Slovenian Prime Minister Alenka Bratušek said the government needs more time to repair public finances, as an asset-sale plan failed to quell concern that the euro area nation will be next to seek a rescue.
Bratušek called fiscal consolidation plans drawn up by the previous government “ridiculous” and said assumptions in this year’s budget were too optimistic. Slovenia’s default risk rose to a six-month high before a planned debt sale tomorrow, and bond yields hovered close to records even after the premier announced plans to sell shares in state-owned companies. Slovenia, the European Union’s fourth-smallest economy, is trying to avoid becoming the sixth euro area state to seek a bailout after international lenders agreed to help Cyprus.
Slovenia will need more than two years, as envisaged under the previous government, to ease a budget deficit that reached 3.7 per cent of gross domestic product in 2012, according to Bratušek. This year’s gap will widen to 5.1 per cent, the European Commission predicts. To help trim the shortfall, the government is considering measures including raising the value-added tax, Bratušek said. To protect the economy, the planned bank recapitalisation plans are “the No 1 priority for the government”, she said.
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