OECD chief Mr. Angel Gurria insisted on Sunday 02.09.2012, that Slovenia did not yet need bailout aid but urged politicians to act to bring the eurozone country out of crisis.
“Are we there yet? Certainly not, there is a lot of room and a lot of work to be done,” Gurria told journalists when asked if a bailout was required, on the sidelines of a conference at Slovenia’s northern lakeside resort of Bled.
Gurria, the secretary general of the Organisation for Economic Co-operation and Development (OECD), added that Slovenia’s politicians knew what measures needed to be taken and urged them to “find the necessary level of consensus in order to do them”.
“Why don’t we spend some time trying to go for the pension reform, labour reform, the banking reform, the budget adjustment process, the state of enterprise changes, before we talk about whether we go for a (bailout) package or not,” Gurria suggested, naming current government proposals.
“If, on top of that you are doing everything you need to do… and still the markets are attacking, then I would say let’s ask the (EU) family to help,” he added.
Last week, Slovenia’s centre-right Prime Minister Janez Jansa warned the country may need a bailout unless the opposition backed his push to change the constitution to include the so-called golden fiscal rule.
At the same time, he announced his government would put pension and labour reform at the top of its priorities in an attempt to restore the confidence of international markets.
Slovenia’s public deficit reached 6.4 percent of gross domestic product in 2011 but hoped to reduce it to between 3.5 and 4.0 percent this year with recent austerity measures.
The national debt, although low by eurozone standards, also almost doubled over the last four years to 45.5 percent of GDP in 2011, according to the European Commission.
Slovenia should continue to “capitalise on your low debt-to-GDP ratio, that’s an asset, that’s something you can bank on,” Gurria said Sunday. Slovenian Finance Minister Janez Sustersic later added his government was on track to meeting this year’s
deficit goal and hoped to be able to borrow money “at normal prices” by the end of the year.
The government’s measures “will enable us to finance our needs by borrowing under normal conditions on the financial markets at acceptable interest rates,” Sustersic said in a joint statement with Gurria.
“We should not need other (EU) mechanism,” he said.
The government also planned to issue $1.5 billion (1.2 billion) worth of bonds — its first ever in the US currency — in the autumn, he announced, adding he was confident it would succeed.
Last month, the main international ratings agencies cut Slovenia’s rating, citing the poor state of its banking
sector, slow moves to recapitalise the lenders and the political situation.
The downgrade pushed government bond yields above 7.0 percent, a level seen as unsustainable in the long term.