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Slovenia Risks Election as Calls Rise for Jansa to Resign

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Jan. 11 (Bloomberg) -- Slovenian Prime Minister Janez Jansa’s party dismissed calls from coalition partners for him to resign over corruption allegations and refused to take part in any “technical government.”

Jansa allegedly failed to declare “more than 200,000 euros” ($265,260) worth of private assets, according to a Jan. 8 statement by Goran Klemencic, the head of Slovenia’s anti-corruption authority. As a result, two coalition partners called on Jansa to quit.

The board of Jansa’s Slovenian Democratic Party “unanimously rejected the offer” to form a “technical government,” the party said on its website after a leadership meeting. Out of 285 party board members, 281 backed Jansa as their leader. Jansa gave coalition partners a Jan. 14 deadline to decide whether they want to stay in his government, news portal www.24ur.com reported.

Slovenia, the first post-communist nation to adopt the euro six years ago, is grappling with its second recession in three years as Jansa’s Cabinet, less than a year in office, works on an economic overhaul and savings measures to avoid becoming the sixth euro-region nation to seek an international bailout.

EU Feedback

European Union President Herman Van Rompuy phoned Jansa on Jan. 10 and “emphasized the importance of political stability” at a time of taking strategic decisions, according to the premier’s party.

EU Economic and Monetary Affairs Commissioner Olli Rehn said in Brussels today that he “can only hope that the current political turmoil will be not long-lasting and the country can ensure that it has political stability and economic sustainability for the sake of its citizens very quickly.”

The country risks a credit rating downgrade, an increase in risk premium on Slovenian bonds and in the cost of capital in case of snap elections, which would also halt efforts to lead the economy out of the crisis, the party cited Jansa as saying after the board meeting.

“The political noise is definitely unwelcome,” Abbas Ameli-Renani, a London-based emerging-markets strategist at Royal Bank of Scotland Plc, said in e-mailed comments today. Still, investors “have grown immune” to a degree of political instability and are “willing to discount the noise as long as the necessary reforms” move forward.

Yields on Slovenia’s Eurobond maturing in 2022 stood at 4.651 percent at 2:56 p.m. in the capital, Ljubljana, versus 4.643 percent on Jan. 10, according to data compiled by Bloomberg. Slovenia’s SBITOP blue chip index was down 1.2 percent on the day.

Standard & Poor’s put Slovenia on credit watch negative on Nov. 6 because of opposition efforts to call a referendum on the government’s plan to overhaul the economy. The referendum was later scrapped by the country’s Constitutional Court.

Rallying Cry

Slovenia has seen weeks of occasionally violent protests against alleged corruption and austerity. The newspaper Delo said protest organizers issued a Facebook call for “loud but peaceful” nationwide rallies at 4:30 p.m. calling on the political elite to step down and give way to a transitional government to prepare for new elections.

Gross domestic product fell 3.3 percent in the third quarter from a year earlier, the third-biggest drop in the euro region after Greece and Portugal, as consumption slumped and exports to Europe eased. GDP is forecast to recover in 2014, according to the European Commission’s November report.

To contact the reporter on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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