Front Matter Page

IMF Country Report No. 16/122

REPUBLIC OF SLOVENIA

SELECTED ISSUES PAPER

May 2016

This Selected Issues paper on the Republic of Slovenia was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on April 22, 2016.

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© 2016 International Monetary Fund

Front Matter Page

REPUBLIC OF SLOVENIA

SELECTED ISSUES

April 22, 2016

Approved By

European Department

Contents

• EXPORT COMPETITIVENESS IN SLOVENIA

• A. Introduction

• B. Explaining developments in Slovenia’s external balances

• C. Review of export performance in value added terms

• D. Structural factors contributing to export performance

• E. Conclusion

• FIGURES

• 1. Export and GDP Growth

• 2. Main Trading Partners

• 3. Market Shares

• 4. Developments in Slovenia’s Current Account Balance

• 5. Developments in Savings and Investment

• 6. Decomposition of Gross Export

• 7. Value Added in Exports

• 8. Exports by Sector

• 9. Value Added in Transport Equipment Exports

• 10. Human Capital

• 11. Labor Markets

• 12. International Capital Flows and Investment Positions

• 13. Foreign Investment Restrictions

• REFERENCES

• CORPORATE FINANCIAL HEALTH AND INVESTMENT

• A. Introduction

• B. Data and Methodology

• C. Developments in firms’ financial condition in Slovenia and the CE-4

• D. Firms’ financial condition, investment and the effect of the crisis

• E. Policy options and conclusions

• FIGURES

• 1. Economic Trends and Corporate Financing

• 2. Summary: Firm-level data

• 3. Slovenia

• 4. Czech Republic

• 5. Hungary

• 6. Poland

• 7. Slovakia

• TABLES

• 1. Point Estimates of Coefficients on Debt-Related Variables

• 2. Optimal Debt Thresholds for Slovenia

• 3. Point Estimates of Coefficients

• ANNEXES

• I. Definitions of Firm Financial Ratios and Variables

• II. Regression Results by Country and by Firm Size

• III. Threshold Effects

• REFERENCES

• ECB QUANTITATIVE EASING: IMPLICATIONS FOR FISCAL POLICY

• A. Introduction

• B. Fiscal “Windfall” of QE

• C. Fiscal Reaction Functions – Empirical Analysis

• D. Fiscal Reaction Functions – Analytical Considerations

• E. Policy Implications and Additional Constraints

• FIGURES

• 1. 10-Year Government Bond Yield and Spread vs. Germany

• 2. Selected Euro Area Countries: Estimates of Funding Cost Savings From QE

• 3. Impulse Responses-Unconstrained VAR

• 4. Impulse Responses-Constrained VAR

• 5. Impulse Responses-Constrained VAR II

• TABLE

• 1. Eurosystem Sovereign Debt Purchases under PSPP, ex Supranational Debt

• REFERENCES

• FINANCIAL SECTOR DEVELOPMENT ISSUES AND PROSPECTS

• A. Introduction

• B. Financial System Structure and Recent Developments

• C. Regulatory and Supervisory Framework

• D. Indicators of Financial Development

• E. Future Prospects

• BOXES

• 1. Financial Development Index

• 2. Financial Development, Growth and Stability

• FIGURES

• 1. Private Sector Credit

• 2. Financial Development Index, Sub-Indices

• 3. Financial Development Sub-Indices Components

• 4. Components of Financial Development Index, 2013

• 5. Comparative Evolution of Institutions and Markets

• 6. Financial Development Impact

• REFERENCES