continued...

 
Positive Slovenia (PS) leader Alenka Bratusek speaks during a news conference after the parliament dismissed Slovenia's Prime Minister Janez Jansa's ruling coalition in Ljubljana February 27, 2013. REUTERS/Srdjan Zivulovic