Skip to main content

NATIONAL REFORM PROGRAMME

National Reform Programme 2018

In February 2018, the European Commission adopted the Country Report and the In-depth review for Slovenia for the past year, where it was determined that, after six years Slovenia is no longer experiencing macroeconomic imbalances. The key notes were that government debt is declining, investments are increasing, the banking sector has improved, the business sector has less debt, and positive movements are further observed in the labour market.  

 

Positive assessments confirm the work done so far and positive effects of the reforms and measures implemented in recent years. Economic conditions in Slovenia have been improving since 2014. At the beginning of 2017, gross domestic product reached the pre-crisis level. The gap in Slovenia’s economic development in comparison to the EU average measured in gross domestic product per capita in purchasing power standards also began closing in 2016. After 2013, conditions in the banking system visibly improved. The extensive recapitalisation of banks at the end of 2013 contributed significantly to this, including the transfer of a large share of bad loans from banks to the Bank Asset Management Company. The quality of bank assets was thus substantially improved. The indebtedness of companies with banks, which reached its peak at the onset of the crisis, decreased to the level before the acceleration in 2005, and the capacity of companies to repay their debts was also greatly improved. After high growth, general government debt has also been falling since 2016, and stood at 73.6% of GDP in 2017.

 

The key objective of the country’s future economic policy must be to provide conditions for maintaining sustainable economic growth without overheating and with a special emphasis on measures which ensure an increase in added value per employee. With this approach, the completion of gradual public finance consolidation may be assured, and the conditions and fiscal space may be created to increase the resilience and absorptive capacity of the economy to mitigate the effects of the next turn in the business cycle. Further measures to make public finance more transparent must be planned, including an efficient and measurable target-oriented use of public funds. With a timely reform of the pension system and prompt reform of the health system and the long-term care system, these measures address the key long-term public finance challenges of ageing population. The key measures of the country’s future economic policy would thus have to be aimed at four priority fields as indicated in Slovenia’s Development Strategy:

 

1.    further improve the Slovenian business environment to ensure better competitiveness in order to support an open economy directed towards exports;
2.    determine priority fields for public investments being financed from domestic budgetary and European funds and priority fields to support private investments; 
3.    eliminate discrepancies between the results of the educational system and the needs of the business sector, and enhance investments in development, research and innovations as per the Skills Strategy;
4.    form suitable policies in the labour market, including a target-oriented policy for the young and the elderly.

 

National Reform Programme 2018

National reform programme 2017-2018

The National Reform Programme provides new basic guidelines and objectives for 2017 and 2018 to be pursued by the Government, while observing EU rules and limitations in trends in public finance and the broader macroeconomic environment. The document pursues the objectives of the Europe 2020 Strategy and the findings of the European Commission in the Country Report on Slovenia[1].

 

In 2016, Slovenia recorded 2.5% growth in GDP, which is more than was anticipated in the Spring Forecast for 2016, when growth was forecasted at 1.7%. The continuing economic recovery in the last four years seems sustainable and is reflected in stable employment, with 2% growth in employment in 2016, which is more than anticipated in the previous year’s documents.

 

Higher economic growth is to an extent also the result of past reforms and measures. Trust in the economy, triggered by the recapitalisation of banks, reforms and sustainable fiscal consolidation, have contributed to strengthening domestic demand. Likewise, most of the established macroeconomic imbalances also improved. The indebtedness of the corporate sector was reduced significantly. The improvement of the economic climate is also the result of changes in institutional arrangements after the crisis, including improved corporate bank management, which is to prevent the repetition of unsustainable lending by banks.

 

The key measures included the recapitalisation of banks and the transfer of non-performing bank assets to the Bank Asset Management Company, which enabled the restructuring of companies’ debts, significantly improved domestic and foreign trust in the Slovenian economy and changed the direction of gloomy GDP and employment forecasts. Sustainable and gradual fiscal consolidation also had an important impact on enhancing trust in the economy. Among the structural reforms, Slovenia also made major changes in the labour market, pensions and business environment. These reforms directly address the needs of the labour market, and their effects are visible over a longer period.

 

The key objectives for the next medium-term period will be further directed towards enhancing economic growth, and pursuing the objective of stable public finances and their sustainability in the long term. The measures are divided into three groups:

-       Long-term structural measures to provide sustainable public finance

-       Measures with a short-term structural effect

-       Measures to enhance growth potential