PM Janša: Slovenia Does Not Need International Aid
Slovenia, at this point, is not in need of financial aid from the European rescue fund, accordimg to Prime Minister Janez Janša following the end of the EU summit in Brussels. He added there is no basis for any degree of speculation on this issue.
“It is our assessment that, based on the measures which have already been passed particularly the Act on the balancing of public finances, Slovenia does not need to ask for help at this point “.
According to the prime minister the only issue still left unresolved is the banking sector,. However, since due diligence of Slovenian banks is still underway, it is too early to make any kind of assessment regarding the need for financial aid by banks.
He asserted that the government is doing all it can to avoid seeking EU rescue funds, which will now become more flexible in line with the recent agreement of EU leaders at the summit. There is probably no member of the eurozone, and Slovenia is no exception, that would look forward to ever having to use these mechanisms, although they will become more flexible, said Janša. He added that the two day EU summit exceeded expectations and that both the short and long term decisions which were made are “of extreme importance to Slovenia”. The summit was a “ground breaking meetings” both in terms of decisions made at the EU level and at the eurozone level. He moreover expressed hope that financial markets would respond positively to the meeting. The key feature in the functioning of the EU stability mechanisms is that both the temporary European Financial Stability Facility (EFSF) and the permanent European Stability Mechanism (ESM) will become more flexible, Janša said, adding that it would be possible to recapitalise banks directly from the ESM, provided that central oversight is boosted, which he deems necessary.
Direct recapitalisation of banks from the ESM will enable the problems of financial institutions or lack of liquidity to be solved in a way that will not directly burden the respective country’s public finances. “This is a big change from how the mechanisms have been used to date but this flexibility is not without limits. The limits are the amount of funds available and the rules enabling the use of State aid.” A general condition for a country to be able to rely on this type of aid is that the country consistently follows the EU rules relating to the stability pact and other rules and recommendations of the European Commission. Contrary to what has been written in some newspapers, Germany agreed at the summit to what it has consistently claimed - that more flexibility is possible only if oversight is boosted.
Furthermore, according to Janša, the key document endorsed at the summit is the pact for growth and employment. He labelled it a “strategic document that responds to the challenges the EU will face in the coming years”. The pact is very important for Slovenia for two reasons, Janša believes. Firstly, because it will create a better and more competitive business environment in the EU in the next few years, thus opening more possibilities for Slovenia’s export-oriented economy. Secondly because it envisages the establishment of certain additional financial sources which Slovenia will be able to directly access to compensate for its own “investment drought”. One of the measures to encourage growth is a capital increase for the European Investment Bank of EUR 10bn to boost its loan capability by EUR 60bn. Slovenia is to contribute EUR 24m to the recapitalisation. Janša said the figure is not yet final, but this “will be a relatively low input considering the options it opens, which are not negligible in the current situation “. Regarding the talks on the financial framework for the 2014-2020 period, Janša said Slovenia’s main goal was to preserve the cohesion funds as an important source of investment and therefore also as an engine of growth in the EU which, according to him, was the stance taken by most members.
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