Slovenia “is addressing problems” with long-term economic policy and growth and doesn’t need a bailout, Estonian Finance Minister Juergen Ligi said.
The former Yugoslav country has a “clearly different” economic model from Cyprus and doesn’t have a “bubble from attracting external funds,” Ligi said in an interview today in Tallinn, the Estonian capital. Estonia, Slovenia and Slovakia are the only ex-communist countries in the 17-nation euro area.
Cyprus’s government wound up talks this week with the so- called troika of officials representing the European Commission, the International Monetary Fund and the European Central Bank on the terms for the country’s 10 billion-euro ($12.8 billion) rescue. Slovenia, struggling with its second recession since 2009 and rising bad debts at its banks, is trying to avoid becoming the sixth euro nation to ask for a bailout.
“Every country should first do its homework,” Ligi said. “As far as I know, Slovenia is doing that and we don’t have information that they would need a similar bailout like Cyprus. They have promised to manage.”
Problems with Slovenia’s banks “aren’t insurmountable” and policy makers are aware that the financial industry needs to be rebuilt, the newly appointed central bank Governor Bostjan Jazbec said on April 3.
Europe’s finance ministers are “keeping fingers crossed” that Italy won’t reverse steps made by caretaker Prime Minister Mario Monti, who remains in office until a new government is installed, Ligi said. The country’s February elections failed to produce a ruling coalition with a parliamentary majority, which delayed the approval of stimulus measures as government borrowing costs rise amid market turmoil sparked by Cyprus.
Cyprus agreed March 16 to a bailout from the European Union that included a tax on all bank deposits, a condition that left politicians racing for almost two weeks to revise the aid package and exempt insured funds from losses.
“It is true that the Eurogroup was worried from the start about the guaranteed deposits, but it is a separate issue whether the signals given by different Eurogroup nations between the first and the second proposals were good communication,” Ligi said, without giving details. “It definitely wasn’t good, the controversy between the signals that were given after the first proposal.”
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