Front Matter Page
IMF Country Report No. 19/58
REPUBLIC OF SLOVENIA
2018 ARTICLE IV CONSULTATION—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR REPUBLIC OF SLOVENIA
February 2019
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2018 Article IV consultation with Republic of Slovenia, the following documents have been released and are included in this package:
A Press Release on the staff report that concluded the Article IV consultation with the Republic of Slovenia.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on lapse of time basis, following discussions that ended on December 11, 2018 with the officials of Republic of Slovenia on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on January 29, 2019.
An Informational Annex prepared by the IMF staff.
A Supplementary Information updating information on recent developments.
The documents listed below have been or will be separately released.
Selected Issues
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Front Matter Page
REPUBLIC OF SLOVENIA
STAFF REPORT FOR THE 2018 ARTICLE IV CONSULTATION
January 29, 2019
Key Issues
Context: A broad-based recovery continued in 2018, lowering unemployment, swinging the headline fiscal balance into surplus, and reducing the public debt ratio. Growth is expected to slow moderately to 3.4 percent in 2019, and risks remain tilted to the downside, notably related to a rise in protectionism, political and policy uncertainty in Europe.
Challenges: The population is now ageing more rapidly than in most other Organization for Economic Co-operation and Development (OECD) and European Union (EU) countries, posing risks to fiscal sustainability and long-term growth. Fiscal challenges are, therefore, prominent, with still high public debt and one of the largest projected increase in age-related spending among EU countries. Macro-financial legacy issues remain in bank and corporate balance sheets, including small and medium enterprises’ (SME) nonperforming loans (NPLs). Structural challenges persist with low productivity growth, skills shortages, high tax wedge, heavy regulatory system, and extensive presence of state-owned enterprises (SOEs).
Policies: Policies should focus on fiscal and structural reforms to rebuild fiscal buffers and increase productivity. Policy priorities are:
Safeguard the fiscal consolidation achieved in 2018 by maintaining a balanced structural budget and avoiding a pro-cyclical fiscal expansion in 2019.
Continue structural fiscal reforms in the areas of pensions, health and long-term care, public wage policy, and tax rebalancing.
Complete the repair of bank and corporate balance sheets by accelerating the resolution of SME NPLs; and closely monitor emerging credit and housing market risks.
Deepen labor market reforms by increasing labor market flexibility.
Accelerate the privatization program, notably in non-financial and non-network sectors.
Approved By
Enrica Detragiache (EUR) and Zuzana Murgasova (SPR)
Discussions took place in Ljubljana during November 28–December 11, 2018. The staff team comprised Mr. Akitoby (Head), Messrs. Cui and Reinke (all EUR), and Grote (FAD) and was assisted at headquarters by Messrs. Andrle (RES), Park, and Smith (Both EUR). Staff met with State Secretaries Dragonja and Jazbec of the Ministry of Finance, Acting Bank of Slovenia Governor Dolenc, other ministers and senior government and Bank of Slovenia officials, as well as representatives of parliament, financial sector, labor, business, and academics. The team also held a conference call with the Single Supervisory Mechanism. Mr. Rampre (OED) attended most meetings. A press conference was held at the end of the mission.
Contents
CONTEXT
OUTLOOK
POLICY DISCUSSIONS
A. Fiscal Policy: Rebuild Fiscal Buffers and Ensure Sustainability
B. Financial Policy: Address Legacy Problems and Emerging Risks
C. Structural Reforms: Support Employment and Productivity Growth
STAFF APPRAISAL
BOXES
1. Growth-Enhancing Tax Reform
FIGURES
1. Macroeconomic Developments
2. Labor Market
3. Fiscal Context
4. External Sector Developments
5. Financial Sector Developments
TABLES
1. Selected Economic Indicators, 2015–23
2. General Government Operations, 2015–23
3. Balance of Payments, 2015–23
4. Vulnerability Indicators, 2009–17
5. Core Financial Soundness Indicators, 2012–18
ANNEXES
I. Risk Assessment Matrix
II. External Sector Assessment
III. External Debt Sustainability Analysis
IV. Public Sector Debt Sustainability Analysis
V. Output Gap Estimate
VI. Authorities’ Response to Past IMF Recommendations
VII. Housing Market Developments
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REPUBLIC OF SLOVENIA
STAFF REPORT FOR THE 2018 ARTICLE IV CONSULTATION—INFORMATIONAL ANNEX
January 29, 2019
Prepared By
European Department
(In Consultation with Other Departments)
Contents
FUND RELATIONS
STATISTICAL ISSUES
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REPUBLIC OF SLOVENIA
STAFF REPORT FOR THE 2018 ARTICLE IV CONSULTATION—SUPPLEMENTARY INFORMATION
February 11, 2019
Prepared By
European Department
Front Matter Page
Press Release No. 19/47
FOR IMMEDIATE RELEASE
February 18, 2019
International Monetary Fund
Washington, D.C. 20431 USA
