Schaeuble Says Slovenia to Avoid Aid as Yields AdvanceBoris Cerni and Rainer Buergin
Slovenia is right to say it doesn’t need a bailout, German Finance Minister Wolfgang Schaeuble said as the country’s benchmark bond declined.
“The Slovenian government says it can do it without the rescue umbrella, it doesn’t want a program and I think they are right,” Schaeuble told reporters in Brussels today before a meeting of finance ministers from the 17-member euro bloc.
The government of Prime Minister Alenka Bratusek presented measures on May 9 including tax increases and a bank recapitalization of 900 million euros ($1.2 billion) as well as announced asset sales to assure investors that Slovenia can manage on its own and avoid asking for aid.
The yield on Slovenian dollar-denominated notes maturing in 2022 have declined from a record 6.38 percent March 27. The nation sold $3.5 billion of bonds May 2. The yield rose 8 basis points today to 5.43 percent at 8:55 p.m. in Ljubljana, according to data compiled by Bloomberg.
After the finance ministers’ meeting, Jeroen Dijsselbloem of the Netherlands, the chief of eurogroup, said Slovenia needs “swift and decisive” action. Olli Rehn, the European Union Economic and Monetary Affairs Commissioner, said the EU was “encouraged” by the Slovene proposal. The EU’s executive arm will give its assessment on the program later this month.
Slovenia’s government plans to raise value-added tax to 22 percent from 20 percent in July. It will introduce a property tax next year and public-sector wages will be cut to help narrow a budget shortfall that is expected to almost double by year’s end, Bratusek said last week. The gap will reach 7.8 percent of gross domestic product and public debt will rise to 61 percent of GDP this year. A further crisis tax plan has been scrapped though it may be introduced later, she said.
The measures “are going in the right direction,” Luc Frieden, the Luxembourg Finance Minister said today in Brussels. “I think that this is the right way one can expect from Slovenia at the moment.”