Slovenia unveiled a reform programme on May 9 that aims to raise sales taxes and sell state enterprises - including a bank, an airline and the country's main telecommunications company - as it scrambles to avoid becoming the next Eurozone country to require an international bailout.
A deep recession and banking system - mostly state owned - which is burdened by bad loans worth about €7bn, or 20% of GDP has the country fighting to avoid such a rescue. The EU said it would study the plans and issue recommendations by late May.
Among the details of the plan, the budget deficit will increase from 4% of GDP in 2012, to 7.8% in 2013 (above the prior 5.3% European Commission forecast) and then moderate to a target of 3.3% the following year. Partly the higher deficit will be driven by the need to inject €900m into the country's troubled banks.
As a result, the general government debt/GDP ratio will increase from 53.7% of GDP at the end of 2012 to 61% this year - an overall increase in public sector debt of around 10% - before moderating to 55%. The European Commission had previously assumed that Slovenia's debt ratio would rise to 63.4% by 2014.
Combined spending/revenue savings of €1bn will be made, while an additional €540m will be raised from new taxes. VAT will increase from 20% to 22% from July 1, and a real estate tax is to be introduced from 2014.
In order to restructure, and later sell off, the struggling state-owned banks, bad loans will be transferred to a new "bad bank" asset management company by June. Overall, 15 companies will be privatised, including NKBM bank, Slovenia Telekom, Adria Airlines, and Ljubljana Airport.
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