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

Business Live

  1.  
    07:55: Diageo results Radio 5 live

    "The results today show we are seeing a pick up in momentum," Diageo's John Kennedy tells Radio 5 live breakfast. "If you look at the overall picture... we've seen an emerging market slowdown... but the big developed markets... are performing well despite a muted recovery particularly in Europe." India is performing strongly, as is Mexico, he adds.

     
  2.  
    07:51: Diageo results

    Distillers Diageo say profit for the six months to the end of December dropped to £1.36bn from £1.65bn as the pound strengthened and they suffered "lower income from associates and joint ventures".

     
  3.  
    07:41: Shell earnings

    Shell's has also pulled $15bn of investment in oil exploration over the next three years. It says organic capital investment in 2015 is expected to be lower than 2014 levels. "Shell has options to further reduce spending, but we are not over-reacting to current low oil prices and keeping our best opportunities on the table," it adds.

     
  4.  
    07:24: New fund BBC Radio 4

    Nigel Wilson, chief executive of asset manager and insurer Legal & General, says the firm will put £1.5bn for a new infrastructure fund in the UK on Today. "We are very long-term investors - 20, 30, 40, 50, years," he says. Longer-term financing from fund managers like him are the future rather than shorter-term bank lending, he says. Will £1.5bn be enough? He's attracting outside investors and will borrow money to grow the fund to about £25bn.

     
  5.  
    07:15: Royal Mail chairman
    mail

    Donald Brydon will step down as chairman of Royal Mail, the company says. The company is looking for a new one. Mr Brydon will carry on until the firm's annual meeting in the summer.

     
  6.  
    07:10: Shell earnings

    Shell has reported full year earnings (on a current cost of supply basis) of $19bn compared with $16.7bn a year earlier. Fourth quarter earnings were also higher at $4.2bn compared with $2.2bn for the same quarter a year ago.

     
  7.  
    06:58: Eurozone union BBC Radio 4

    Bank of England Governor Mark Carney yesterday said the eurozone needs fiscal union to manage monetary union. James Bevan, an asset manager CCLA, tells Today "a root cause of the problem is absence of growth," low money rates alone won't get growth going.

     
  8.  
    06:48: Shell results
    Car lights are seen streaking past an oil rig extracting petroleum

    Some discussion here on the business livepage as to just how cheap it really is to extract oil in Saudi Arabia. So we thought we'd open it up to the floor. How much do you think it costs Saudi Arabia - per barrel - to extract oil from the ground. Send your answers to bizlivepage@bbc.co.uk or tweet @bbcbbusiness. Usual rules apply: no peeking at the internet.

     
  9.  
    06:38: Shell results Radio 5 live

    How does the lower oil price affect alternative ways of exploring for oil such as shale? Michael Hewson of CMC markets tells Wake Up to Money shale oil exploration is largely dead in the water. Getting shale oil out of the ground is still far more expensive than getting oil out of the ground in Saudi Arabia, he says. What pushed up Saudi Arabia's oil extraction costs was the welfare programme the country introduced when the Arab Spring broke out in 2011. He adds Saudi Arabia can live with a low oil price for a long time.

     
  10.  
    06:23: Shell results Radio 5 live

    "I think there is a good chance that we could see a reduction in [Shell's] dividend and that could affect pension funds here in the UK," Michael Hewson of CMC markets tells Wake Up to Money. He doesn't see that happening just yet, but if the oil price continues to fall, or stays low for a long time, then he thinks it is unavoidable.

     
  11.  
    06:11: Shell results Radio 5 live

    Michael Hewson of CMC markets tells Wake Up to Money he expects Shell's revenues will be slightly lower when it publishes results later this morning. He is, naturally, interested in how Shell is coping with the lower oil price. He doesn't think "we've hit bottom yet" in terms of oil prices. "The Saudi's have still got their foot to the floor in terms of market share," he says. "The low hanging fruit in terms of getting oil of out the ground is gone," he adds.

     
  12.  
    06:01: Apple analysis
    apple

    Apple caught up with Samsung as the world's biggest smartphone seller in the fourth quarter of 2014, thanks to booming sales of its new iPhone 6, market researcher Strategy Analytics said. Strategy Analytics said Apple flogged 74.5 million handsets in the fourth quarter, compared to 51 million a year ago. Samsung shifted the same number, which for them was a reduction from 86 million the previous year.

     
  13.  
    06:01: Matthew West Business Reporter

    Morning. Do get in touch at bizlivepage@bbc.co.uk or tweet us @bbcbusiness.

     
  14.  
    06:00: Howard Mustoe Business reporter

    Good morning everyone. Overnight, McDonald's has said Don Thompson will retire as chief executive of the fast food firm to be replaced by British-born Steve Easterbrook, the company's current chief brand officer. We have house price data from the Land Registry at 09:30 and Shell's results to look forward to. Stay tuned.

     

Features

Copyright © 2015 BBC. 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.