Slovene Government Pauses Asset Sales as Election Nears

Slovenia’s government halted a state asset-sale drive until a new government is formed following a July 13 snap election, raising concern over politicians willingness to fix the country’s recession-hit economy.

Prime Minister Alenka Bratusek, who resigned last month when she lost a leadership battle in her Positive Slovenia party, told the state asset managing body not to complete any sales under way or start new ones until a new administration takes power after the election, which she estimated may happen by October.

“This doesn’t mean a halt to privatizations,” she told journalists today in the capital Ljubljana. “It just means that no sales already started should be completed and no new sales should be started. It seems the ongoing processes won’t be done until we have a new administration anyway.”

Bratusek steered Slovenia away from becoming the euro area’s sixth international bailout recipient last year by engineering a 3.2 billion-euro domestic rescue of the country’s banks. The plan to sell a total 15 state companies is a crucial part of an economic overhaul that also includes tackling a budget deficit that last year was five times the European Union’s prescribed ceiling of 3 percent of annual output.

The asset sales have become a “hot political” topic before the ballot, Bratusek said. While the new government can stop the process altogether, it will have to take full responsibility for any such move, she said.

Political Reluctance

While Slovenia was the first former communist EU state to adopt the euro in 2007, it has been the slowest to reduce government influence in the economy by selling state-owned banks, utilities and energy companies. After two decades of successive governments using the banks to finance state projects and companies, bad loans jumped to a fifth of economic output when property and construction bubbles burst during the global economic crisis.

The government controls more half of the entire economy both through direct ownership and stakes held by the country’s two largest banks, Nova Ljubljanska Banka d.d. and Nova Kreditna Banka Maribor d.d., which it bailed out last year.

“I expect the processes to continue and that they won’t be stopped as the premier’s thinking can be understood in terms of caution and the election campaign,” Matjaz Music, head of economic research at Hypo Alpe-Adria Bank d.d. in Ljubljana said in an e-mailed response to questions. “Such statements though are causing market uncertainty and there is fear the controversy of Slovenian politics regarding state ownership hasn’t really changed.”

‘Government Influence’

Last year, the International Monetary Fund recommended “reducing government influence on the day-to-day operations and lending decisions of banks” to shore up their stability.

Nova KBM and phone operator Telekom Slovenije are among the 15 companies Bratusek’s government pledged it would sell.

Hungary’s OTP Bank Nyrt. is among bidders for Nova Kreditna, Delo newspaper reported today, citing unidentified people. Telekom Slovenije has attracted bids from private equity groups including Apax Partners LP, Bain Capital Partners LLC and Providence Equity Partners Inc., Finance newspaper said today, citing people it didn’t identify.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE