The government endorsed changes to the public finances act setting the ceiling for public debt at 48% of GDP, Finance Minister Franc Križanič told the press after the cabinet session.
The government's initial plan was to put the ceiling at 45%, which would allow the country to exit the period in which about 7% of GDP is invested in banks to encourage loan activity and prevent its drop, the minister said.
"Until this share is withdrawn, we are leaving more room in the form of those three percent," Krizanic said.
In line with the motion, the total share of state guarantees to non-state entities must not exceed 20% of GDP, whereby the guarantees for the temporary European Financial Stability Facility (EFSF) and European stability mechanisms are excepted.
Along with limiting public debt and guarantees, the bill also envisages a five-year fiscal framework, which is in line with the new EU standards on fiscal planning.
"The five-year fiscal framework will set the ceiling for expenditure, the so-called fiscal rule, which is now legally defined but is not included in the law itself so it must be set by the National Assembly as it passes the mid-term plan," Krizanic said.
The government proposes that the motion is rushed through parliament, arguing that its passage is crucial for preventing irreparable consequences that a lack of fiscal rules would lead to.
If the proposed solutions are not passed in time, Slovenia's position on international financial markets could deteriorate, which would push public debt higher and consequently affect Slovenian financial institutions and businesses on international financial markets, the government said.
SOURCE: The Slovenia Times
