EU Proposes Lifting Slovenia Budget Monitoring After Bank Rescue

  • Adriatic nation’s budget balooned when it rescued its banks
  • Hungary, Romania and Bulgaria have exited the process earlier

The European Commission has proposed ending its excessive deficit procedure against Slovenia, leaving neighboring Croatia as the bloc’s only eastern member under the European Union’s budget spotlight.

The euro-area member exited surveillance of its public finances along with Cyprus and Ireland after the its budget deficit shrank to below the bloc’s ceiling of 3 percent of gross domestic product last year, the EU’s executive said in a statement Wednesday. A program submitted by the government in Ljubljana sees the deficit remaining below that level in 2016 and 2017, in line with the commission’s forecasts.

By righting its public finances, Slovenia clawed back from a fiscal shortfall of 15 percent of output in 2013, caused by a rescue of state-owned banks in the aftermath of the global financial crisis. By saving its lenders, the former Yugoslav Republic of 2.1 million people narrowly avoided following Greece and Ireland into asking for an international bailout.

Prime Minister Miro Cerar is seeking to offset funds spent on the rescue by selling states in state-owned banks including Nova Ljubljanska Banka d.d. and Nova Kreditna Banka Maribor d.d, which was bought by Apollo Global Management LLC last month. His government cut the budget gap to 2.9 percent last year and sees it falling to 2.4 percent this year and 2.1 percent in 2017, the commission said this month.

Croatia is still under EU’s surveillance over a high level of public debt despite having narrowed its budget gap, central bank Governor Boris Vujcic said earlier this month. Hungary, Romania and Bulgaria were the EU’s other eastern members to have exited the excessive deficit procedure.

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