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Slovenia Must Pass Measures to Lower Borrowing Costs

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Sept. 19 (Bloomberg) -- Slovenia must enact a planned banking overhaul and other measures to win back the confidence of the financial markets and lower its borrowing costs, Prime Minister Janez Jansa said.

Borrowing costs of between 6 percent and 7 percent since last September are “too high,” making it more difficult to finance the budget and state debt, said Jansa today in Ravne na Koroskem, in northern Slovenia. It’s also fueling speculation that the government may seek financial aid from abroad, he said.

“All these trends will deteriorate further until we accomplish what should have been accomplished a long time ago,” Jansa said.

Lawmakers in the euro region nation will be debating and passing measures to help re-capitalize ailing banks and overhaul the labor market and the pension system because they are “crucial” for Slovenia to emerge from a “dangerous situation” Jansa said.

Slovenia’s borrowing costs on the benchmark 2021 bond surpassed the 7 percent mark last month, adding to concern that the country may be the next in line to ask for an international assistance package.

Rating companies Moody’s Investors Service, Standard & Poor’s and Fitch Ratings have lowered Slovenia’s credit score with a negative outlook because of the government’s need to prop up the ailing financial industry.

The notes maturing in January 2021 rallied today, with the yield dropping 22 basis points to 6.36 percent at 4:07 p.m. in Ljubljana, according to data compiled by Bloomberg. A basis point is a hundredth of a percentage point.

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