Slovenia's 2011 Budget Gap Rises on State Aid to NLB

Slovenia’s budget deficit widened to 6.4 percent of gross domestic product last year as the government boosted the capital of Nova Ljubljanska Banka d.d. and helped other state-owned companies.

The gap grew from 6 percent of GDP in the previous year, the statistics office in Ljubljana said on its website today. The government spent 243 million euros ($324 million) to buy shares of NLB, 119 million euros to cover liabilities of Slovenske Zeleznice d.o.o., the country’s railways company, and 49 million euros for aid to the air carrier Adria Airways d.d., the office said. All transactions represent 1.3 percent of GDP, a one-percentage point increase from a year earlier, it said.

“Today’s data show that there wasn’t much done in the last three years to balance public finances, which have increased each year,” Finance Minister Janez Sustersic said in an e-mailed statement today. “The measures we have proposed are therefore urgent and it’s of utmost importance they are adopted quickly.”

Prime Minister Janez Jansa’s government, which took office last month after early elections in December, pledged to cut spending by about 800 million euros and reduce the deficit to below 3 percent of GDP by year’s end. Government spending advanced under the previous administration of Borut Pahor because revenue collection slipped on a faltering economy, after the country failed to attract foreign investors to boost capital at state-owned enterprises.

Slovenia plans to sell its first benchmark bond this year as its borrowing costs dropped since December after the European Central Bank started offering three-year loans to European banks.

The euro-region nation’s export-driven economy dropped an annual 0.2 percent last year and is set to decline an annual 0.9 percent this year, according to the government’s forecasting institute.

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