Slovenia needs to increase reform efforts for a return to stronger growth | WPN World People News

Economic reforms have helped Slovenia recover from the crisis, but further action is needed to strengthen the banking and corporate sectors, stabilise debt and create jobs, according to the latest OECD Economic Survey of Slovenia.

The Survey, presented in Ljubljana by OECD Secretary-General Angel Gurría and Slovenian Prime Minister Miro Cerar, says that the country’s return to growth since 2014 has benefited from a reform path charted since the crisis. This includes fiscal consolidation, pension reform, labour market reform, restructuring and recapitalisation of banks and initiation of privatisation procedures.

“When faced with the uncertainties posed by the economic crisis, Slovenia took important action to regain the trust of the markets and renew the confidence needed to boost economic activity,” Mr Gurría said. “Despite the ongoing recovery, many challenges remain to ensure sustainable growth and deliver high levels of well-being to all Slovenians.”

While much has been done to strengthen the banking and corporate sectors, the Survey points out the need for further efforts to improve balance sheets of banks and restructure financially-troubled firms. Enhancing the leading role of the Bank Asset Management Company would ensure swift restructuring of companies, asset sales and a return to healthier credit conditions across the economy.

Additional fiscal consolidation is needed to curtail public debt - which has risen from 22% of GDP in 2008 to more than 80% of GDP in 2014 – particularly in light of the projected rise in ageing‑related public expenditure from pensions, health care and long-term care, which will increase pressure on public finances.

Recent pension reform has improved sustainability, but further steps are needed. A thorough reform of the health sector is necessary to improve efficiency. Cost efficiency reforms should also be pursued in education, public administration and local government, the Survey said.

To sustain growth and boost job creation, Slovenia needs to boost spending on active labour market programmes, which should be better targeted at those most in need, including jobless youth and the long-term unemployed.

Further action is needed to improve the business environment, notably by strengthening corporate governance, reducing regulatory burdens on business operations, and continuing the planned privatisation process. A stronger business environment will attract capital and foreign direct investment needed to boost innovation and modernise the economy, the Survey said.

Source: Organization for Economic Co-operation and Development