Slovenians began voting for a new government that will have to tackle a widening budget deficit, hold back rising debts and keep the first former communist nation to use the euro from slipping back into recession.
The Slovenian Democratic Party of opposition leader Janez Jansa, an ex-premier who led the former Yugoslav republic into the euro region, had 31.4 percent support in a Dec. 2 survey by polling agency Ninamedia, according to Dnevnik newspaper. Ljubljana Mayor Zoran Jankovic’s party had 23.3 percent and the party of outgoing Prime Minister Borut Pahor had 12 percent.
The election was called after Pahor was ousted in a no- confidence vote in September triggered by coalition disputes over pension changes. Borrowing costs surged after voters rejected the extension of the retirement age, while austerity measures in Europe weaken demand for its exports and public debt will widen to more than 50 percent next year.
“The main task of the new government will be to stop the trend of increased borrowing,” Jansa, 53, said in a Dec. 2 interview with the Ljubljana-based broadcaster Info TV. “The difficulties in the euro region are very serious, but I am optimistic about the euro’s survival.”
Polling stations, which opened at 7 a.m., will close at 7 p.m., when the first exit-poll figures will be published. Official results will be released later in the evening. Parties are vying for 88 seats in the 90-member assembly as two seats are reserves for representatives of the Italian and Hungarian minority. The winner of the vote is likely to seek coalition partners to gain more than a 45-seat majority.
Voting may be extended, the electoral commission in Ljubljana said after ballots were reported stolen in one polling precinct. Voter turnout at 5 p.m. local time was at 48.3 percent, the commission said on its website.
“I gave my vote to Jansa because he is saying that only hard work can get us out of trouble, and I agree,” said Ciril Metelko, an 82 old pensioner after he cast his vote in a polling stations in eastern Ljubljana.
Jansa, who was reluctant to outline specific economic and fiscal strategies during the campaign leading up to the snap poll, should look to European leaders like German Chancellor Angela Merkel and French President Nicholas Sarkozy for direction on restoring faith in the country’s economy, said Miro Kline, a political analyst and a marketing communications professor at the Faculty for Social Sciences in Ljubljana.
“Slovenia’s bond yields are more in the hands of Angela Merkel and other EU leaders,” said Kline in an e-mailed response to questions. “So Jansa’s hands are tied on this.”
Yields on Slovenia’s 10 year bonds surged to 7.77 percent on Nov. 11 after two days earlier Italian benchmark notes gained past the 7 percent mark. Pressure on the yield of euro-region nations eased after central banks moved to improve dollar liquidity. Slovenian notes maturing in 2021 rallied with the yield at 6.71 percent in the capital Ljubljana on Dec. 2, according to Bloomberg data.
“Europe has problems with its common currency because some members are abusing the trust instead of playing by the rules,” Jansa said. “There are reserves in our public sector where we could save 20 percent and we would have to in parallel create jobs in the private sector to increase the tax intake.”
UniCredit SpA analyst Gyula Toth said Slovenia needs 3 billion euros ($4 billion) for 2012 to repay old debt and finance the budget. It will test investors’ appetite for its debt as is seeks to raise 1 billion euros in a Treasury bill auction on Dec. 6.
The country, which had its credit rating cut by one level to AA- by Standard’s and Poor and other ratings services, may opt to sell bonds in the U.S., Japanese or Swiss debt markets if the Treasury bill auction fails.
The export-driven economy shrank an annual 0.5 percent in the third quarter from a year before following growth of 0.8 percent in the previous three-month period.
The risk of recession “has risen greatly,” Michal Dybula, an economist at BNP Paribas in Warsaw wrote in a Nov. 29 note to clients.
Slovenian banks including Nova Ljubljanska Banka d.d. and Nova Kreditna Banka Maribor d.d. (KBMR) are reeling from the impact of the 2009 recession. As bankruptcies increase, lenders’ bad loans are mounting, with both the biggest banks expecting losses by the end of the year.
“We may see a continuation of economic policies from the 2004-2008 period from Jansa, which means there is an accelerated privatization at the door,” said analyst Kline.
Jansa wants to sell the majority state stake in Nova Ljubljanska to 25 percent, similar to a plan by Pahor. Jankovic says NLB should be merged with Banka Celje d.d. and have a new management team that would be able to pull the lender from its woes, he said in an e-mail reply to questions.
To contact the reporter on this story: Boris Cerni in Ljubljana at firstname.lastname@example.org
To contact the editor responsible for this story: James M. Gomez at email@example.com