Slovenia rules out bailout

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Series Details 09.04.13
Publication Date 09/04/2013
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The OECD published its Economic Survey of Slovenia 2013 on the 9 April 2013.

It reported that Slovenia had been hit hard by a boom-bust cycle, compounded by reform backlogs and the euro area sovereign debt crisis. The reduction of public and private sector indebtedness was significantly weighing on growth amid tight financial conditions, growing unemployment and stalling export performance. Although important reforms had been adopted in 2012 and early 2013, additional and far-reaching reforms were needed as soon as possible to restore confidence and head off the risks of a prolonged downturn and constrained access to financial markets.

Slovenia was facing a severe banking crisis, driven by excessive risk taking, weak corporate governance of state-owned banks and insufficiently effective supervision tools. The creation of the Bank Asset Management Company to ring-fence impaired assets was welcome, but lack of transparency and potential political interference posed risks.

The main results of new stress tests should be disclosed, followed by the recapitalization and privatization of state-owned banks. The corporate sector had a severe debt overhang, which requires an improvement of insolvency procedures, but greater foreign direct investment would also help smooth corporate deleveraging.

Despite the warnings in the report Slovenia insisted on the 9 April 2013 that it could avoid an international bailout.

Related Links
ESO: Background information: Slovenia dismisses Cyprus comparisons
OECD: Economic Survey Slovenia 2013
EurActiv, 10.04.13: New Slovenian prime minister denies bailout speculation
EUObserver, 10.04.13: Slovenia promises to save its own banks, as doubts grow
ESO: Background Information: Speech: Statement by President Barroso following his meeting with Ms Alenka Bratušek, Prime Minister of Slovenia
Spiegel Online International, 10.04.13: Next Domino?: Slovenia Totters Toward Euro-Crisis Brink Next Domino?: Slovenia Totters Toward Euro-Crisis Brinkpe/slovenia-could-become-next-country-to-request-euro-zone-aid-a-893585.html
Večer, Financial Times, Le Temps, 10.04.13: Cyprus syndrome looms over Ljubljana (via PressEurop)

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