Clare Nuttall in Bucharest -
Just five weeks after its launch, the Party of Miro Cerar (SMC) has swept to victory in Slovenia’s parliamentary elections held on July 13. As he prepares to take on the role of prime minister, Cerar - who remains something of an unknown quantity - has moved quickly to reiterate his opposition to some of the country's high-profile privatisations.
The party has consistently led the polls since its launch on June 2. Preliminary results from the Slovenian State Election Commission (SEC) show Cerar with a clear lead. The party currently has just under 35% of the vote, likely to translate as 36 seats in the 90-seat parliament. The centre-right Democratic Party of Slovenia (SDS) is on 20.69% which would hand it 21 seats. The centre-left Democratic Party of Pensioners of Slovenia (DeSUS), United Left Coalition, and the Social Democrats (SD) are likely coalition partners for SMC.
Tim Ash of Standard Bank suggests that while the market will be somewhat suspicious of the centre-left victory, the pros may outweigh the cons. Although “likely participant parties in the new ruling coalition campaigned on agendas which appeared to support a slowing in the pace of both fiscal adjustment and broader structural reform”, there are a number of positive factors, he notes.
Firstly there is hope “Cerar [will win] a resounding victory and strong personal mandate for power - which stands in some contrast to the weak mandate of the outgoing Bratusek administration”. Cerar also “has high personal standing for campaigning against corruption and graft” and appears to be “pragmatic” on economic policy, the analyst adds.
Snap elections were called after outgoing Prime Minister Alenka Bratusek was ousted as leader of Positive Slovenia. That followed the party's failure to take a single seat in the European Parliament elections in May. Following Bratusek’s resignation, President Borut Pahor dissolved the parliament and called the snap vote.
On May 31, the former PM launched her own party, the Alliance of Alenka Bratusek, taking with her a splinter group of Positive Slovenia MPs. At one point, it looked like it could prove a platform for a political comeback, but that changed with Cerar's emergence, and the SEC shows the Alliance of Alenka Bratusek taking just four seats in the next parliament.
As Cerar attempts to put together a new coalition, likely the biggest question in Slovenia is which way he will swing on the country’s hottest political issue - the privatisation of major state owned companies.
On July 3, Bratusek bowed to public pressure and suspended the programme of state asset sales. A year ago her government drew up a list of 15 companies to be sold off by 2016, as it scrambled to avoid an international bailout. However, so far just two companies - specialty paints firm Helios and laser manufacturer Fotana - have been sold. The privatisation of the country's biggest concerns, including Telekom Slovenije, Ljubljana Airport and Slovenia’s second-largest bank Nova KBM remain up in the air.
Cerar voiced his opposition to the sales of Telekom Slovenije and Aerodrom Ljubljana in the run-up to the vote, although he supports the sales of smaller state companies. He has already indicated that the next government will amend the list of companies to be sold, as well as make changes to Bratusek’s anti-crisis austerity programme.
"Our party will aim for Slovenia to fulfill its EU obligations, but within that we will seek our own ways to reach these goals in the best way for Slovenia,” Cerar told Reuters on July 13.
Several sales could now be cancelled, or at least delayed, while the government is established. At the time the process was suspended, three strategic investors and at least half a dozen funds had submitted non-binding bids for a 72.75% stake in Telekom Slovenije. France’s Vinci Airports confirmed earlier this month that it is in the running to buy a controlling stake in Ljubljana Airport.
Just ahead of the vote, Otilia Dhand, vice president at Teneo Intelligence, suggested it's “possible that, depending on its exact composition, the new coalition will cancel the sale of some [state owned enterprises]. While they may yet reconsider these attitudes once they join the government, so as not to hurt investor confidence, the risk of cancellation is very real given existing political manifestos and an overall social consensus hostile to further sales."
“Cerar is not going to back any cheap sale of the family silver, and hence for 2015 and beyond there will be increased reliance on debt issuance, which suggests that debt ratios will only slowly moderate and will remain in the 70-80% range," points out Ash. "That said, even under the most bearish forecasts, the public sector debt/GDP ratio will remain around 10-15 percentage points below the EU average for this year and next, and well below that of Hungary."
Slovenia, which adopted the euro in 2007, was once the eurozone’s fastest growing economy. However, the country has been slow to emerge from the recent economic crisis. In 2014, the economy is expected to grow by just 0.8% according to the European Commission, but a lengthy period of political uncertainty and postponement of the privatisation programme could put that growth at risk.
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