SLOVE NI A I N A TI ME O F E CO NO MI C CRI SI S,
CHAL L E NGE S AND ACTI O NS TAK E N
B O Š TJ A N VA S L E , I M A D
ZAGREB , 11.DECEMBER 2014
One of the biggest declines at the beginning of crisis:
in terms of output...
Source: Eurostat, IMAD, EC.
... and in terms of employment
Source : Eurostat, IMAD, EC.
Slovenia being a small and open economy, exports are key to the
economic development
Source : SURS.
A huge drop in investment as the crisis coincided with the
conclusion of large infrastructure projects
Source: SURS.
All this together resulted in a substantial public finance deficit
Source: Ministry of finance, IMAD estimates.
Large dependence of the corporate sector on bank credit
Source: Bank of Slovenia.
Inappropriate wage policy at the beginning of the crisis
Source: SURS.
Continued increase in employment in the public sector despite
public finance restrictions
Source: SURS.
The result: loss of competitiveness
Source: Eurostat, IMAD.
Problems culminated in a substantial increase in public debt...
Source: SURS, forecast Ministry of finance.
... and interest payments narrow public finance
maneuvering space
Source: SURS, forecast Ministry of finance.
At the same time, increase in government financing costs
Source: Bloomberg.
Problems reflected in a huge increase
of non-performing loans in the banking sector
Source: Bank of Slovenia.
Crisis culminated in EU procedures
7 country specific recommendations:
- decreasing public finance deficit and improvement of budgetary strategy
- sustainability of the pension system
- social agreement
- privatisation
- SDH strategy
- corporate restructuring plan
- improvent of business environment
- anti-corruption measures
Publicly financed capitalization of banks
Source: IMF. *data for Q2 2014, **data for Q4 2013, ***data for 2013, ****data for Q2 2012, *****data for Q3 2013 before capitalizati on.
Attempts of structural reforms – pension system reform
Source: Country fiche, april 2013.
Attempts of structural reforms – labour market reform
Source:OECD.
Attempts of structural reforms – consolidation effort
Source: Ministry of finance, IMAD estimates.
Turnaround in economic activity ...
Source: SURS.
... and employment
Source: SURS.
The need for systemic public finance consolidation remains
Source: Ministry of finance.