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Six-Week-Old Slovenian Party Triumphs in Early Election

Slovenian Politician Miro Cerar
Miro Cerar, center, gestures the V sign in front of journalists and supporters moments after the first unofficial results announcing his victory in the early parliamentary elections were released, in Ljubljana, on July 13, 2014. Photographer: Jure Makovec/AFP via Getty Images

The six-week-old party of Slovenian political newcomer Miro Cerar won a snap parliamentary election on pledges to reconsider the state-asset sales that helped sink the previous government.

Cerar’s party got 35 percent of the vote, beating jailed ex-Premier Janez Jansa’s Slovenian Democratic Party, which got 21 percent, the State Election Commission said yesterday with almost all ballots counted. Karl Erjavec’s pensioners party, Desus, was third with 10 percent, while the United Left was fourth with 6 percent, according to the commission, based in Ljubljana, the capital. Turnout was 51 percent, it said.

Cerar is set to form the fourth coalition government since 2008 in the former Yugoslav republic of 2 million, which pushed through a 3.2 billion-euro ($4.4 billion) banking rescue last year to avoid a bailout similar to fellow euro members Greece and Cyprus. His pledge to review outgoing Premier Alenka Bratusek’s privatization plan risks friction with the European Union, which backed the proposals to help bolster state coffers.

“Cerar’s convincing victory means a coalition should form fairly quickly, so markets are taking the election outcome as positive for now,” Chris Marsh, an economist at Pharo Management LLP in London, said by e-mail. “However, we believe analysts will be looking for the new coalition to remain committed to governance reforms, including through the independence of the bad bank, and ensure the privatization process is not substantially side-tracked.”

Stocks Gain

The SBITOP index of the six most-traded Slovenian stocks reversed an earlier drop to the lowest intraday level in two months, advancing 0.6 percent to 764.03 by the close, data compiled by Bloomberg show. Leading the advance were companies including state-controlled Telekom Slovenije d.d., which has been slated for privatization.

The yield on Slovenia’s euro-denominated notes due 2024 extended a two-day decline, plunging 12 basis points today, or 0.12 percentage point, to 3.164 percent, the lowest level in two weeks, data show.

“I hope Cerar’s victory might bring more stability,” Janko Medja, chief executive officer of state-owned Nova Ljubljanska Banka d.d., the nation’s biggest lender, said today in an interview in Cavtat, Croatia. A stable government is “what Slovenia really needs if it wants to be competitive.”

Coalition Plans

Cerar will probably create a coalition with Desus and the Social Democrats, New York-based Eurasia Group said last week in an e-mailed note. The Social Democrats got 6 percent of the vote and the three parties are set to garner 52 seats in Slovenia’s 90-member parliament, the results show.

Cerar told public broadcaster TV Slovenija that he’d hold an informal meeting with President Borut Pahor on July 16 before “serious” talks on forming a government next month.

“Slovenia needs a strong and coherent government,” he said. “We are, in principle, against asset sales, but some of the privatization processes have gone so far that it’s a question if they can be stopped.”

Cerar, whose mother was a district attorney and father an Olympic gymnast, offers a contrast to Jansa, who’s serving a two-year prison term for corruption.

“Cerar has high personal standing for campaigning against corruption and graft,” Tim Ash, chief economist at Standard Bank Plc in London, said by e-mail. “An agenda of rooting out graft is long overdue in Slovenia.”

Leadership Battle

The elections were triggered by Bratusek’s resignation in May after her privatization proposals helped ignite a leadership scrap within her party. She paused the asset-sale plan July 3, saying the new government should decide how to proceed.

The new coalition “is likely to restore the privatization process, though it is likely to remain quite slow,” Jaromir Sindel, an economist at Citigroup Inc. in Prague, said today in an e-mailed report.

Bratusek leaves unfinished an economic overhaul that includes selling some of the country’s largest companies and narrowing the budget gap to less than 3 percent of gross domestic product by end-2015 from almost 15 percent last year. Failure to do so would curb inflows of EU funds and stoking a debt ratio the EU says may exceed 80 percent of GDP by year-end.

Slovenia’s first female premier since independence pledged last year in a plan that was sent to the European Commission to sell 15 companies, including Telekom Slovenije and lender Nova Kreditna Banka Maribor d.d.

After losing support within Positive Slovenia, Bratusek created her own party and just exceeded the 4 percent barrier to enter parliament. Positive Slovenia, led by Ljubljana Mayor Zoran Jankovic, who toppled the Bratusek cabinet, failed to meet the threshold.

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