Belated and cautious steps

Slovenia
Centre of International Relations
 
As for the expectations towards the EU in the context of the increased economic and social interdependence on a global scale demonstrated by the financial crisis, Slovenia expects the EU to provide for a common framework from which the EU member states could choose the measures best suited for the structure and specificity of their economies. But it is to take into consideration, that those economies that did not consolidate public finance in the ‘good times’, now do not have the abundance of room for measure-taking.
 
Regarding the performance of the EU in the financial crisis so far perceived, discussed and evaluated in Slovenia, two more roles of the EU have been emphasised:
 
1.       to provide measures at the level of the EU policies (for example: the EU budget, the European Investment Bank, the common trade policy, etc.)
2.       to provide equality and the respect of rules at the community level, especially the rules of: a) country aid and b) the Stability and Growth Pact.
 
Acknowledging the measures taken so far, the EU has set-up two crisis-response frameworks:
 
1.       the framework for financial stability adopted by the European Council in October 2008, and
 
2.       the framework for real economy stimulation adopted by the European Council in December 2008.
 
These two documents represent an adequate response in the eyes of Slovenia’s government. The role of the European Central Bank has especially been assessed as positive. Both, the EU and the European Central Bank, might exit this crisis stronger. The appropriate response by the EU to the given circumstances can, in the opinion of the Slovenian Ministry of Finance, be confirmed also by the positive responses coming from the American administration.
 
As for the expected shifts in the international power constellation, the Slovenian official position is that the final outcome of the crisis will provide countries greater economic ability to adopt. As every crisis has demonstrated, the current one is also expected to change the aspects of international financial institutions. Slovenia believes it is reasonable to expect a greater role of the International Monetary Fund (IMF) due to its expertise, whereby in the future constellation the IMF would coordinate its activities better with the Financial Stability Forum. Considering other forums, it has been acknowledged (and accepted) that sessions at the G7 level are no longer sufficient and have therefore been extended to the G20 level on 15 November.[1]
 
The Slovenian response to the financial crisis was very much in line with Slovenia being an advocate of the respect of the Stability and Growth Pact. The Slovenian government carried out consultations with its social partners and experts before adopting a national measures-framework. There was also a debate about these measures held before the Slovenian parliament. The Slovenian government has determined the starting points for the rebalance of this year’s budget which will be prepared for the parliamentary debate in the end of February 2009. The economic and financial crisis and its consequences, i. e. considerable decrease of tax-income and counter-crisis measures are the main reason for a governmental provision of this kind; for example, the most expensive counter-crisis measure of subsiding full-time working hours amounted up to 130 million Euros). The budgetary deficit is going to be higher than planned, rising from 0.33 percent GDP to 2.7 percent GDP. The deficit of public finance will most likely exceed the Maastricht criteria for 0.5 percent and will amount to 3.4 percent GDP.[2] Regarding the latter, the Bank of Slovenia has already expressed non-admissibility of the public finance deficit and the fact that the announced deficit could hinder possibilities of acquiring loans.
 
The danger of the announced public finance deficit was similarly exposed by academics, who uttered that restraint of public administration spending is urgent since the announcements of countries running into debt in the amount of 1,500 billion Euros do not promise favourable conditions on the world market.[3]
 
The government will continue with its policy of excising oil derivates and increasing the excises on tobacco, cigarettes and alcohol products. The fall of economic growth should be eased by the preservation of the quantity of state investment expenditures. In comparison to 2008, and considering the funds of the EU budget, these expenditures will increase by around 30 percent. Prime Minister Borut Pahor has announced structural reforms, stressing that fiscal possibilities for measure-taking have already been exhausted. According to Pahor a “larger social consensus for the examination of the retirement, health and salary systems and the efficiency of public-funds expenditure” will be needed.[4]
 
According to the Eurobarometer, a nation-wide public opinion survey, Slovenians are not over pessimistic about the current situation: 62 percent of the questioned assess the financial state of their house-holds as good and 63 percent understand their personal position concerning employment as good. Slovenians are most pessimistic when questioned about the current situation of their life-expenses: 84 percent of the respondents assess the current position as bad. More than a half of the questioned (55 percent which amounts to +4 percent compared to 6 months ago) confirmed having problems with paying the bills at the end of the month. In contrast to trends in most EU member states, Slovenians are still convinced that things are currently moving in the right direction. Nevertheless, the financial crisis has taken its toll and raised pessimism among Slovenians about the future: the proportion of those, expecting deterioration in the next 12 months has generally risen: 25 percent (+12 percent) of the questioned expect their lives to worsen in the next year, 46 percent (+4 percent) await a downfall in Slovenia’s economic performance, 44 percent expect an aggravation in the employment sector and 32 percent (+9 percent) anticipate a setback of the financial state of their house-holds.[5]




[1] Urška Štorman, head of office of the public relations office of the Slovenian Ministry of Finance: Written comments to the EU-27 Watch Questionnaire, 7 January 2009.


[2] RTV SLO: Vlada predlagala spremembe proračuna (The government has proposed alterations to the budget), 23 January 2009, available at: http://www.rtvslo.si/play/vlada-predlaga-spremembe-proracuna/ava2.26865317/ (last access: 23 January 2009).


[3] MMC RTV SLO: Skupni primanjkljaj čez dovoljeni prag? (Entire deficit over the allowed threshold?), 19 January 2009, available at: http://www.rtvslo.si/modload.php?&c_mod=rnews&op=sections&func=read&c_me... (last access: 28 January 2009).


[4] RTV SLO: Vlada predlagala spremembe proračuna (The government has proposed alterations to the budget), 23 January 2009, available at: http://www.rtvslo.si/play/vlada-predlaga-spremembe-proracuna/ava2.26865317/ (last access: 23 January 2009).


[5] European Commission Representation in Slovenia: Nacionalno poročilo Eurobarometer: Slovenci ostajajo med najbolj optimističnimi državljani Evropske unije (National report Eurobarometer: Slovenians remain among the most optimistic citizens of the EU), 21 January 2009, available at: http://ec.europa.eu/slovenija/hp/2009-0121-eurobarometer_sl.htm (last access: 23 January 2009).