Time to Get Serious
The second international Foreign Direct Investment (FDI) Summit 2011 was characterised by two themes. The first was fairly straightforward: Slovenia is experiencing a socioeconomic crisis that is not only the result of the global financial crisis but also a failure to speedily implement crucial reforms. It was the second theme, however – the crisis in the public sector – that really triggered alarm bells.
Slovenia’s public sector is struggling. Revenues from the pension fund are increasingly falling out of step with predicted expenses. The health sector is experiencing ineffective organisation, with revenues no longer able to cover its expenses. The indebtedness of the state budget is barely maintainable, state investments are declining, the economy is critically undercapitalised, indebted banks are obsessed with their own problems instead of financing the economy.
The conclusion reached by all attending this year’s FDI Summit is that foreign investment could offer a lifeline. The problem is that Slovenia has traditionally struggled to attract it; not least thanks to a failure to design clear policies in this area. Those at the conference noted a gap between the public words of the Slovenian government when it comes to FDI and the actual behaviour towards foreign investors. Most feel this is significantly reducing the credibility of the country as a whole.
Investors, as a rule, are concerned by what they see as an endless labyrinth of artificial political problems in Slovenia, both on the local and national levels. A key conclusion reached at the conference was that Slovenia has run into problems due to anomalies in its own socioeconomic system. The global economic crisis uncovered Slovenia’s unwillingness to change in the international business environment and also showed that Slovenia lacked a clearly designed development concept to follow its successful transition and entry into the European Union.
The consequence is a decline of interest in Slovenia by foreign capital owners who, in many cases, no longer consider the country a serious investment destination. Often the nation is viewed as a friendly and nice but unreliable partner. Slovenia’s economic position has become even more serious following the reduction of its credit rating by the Moody and Standard & Poor credit rating agencies, and it’s a clear warning that the problems in the banking system and unsuccessful balancing of public expenditure could result in a further reduction. Debt is a real concern. The country has over a billion Euros in loans that will mature in 2012, while banks owe over four billion. There is concern that the government will be forced to confront this issue rather than dealing with development problems.
Despite the critical findings, the conference also showed that Slovenia is by no means in a catastrophic state. Yes, the seriously negative trends need to be halted. But there does seem to be commitment to short-term solutions such as an immediate reorganisation of public administration in the broadest sense. This doesn’t only mean reduction. It also means adapting state needs to realistic capabilities – an economic tax base, defining key strategic national economic projects and, in particular, acquiring foreign capital as the country’s own assets are insufficient for starting-up a new development cycle.
With key decision makers finally realising these facts, the hope is that people, companies and expert institutions will finally be able to influence key development decisions. In this area as in so many others, all eyes will be on the new government.
30 Oct 2012 / By T. M.
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16 Nov 2011 / By Mateja Novak and Jaka Terpinc, photos by Alenka Slavinec
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13 Nov 2011 / By Polona Cimerman, photos by Alenka Slavinec
07 Nov 2011 / By Jaka Terpinc
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