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Slovenia: Fiscal Rule to Be Introduced in 2015

Published: May 23, 2013; 17:37 · (Vindobona)

Prime Minister Bratusek announced her consent to introduce fiscal rule in 2015.

Slovenia: Fiscal Rule to Be Introduced in 2015 / Picture: © Wikipedia / Jonas Steinhöfl

The country’s standstill in regard to the fiscal reforms seems on the verge of coming to an end. Yesterday, Slovenia’s Prime Minister Alenka Bratusek told the media in Brussels that she was ready to accept the plan of the previous government and therefore for the reform to become effective by 2015. Bratusek has been insisting that the introduction of the fiscal rule should take place in 2017 only. Furthermore she pointed out that the regulation put into effort would be shaped to grant Slovenia the rescheduling of balancing the budget. Diplomatic sources in Brussels had earlier announced that the country would be given two more years to stabilize the excessive deficit.

The implementing act will have to outline the manner and execution of fiscal consolidation, how compliance with the fiscal rule will be administered and who will supervise it, she announced. "2017 is still the realistic year...but we decided otherwise because of a lack of political will on the other side," Bratusek said as she spoke to reporters after Wednesday's EU summit.

For today a meeting of the party heads is planned where the fiscal rule will be the topic with the highest priority. The National Assembly will have a session on Friday to debate the regulation. Furthermore, the Prime Minister announced that she is going to propose in parliament to hold another meeting on Friday to strengthen referendum rules.

There has been broad consensus on the need to alter the constitution with a fiscal rule, but Bratusek's Positive Slovenia (PS) long argued that 2015, the year proposed and fiercely advocated by the opposition Democrats (SDS), was unrealistic given the current developments.

The SDS has also insisted that the fiscal rule needed to be put in place before parliament votes on alterations to the constitution that will make it much more difficult to call referenda, which had been successfully used in the past to overthrow reforms.

In the meantime, the government signed an agreement with public unions to cut wage costs by € 109m this year and by € 182m next year (0.3% and 0.5% of GDP respectively). While the amount for 2013 is slightly lower than the government had planned in its Stability Program (€ 158m), it should be taken into account that government has already signed the agreement for the next year. The National Assembly will negotiate about this issue today as well as the government proposal to hike VAT rates - the standard VAT rate by 2 %, from 20 % to 22 %, and the reduced rate by 1 % (Slovenia did not hike VAT during the crisis).

In an interview with Reuters Slovenian Economic Development Minister Stanko Stepisnik said the government is aiming for up to € 1bn from the sale of state-owned enterprises this year to help prevent the need for an international bailout. As part of these efforts, Slovenia's new government has drawn up an economic reform plan that focuses on cutting spending, raising taxes and selling off 15 assets, including those in the mainly state-controlled banking sector which is troubled by non-performaning loans worth more than 20 percent of the annual GDP.