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Some difficult tasks await Slovenia’s next government led by Marjan Šarec.

After the leaders of five political parties forming the next Slovenian government signed a coallition agreement on Wednesday, Marjan Šarec, the next prime minister, submitted a list of ministerial candidates to the parliament the next day. The new government is due to commence work within two weeks.

The estimated value of the main projects included in the coalition agreement is said to be approximately EUR 2bn. Among the challenges waiting to be tackled include those that previous governments failed to solve or solved only partially. They include:

1. Continuation of the privatisation

Sale of state-owned companies is going to be on the list during Šarec’s government mandate. One of the major ones is the sale of state’s 75% minus one share in NLB, Slovenia’s largest bank, which previous governments attempted to sell several times in the past. Following the agreement with the European Commission who approved state aid to NLB in 2013, Slovenia has to sell 50% plus one extra share by the end of this year, while the remaining shares are expected to be sold in 2019. At the same time, no new investor will be allowed to obtain a share that exceeds the state’s share, i.e. a quarter of the bank’s shares plus one extra share.

NLB shares will be offered to the market based on IPO principle via Ljubljana and London stock exchange. Initial information indicates that possible buyers interested in acquiring a stake at Slovenia’s biggest bank might be international (financial) institutions and funds. If the sale falls through yet again, Slovenia is likely to be requested to return the money it spent in the past few years to improve the bank’s financial situation. To date, Slovenia has helped the bank with almost EUR 2.5bn of taxpayers’ money in several successive recapitalisations. Besides NLB, there are other planned sell-offs of state-owned companies.

2. Pension system reform

Another important challenge awaiting the incoming government is how to successfully deal with the aging population and properly reform the pension system. The demographic picture shows that labour force supporting pensioners is shrinking on yearly basis, and therefore a wholesome reform of the pension system will be needed for the system remain stable in the coming years. Employees’ social contributions today only cover three quarters of the pension expenses, whereas the rest comes directly from the public budget.

For example in 2017, to maintain the same level of pension, the state helped with almost EUR 1.2bn  from the budget. Projections show the expenditure for pensions in the next 30 years will increase by a third, totaling more than 15 % of GDP. Forecast from Brussels indicates the number of pensioners in the next 20 years will exceed the number of employees, hence the state will have to allocate even more money from the budget for the system to remain sustainable. Therefore, the politics will have to take into account the figures and forecasts when it prepares the pension reform. One of the aspects the state should also consider is how to incentivise its citizens to invest more into private pension schemes, since the living standard after retirement changes for most of people.

3. Healthcare reform

Samo Fakin has listed five goals he wants to achieve after he takes the helm at the Ministry of Health.  These include ensuring a better flow of information between the five main stakeholders in healthcare; establishing efficient data management system; running hospitals as businesses; establishing agency for quality; and investing in the digitalising healthcare. However, for citizens of Slovenia the two most pressing issues that need to be tackled in the public healtn system are shortening the hospital waiting times and introducing a proper regulation of public procurement procedures so that the taxpayers money is spent transparently. Establishing an efficient system that will limit exposure to corrupt practices is also amongst the most important aspects.

 

 

Adriatic Journal

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