Slovenian efforts to avert another eurozone bail-out have been boosted by a successful bond auction but a gloomy economic forecast and credit rating downgrade maintained pressure on the new government to draw up a convincing action plan for EU officials and financial markets.
After only six weeks in power, Prime Minister Alenka Bratusek must send to Brussels next week a clear plan and a timeframe to ensure the recovery of the country’s shaky banking system, stabilise its public finances and jumpstart the economy despite a deep recession.
This task became more difficult when Moody’s downgraded Slovenia’s credit rating by two notches to “junk” status last week while warning that the chances of an international bailout had increased significantly.
In April, the European Commission said that Slovenia posed one of the biggest economic risks in the eurozone, and on Friday a new Commission forecast for the country estimated that its economy would contract by 2.0 per cent this year and by 0.1 per cent next year.
EU Economic Affairs Commissioner Olli Rehn has urged Bratusek to pursue reforms adopted by the previous government and introduce new measures, and this is the action plan expected by May 9, Bratusek has said.
It is to include measures to fix the banking sector and cut spending while stimulating the economy, in recession since 2011.