"If Slovenia implements
courageously all the reforms that are (being prepared by the government), this
should be enough to reassure markets" and avoid a bailout, said IMF
mission chief Antonio Spilimbergo.
He compared the small former
Yugoslav republic's plight to an aircraft flying "through very high
turbulence and (which) needs to change some of the engines during the
flight."
"One (of those 'engines')
is clearly the financial sector... half of the Slovenian financial sector is in
public hands and this sector has accumulated non performing loans,"
Spilimbergo said.
Spilimbergo praised a
government bill sent to parliament that if passed would create a "bad
bank" to take some toxic assets off bank balance sheets.
He also urged the centre-right
government of Prime Minister Janez Jansa, which has found it tough to get
reforms through parliament, to press ahead with vital labour law and pension
changes.
With credit rating agencies
sounding warnings, Slovenia's borrowing rates have risen sharply in recent
months, sparking speculation that it may become the latest eurozone member to
need a bailout.
Last week the government
slashed its growth forecasts, predicting a 2.0-percent slump in economic output
this year and a 1.4-percent drop in 2013.
The IMF's mission, which arrived
on September 20, predicts that gross domestic product (GDP) will contract by
2.2 percent this year and by 1.0 percent in 2013.
0 comments:
Post a Comment