Slovenia unveils reforms as it seeks to avoid EU bailout

Slovenian Prime Minister Alenka Bratusek Slovenia's new Prime Minister, Alenka Bratusek, is hoping to avoid an EU bailout

Related Stories

The government of Slovenia has announced a package of measures it hopes will help avoid an EU bailout.

The measures include a tax increase, a major restructuring of Slovenia's ailing banking sector, and a programme of mass privatisation.

Slovenia's mostly state-owned banking sector is suffering from mounting bad debts and the government has struggled to borrow money.

The European Commission will now consider the plan.

It is expected to deliver its verdict by the end of the month.

Slovenia has been in recession since 2011, and analysts have cited it as the most likely country to seek help from the EU following the bailout of Cyprus earlier this year.

European officials have expressed concern over the stability of the country's banking sector, which is struggling under billions of euros of bad debts.

Meanwhile the government's ability to borrow money was dealt a blow last week when Moody's, a ratings agency, cut Slovenia's bonds to "junk" status.

Despite this, the government was able to raise 3.5bn euros (£3bn; $4.6bn) from international bond markets last week, which has bought it some time.

State sell-off

The package of measures was announced by Slovenia's recently installed Prime Minister, Alenka Bratusek, and her Finance Minister, Uros Cufer.

The measures include a 2% increase in VAT to shore up government finances.

A "bad bank" will also be created to allow the banking sector to offload its bad debts.

Meanwhile a total of 15 publicly-owned businesses will be sold off, including the second biggest bank, Nova KBM, the flag-carrying airline, Adria Airways, and Telekom Slovenia.

The biggest bank, NLB, has already announced plans to downsize.

Announcing the measures, Ms Bratusek said she expected the budget deficit to rise to 7.8% of GDP this year, but was forecast to fall to 3.3% next year.

She also said the VAT increase was decided on as the tax rise with the least impact on economic growth.

Slovenia is seeking to avoid becoming the latest in a string of EU countries to seek a bailout from European authorities.

Earlier this year Cyprus agreed a 10bn euro bailout with the EU and the International Monetary Fund (IMF) after its banking sector faced near collapse.

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

BBC Business Live

  1.  
    BANKER BONUSES 08:24: Radio 5 live

    Shadow chancellor, Ed Balls, says the previous Labour government should have been tougher on bankers' bonuses. "Most of the criticism of the Labour government from the banking sector and the Conservative party was that we were much too tough on the banks. Now in retrospect, those criticisms were wrong because we should have been tougher," he tells 5 live. He points out that no one at the time was pressing them to crack down further.

     
  2.  
    AMAZON INDIA Via Email Simon Atkinson Editor, India Business Report

    The editor of India Business Report in Mumbai emails: "Online shopping is still in its infancy in India but growing fast. The market's led by local players but Amazon is upping its presence - and today said it's investing $2bn in its India operations. But restrictions on e-commerce here mean it can't hold its own stock like it does in the UK and US. - for now at least it is only a 'platform' for others to sell through."

     
  3.  
    BAT PROFITS 08:07:
    A pile of cigarettes

    Tobacco giant British American Tobacco reports a fall in profits to £2.6bn in the six months to 301 June from £2.9bn a year earlier. It blames the strength of the pound but revenue is also lower, down 10% to £6.8bn in the period. Volume - which measures the number of actual cigarettes sold - fell 0.4%.

     
  4.  
    BARCLAYS PROFITS 07:55: BBC Radio 4

    Back to Barclays profits for a moment as Antony Jenkins also tells Today that staff at his bank are changing their ways: "Staff at Barclays are fully behind what we're trying to do with our culture change programme." He says staff know this is not only "the right thing to do" but also the way to better profits.

     
  5.  
    ELECTRICITY CUT 07:43:
    Pylons

    Regulator Ofgem has announced a cut in distribution charges that will mean a £12 a year average reduction in electricity bills. And, incidentally, offers us the opportunity to publish a nice picture of pylons.

     
  6.  
    BANKER BONUSES 07:32: BBC Radio 4

    Barclays boss Antony Jenkins tells the Today programme his bank can already take action against mis-behaving bankers: "If someone has done something wrong and performed badly we have the right too claw the bonus back today."

     
  7.  
    HEADLINES
  8.  
    BARCLAYS PROFITS 07:27: BBC Radio 4

    Antony Jenkins, chief executive of Barclays is on the Today programme: "These are an encouraging set of results... Our capital position has never been stronger."

     
  9.  
    ITV PROFITS 07:27:

    ITV boss Adam Crozier says the broadcaster's "share of viewing" improved during its second quarter helped by the World Cup. He says he is confident of ITV's Autumn schedule of both new and returning drama and entertainment will help keep audience figures high. Meanwhile, ITV has benefitted from the economic recovery - specifically an improved advertising market.

     
  10.  
    BARCLAYS PROFITS 07:19:

    Investment bank income at Barclays fell 18%, reflecting a fall in customers. This follows allegations about malpractice in "dark pool" trading. Essentially, these are private stock markets and are the latest area of banking to be probed by regulators.

     
  11.  
    ITV PROFITS 07:19:

    ITV says total external revenues rose 7% to £1.2bn in the six months to 30 June, while revenue from its online, pay and interactive TV unit was up 20% to £67m.

     
  12.  
    BARCLAYS PROFITS 07:13:
    Barclays logo

    More on Barclays: Statutory pre-tax profit was £2.5bn (2013: £1.7bn), reflecting the fact bank had to set aside another £900m for PPI redress Read the full release here.

     
  13.  
    ITV PROFITS 07:10:
    ITV logo

    A strong set of numbers from broadcaster ITV this morning. Annual pre-tax profits are up 40% to £250m in the six months to 30 June compared with £179m for the same period last year.

     
  14.  
    BARCLAYS PROFITS 07:03:

    Barclays profit before tax is down 10% at £3.84bn.

     
  15.  
    BRITISH GAS BOSS 07:03:
    Iain Conn

    In all the excitement over bankers' bonuses we nearly forgot this. British Gas owner Centrica has succeeded in its pursuit of Iain Conn, confirming he will become its new chief executive from January 2015, succeeding Sam Laidlaw who is retiring. Mr Conn joins from BP where he has been chief executive, of BP's refining and marketing division,for the past seven years.

     
  16.  
    BARCLAYS PROFITS 06:52: BBC Radio 4
    Pedestrians pass a branch of Barclays Bank in the rain in London

    Michael Hewson, chief market analyst at CMC Markets is talking to the Today programme about Barclays interim results - coming up imminently. He says the investment banking arm of Barclays is "not listening" to new boss Antony Jenkins who has been trying to clean up the bank's reputation and practices.

     
  17.  
    DRIVERLESS CARS 06:44:
    Nissan car

    It's going to be a bank-heavy day today let's face it, but just to provide a break from all that, the government will be announcing changes in the law that will pave the way for driverless cars to take to Britain's roads next year. The government wants the UK to become a leader in developing the technology. In December, the Treasury said it would create a £10m prize to fund a town or city to become a testing ground for the cars.

     
  18.  
    MUSLIM ACCOUNTS 06:36:

    HSBC has told three Muslim organisations it will close their bank accounts. These are the Finsbury Park Mosque in North London, a think-tank on Islamic issues called the Cordoba Foundation based in West London, and a Muslim charity in Bolton called the Ummah Welfare Trust, which works in 20 countries giving aid. HSBC says the decisions were "absolutely not based on race and religion".

     
  19.  
    BANKER BONUSES 06:30: Radio 5 live

    More from Ms Mangwana on Wake Up to Money. She says the proposed seven year rule may be more about changing culture in banking and the way in which bankers view their bonuses. But she also points out bonuses are generally paid in tranches that vest over a number of years, already (commonly anything between three and five years). "That's the current formula and there are [already] mechanisms to reclaim those bonuses," she says.

     
  20.  
    TWITTER SHARES 06:21:
    Twitter

    In case this happened too late for you, Twitter shares rocketed 30% on stronger-than-expected financial results. Revenue more than doubled in the second quarter. Shares rose to $50 in after hours trading. Still down on its high of $74.73, hit in December.

     
  21.  
    BANKER BONUSES 06:10: Radio 5 live

    Samantha Mangwana, employment lawyer at Slater Gordon told Wake Up to Money seven years is a long time to hold a bonus and regulators may well find it difficult to reclaim money. It is highly likely bankers will have gone and spent the money already, she says, and have nothing that the Bank of England can reclaim.

     
  22.  
    BANKER BONUSES 06:07: BBC World News
    Tom Stephenson

    Those new rules on bankers' bonuses are expected to recommend a claw-back period of seven years. Tom Stephenson from Fidelity Worldwide on BBC World News says they could have been tougher: "One of the suggestions was that bankers could be jailed for a significant fall in profits - that's quite something isn't it. Even so, being able to claw back bonuses for seven years is pretty draconian."

     
  23.  
    06:02: Matthew West Business Reporter

    Good morning folks. It's looking like a busy day today. We also have trading updates from ITV and house builder Taylor Wimpey. As always you can get in touch via email at bizlivepage@bbc.co.uk and on twitter @bbcbusiness

     
  24.  
    06:00: Rebecca Marston Business reporter, BBC News

    Welcome again to the Live page. We're going to be banking heavy. There's Barclays results - in about an hour - and later this morning the Bank of England will release new restrictions on bankers' bonuses, said to be the toughest in the world. We'll see.

     

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.