Slovenia adopted biennial budget to reduce deficit

Slovenian government approved a biennial budget, which aims to reduce the deficit of the country to its lowest level in nine years. It comes after the warning from the European Commission that the country may violate EU rules on public finances in relation with budget deficit. The MPs voted almost solid the adoption of the budget, which envisages a budget deficit of 1.6% of gross domestic product (GDP) in 2017 and 0.7% in 2018.

Yesterday, the European Commission said that there is a risk the country and five other EU members to violate the bloc’s rules of monetary policy and that the draft could lead to significant deviation from the MTO. The Finance Minister Matthew Vranicar Erman said that the comments of the EU raise concern about public finances and the government can not abandon the quest to reduce costs over the next few years.

“This is a serious warning”, said Matthew Vranicar Erman after the report of the EU. “At the discretion of the government is not all austerity measures can be lifted and must continue to spend wisely”, added he.

Slovenia is the first former communist country, which adopted the Euro currency, out of the EU regime for monitoring the budget in May, after reducing its deficit. It had blew up almost 15% of GDP in 2013, after the country was forced to rescue the state banks. Because saving Slovenia narrowly escaped the fate of other EU member states such as Greece and Ireland, which had to seek an international bailout.

The government of Prime Minister Miro Cerar is a currently trying to recover some of 3.2 billion EUR were invested in bank bailouts. The sale of Nova Kreditna Banka Maribor to Apollo Global Managament was completed in April and the planned IPO of the largest creditor – Nova Ljubljanska Banka, may be delayed after 2017.

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