Slovenian Parliamentary Speaker Gregor Virant said he’ll decide on whether to hold a referendum on a plan to recapitalize the nation’s banks on Nov. 12, after a trade union requested the vote, raising the risk of a bailout.
Virant on Nov. 2 rejected the motion by 30 opposition lawmakers, who also called for a plebiscite on the creation of a wealth fund meant to ease the sale of state assets. The union of workers in the chemical, non-metal and rubber industries filed for the vote before the lawmakers’ motion. Signatures required for the referendum were first deemed lost and were later found, Virant said today.
“I don’t want a referendum, but according to rules I have to allow the union to start collecting signatures from Monday,” he told reporters in Ljubljana. “With this signature saga, we have suffered moral damage that may harm Parliament’s reputation.”
Standard & Poor’s put Slovenia’s rating on Credit Watch negative on Nov. 6 because a possible referendum on the plan to overhaul the economy raised concern the government would be unable to enforce the measures. Failure to implement the overhaul by year-end may force the Adriatic nation to seek an international bailout, Prime Minister Janez Jansa has said.
The government asked the Constitutional Court to rule if the vote on the creation of a wealth fund should go ahead and will probably do the same for the bank-plan referendum, according to Virant.
Going ahead with the vote may lead the other main rating companies to follow S&P in putting Slovenia on credit watch, Andraz Grahek, an independent financial adviser in Ljubljana, said in a phone interview.
Still, “there is a slight possibility the top court will deem the referendum call on the bank plan unconstitutional, since its rejection would indeed undermine the financial stability and operability of the country,” he said.
The trade union has 35 days to collect 40,000 signatures from citizens and if successful, Virant has to call the vote, which will probably take place in January.
Slovenia’s bank stabilization plan foresees the creation of a government agency that would take non-performing loans from the country’s ailing lenders amounting to as much as 4 billion euros ($5.1 billion) in exchange for state-backed bonds that would probably be eligible as collateral for further financing with the European Central Bank, Finance Minister Janez Sustersic has said.
“If there is indeed a referendum, the plan to save the banking system will fail and no similar legislation can be adopted for a period of one year,” Grahek said. “This could be very problematic and could prevent Slovenia to ask for aid from the European Stability Mechanism to prop up the banks.”
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