Slovenia's parliament adopted a cap on public spending, in efforts to stave off the need for an international bailout.
The 78-8 vote in the assembly means Slovenia's constitution will be changed to require that the government budget be balanced — that is, it will not be allowed to spend more than it earns in taxes. The budget should be balanced by 2015, as demanded by the European Union. In addition to a two per cent hike in the retail sales tax, the government has recently pledged to privatise 15 state-owned companies, in an austerity package that will be discussed by the European Commission when the EU's executive arm evaluates Slovenia's crisis measures.
Slovenia's public debt is set to surge to 71 per cent of annual GDP in 2014 as the state faces huge costs saving its banks, which hold some €7 billion in bad loans. The first ex-communist country to adopt the euro in 2007 has seen its public debt level more than double from 22 per cent of GDP in 2008 to 54 per cent last year.
Bratusek told the parliament that Slovenia must get its house in order for its own sake. "We are doing this for ourselves", she said in response to claims that she made the U-turn because of pressure from Europe.
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