Edited by Andrew Massey and Karen Johnston
Chapter 17: Government challenges in Slovenia at a time of global economic crisis and austerity measures
The global economic crisis has led to a decline in economic activity in Slovenia and a deterioration in its fiscal position. A system of economic governance within the context of the so-called ‘European semester’ has been in place since 2011; it is aimed at strengthening fiscal discipline and introducing more wide-ranging economic supervision and control. Under this scheme, Slovenia is obliged to follow the public finance situation more closely and to take the necessary steps to remedy its position. Slovenia has made progress towards fiscal consolidation, with the government adopting an ambitious fiscal consolidation package that emphasizes the cutting of expenditure. Positive effects are also expected from the pension reform measures adopted in 2012 and the labour market reforms carried out in 2013. While Slovenia’s budget deficit is expected to fall further, public debt will still rise, which is why fiscal consolidation should continue. Policy decisions in Slovenia have mostly relied on temporary measures, cuts to the public wage bill and reductions in discretionary expenditures. More structural reforms and measures are needed, in addition to the pension and labour market reforms carried out (OECD, 2013). In 2013 the European Commission made recommendations for bringing an end to Slovenia’s excessive government deficit. As part of these recommendations, Slovenia is to abolish the present excessive deficit by 2015, with a deficit target of 4.9 per cent of GDP in 2013, 3.3 per cent of GDP in 2014 and 2.5 per cent of GDP in 2015.
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