Slovenia won’t need an international rescue package if stabilization measures are adopted by the end of the year, Prime Minister Janez Jansa said.
The government is pushing ahead with measures to stabilize the ailing banking industry, to consolidate public finances as well as overhaul the pension system and the labor market, Jansa told reporters today in Bratislava, Slovakia.
“With all these efforts, passing necessary decisions by year’s end, I think Slovenia is on the safe side and we will come out of waters when there are question marks about a possible bailout,” Jansa said. “This will also improve the country’s situation on financial markets.”
Rising bad loans at lenders in Slovenia such as Nova Ljubljanska Banka d.d. and Nova Kreditna Banka Maribor d.d. and the faltering economy are at the center of investors’ concern that the Adriatic nation may become the sixth euro-region member to ask for international aid. If all government efforts are implemented, Slovenia will not need a rescue program, central bank Governor Marko Kranjec said at Brdo, Slovenia, yesterday, where the Governing Council of the European Central Bank held its meeting.
Slovenia has taken “significant action” with efforts “on all fronts - fiscal consolidation, efforts on structural reforms and the banking system,” ECB President Mario Draghi said in an interview with public broadcaster TV Slovenija late yesterday.
Lawmakers in the capital Ljubljana on Oct. 3 approved legislation to stabilize the country’s banking industry. They voted to create a special agency that will assume lenders’ bad loans and swap them for government-guaranteed bonds worth as much as 4 billion euros ($5.22 billion) that could be eligible as collateral with the ECB, according to Finance Minister Janez Sustersic.
When asked whether the ECB will accept Slovenian state bonds as collateral, Jansa said the government has had a “good discussion” with the ECB about a plan to help the banking industry, adding that the Frankfurt-based bank gave its support to government’s measures.