STA, 20 October 2019 - Central bank Governor Boštjan Vasle and Finance Ministry State Secretary Metod Dragonja attended this week's autumn meetings of the World Bank Group and the International Monetary Fund (IMF) in Washington where they said that Slovenia's economic condition was currently good despite risks to the global economy.
Vasle, who mostly took part in meetings and discussions at the IMF, said in a statement for the Slovenian media that the IMF had downgraded its global growth projection for this year to 3% and highlighted the risks to the global economy that could potentially further diminish growth.
"We're talking about a trade war which is currently the strongest limiting factor for economic growth. There are still uncertainties related to Brexit and slowing Chinese growth," said the governor.
"Regarding these weaker projections, the IMF says that all macroeconomic policies should be implemented. So far, mostly monetary policies of all the biggest central banks have been striving for stabilisation, but the IMF is highlighting the need for other two policies as well - stronger activation of structural measures and fiscal policy."
According to Vasle, Slovenia is in a situation similar to other euro countries as well as others. Growth is cooling down due to global factors - slowing international trade; however, it is still positive.
The governor said that Slovenia's service sector, which depends on the home environment, was doing very well, which resulted in a stable labour market, with the highest figures since the country's independence.
Asked about whether Slovenia was ready for another financial crisis, Vasle said that the current situation was completely different from the one in 2007 and 2008, pointing out that the processing industry had changed and become more efficient and focussed on development and foreign markets.
He added that people saving up and being moderate in spending have also contributed to this stability, with budget conditions improving as well.
"However, during the financial crisis, the debt increased severely. Slovenia has a three times higher debt than it had before the last crisis arose, which could be one of the factors that would make it harder to respond to a potential further economic deterioration in the next few years," said Vasle.
He added that IMF representatives delivered a positive assessment of Slovenia's fiscal policy and acknowledged that public debt had been significantly reduced in the recent years.
Meanwhile, Dragonja pointed out that the government was tackling a complex issue of some EUR 30 billion debt.
On the sidelines of the Washington meetings, the state secretary met representatives of credit ratings agencies, investment funds and investment banks to discuss reducing interest on the national debt and easing the squeeze on the budget.
"There were 20 talks and the outlook looks promising despite somewhat lowered growth projections. Slovenia is in a good economic and macroeconomic condition; however, it does have an excessive public debt, which is why it needs to maintain strict discipline when it comes to banks and budget," said Dragonja.
"The budgets need to be balanced, surplus needs to be generated and reserves for controlling economic cycles should be created."
Asked about whether the IMF figures on Slovenia's growth were the same as Slovenian ones, Dragonja replied that the figures were very similar, although Slovenia's projection for this year was a bit higher than the IMF outlook which stood at 2.9%.
There were not huge discrepancies and Slovenia is taking into account the IMF suggestions on planning the country's economic policy, said Dragonja, adding that Slovenia was part of the EU economic space and as such could not significantly diverge from its outlook.
Both the governor and state secretary said that the current situation included extremely low interest rates, which benefited debtors but put pressure on the financial sector, with the meeting discussing the future challenges of this issue.