Finance Minister: We Will Adopt Measures to Boost Growth, but Focus First on Public Finances

  • Written by FDI
  • October 23, 2014 at 8:13 am
  • The Slovenian government plans sweeping measures to help companies and improve the business environment, but it first needs to focus on sorting out public finances in line with EU debt and deficit rules, Finance Minister Dušan Mramor told an investor conference in Ljubljana. Mramor told the FDI Summit that the government’s first task would be to make “Slovenia a macroeconomic success story”. A lot has already been done but Slovenia must still fulfil requirements under the EU’s procedures on macroeconomic imbalances and excessive deficit.

    “When we complete these procedures we will have more economic freedom,” he said. While Mramor acknowledged that the majority of economists think the fiscal policies impose by the EU are wrong, he said that Slovenia would abide by the rules. “This is what Europe chose, we have to be part of it.” Since this means fiscal stimulus is out of the question, the government plans to retain the present level of expenditure and try promoting growth by closing the deficit gap.

    One of the driving forces of growth could be private consumption since Slovenian households are among the least indebted in the EU. However, consumers are fearful of unemployment prospects, which is why the government has decided against layoffs in the public sector. Nevertheless, it needs to tackle the costs of the public sector. “We need to tell people they will not be laid off, but labour costs are too high and have to be reduced,” he said in view of the upcoming negotiations with the public sector unions. Looking ahead, Mramor pledged that he would “not allow taxes to be increased”, as the plan is to boost growth, which in turn will lead to higher tax revenue without higher tax rates.

    Listing some of the measures that the government plans to undertake, Mramor said the public sector needed to become more efficient and it is slated to play a key role in measures designed to improve the business environment. He also said the government would tackle land permits, which have for years been highlighted as a major obstacle to development. “This is a real problem, not just for foreign investors but also for Slovenian companies…I will try to get everyone involved to make this as transparent and efficient as possible.”

    The plan is to give local communities more money to actually develop commercial zones, which in turn will bring in more local tax. It will also tackle the administrative burden and the public administration minister has already drawn up a list of 200 measures in the field that will now be debated and fine-tuned, according to him. Asked whether a cap on social security contributions was in the offing, Mramor said that the “social cap is off the table, everything else is on the table.”