Slovenia postponed a vote on approving the limit on fiscal spending and on the creation of a sovereign fund that is meant to take bad loans from banks.
Lawmakers, who were to vote on the measures today, will decide at the end of August on putting the spending limit into the constitution and on creating the fund that will assume non- performing credits from lenders, including Nova Ljubljanska Banka d.d., Prime Minister Janez Jansa said in an e-mailed statement late yesterday.
“This is the last delay that Slovenia can afford in solving these key problems,” Jansa said. “If these measures are adopted, the damage will be repaired and the delay will pay off. If not, the price will be double of what it would have been today.”
Slovenia is seeking to allay investors’ concern over its debt, which has more than doubled since the former Yugoslav nation adopted the euro in 2007. Banks, which rely on funding from the European Central Bank for liquidity, will probably need to be propped up by an international assistance program by year’s end, economists from London to Warsaw have said.
The Slovenian Sovereign Holding will be created by merging agencies that are managing state assets valued at more than 10 billion euros ($12.3 billion). Bad loans, which surged to about 6 billion euros, would be transferred to the fund to clean up banks’ balance sheets so that they would be able to finance the economy, which is teetering on the brink of its second recession in three years.
Slovenia’s banking industry posted a combined net loss of 69.3 million euros at the end of May compared with 48.6 million euro profit a year earlier, the central bank said today in response to Bloomberg questions.
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