Former Slovenia central bank governor and finance minister Mitja Gaspari believes that the method of measuring capital adequacy of banks in Europe is unfair. “I myself am one of those who believe that the situation  is nowhere near as bad as is being portrayed,”.

Mr. Gaspari pointed to different models of calculating capital adequacy, saying that the standard model used by most Slovenian banks puts them in a less favourable position.

Mr. gaspari also believes it is important to keep in mind what creates reservations and impairments at banks. “The least we should expect from the European Banking Authority, which conducts stress tests at banks, is to introduce uniform definitions of good, less good, bad and invalid loans.”

Touching on allegations that Slovenia’s biggest bank, Nova Ljubljanska banka d.d., served as political playground, he said that big banks in any country are bound to be linked to politics in some or other way.

But the important thing for a bank is to maintain good business results. “This is the responsibility of those in the bank who decide what to do with the money.”

As regards efforts to stimulate the economy, Mr. Gaspari believes it is essential for Slovenia to change its insolvency legislation and overcome the situations in which receivership is the only option.

“It is vital for the economy to boost credit activity. Without that we can go on introducing measures reducing red tape indefinitely without any effect,” he told the daily.

The former minister does not oppose an increase in VAT in order to reduce deficit. However, “those who wish to increase VAT should also reform the pension system. Such a combination would make sense.”

“A rise in VAT by three points would not bring in more than some EUR 400m….I read in the papers that the budget hole is EUR 700m deep. The government is reserved about pension reform, but what can be achieved only by raising VAT,” Gaspari wondered.

Gaspari therefore maintains that pension reform must be implemented as soon as possible in order to reduce the pressure to save in other areas.

Touching on the government’s plans to introduce a sovereign holding as a super custodian of state assets, Gaspari does not believe, unlike many, its organisation to be problematic. “The main decision will be in which areas the state must be an active regulator – perhaps in energy, transport and some others.”

But, being the regulator, the state must not be in an advantageous position. He insists that the state does not need to be present in the private sector. “It should define in a strategy how and under what conditions it will withdraw from the private sector over the next five years.”

As regards the golden fiscal rule, which the cabinet wants to include in the Constitution, a move that was postponed to autumn due to disunity in the National Assembly, Gaspari believes the rule should first be laid down in an act.

“I do not agree that Slovenia should first improvise with the Constitution and only later start thinking about how to put it into an act,” he said.

He believes the fiscal rule discussion could be harmful only if the rule would be written down so stupidly as to reduce the freedom needed to keep the economy going. This does not mean Slovenia should have a constant deficit; but the country must get closer to its mid-term goal: balanced public finance under the ESA method.