UPDATE 1-Slovenia to start privatisations in September -minister

Mon May 20, 2013 12:44pm EDT

* Slovenia to sell 15 state firms to cut bailout risk

* Coalition tensions over privatisation drive

By Marja Novak

LJUBLJANA, May 20 (Reuters) - Slovenia will launch a privatisation programme in September, Finance Minister Uros Cufer said on Monday, signalling further fundraising efforts to avert an international bailout.

Slovenia earlier this month listed 15 companies it planned to sell to boost state income and improve corporate governance in an ailing economy that is around 50-percent controlled by the state.

The firms include Slovenia's second-largest bank, Nova KBM , its largest telecoms operator, Telekom , Ljubljana airport and national airline Adria Airways.

The privatisation process is opposed by the governing coalition's second-largest party, but Cufer told parliament it would begin in September. He did not specify which firms would be sold first.

"The processes will take two to three quarters to complete," Cufer said.

Analyst Andraz Grahek, of consultancy Capital Genetics, said the programme could raise up to 750 million euros.

Shielded by years of rapid growth driven by exports, successive governments in Slovenia shied away from the unpopular sale of state assets, often turning a blind eye to poor corporate management and political interference in bank lending.

When demand for its exports fell away with the onset of the global crisis, bad loans shot up.

Its banking sector, now saddled with 7 billion euros ($9 billion) in bad loans, is the focal point of fears the ex-Yugoslav republic, which joined the euro zone in 2007, could follow four other states in the bloc into seeking a sovereign bailout.

Rating agency Fitch cited that risk on Friday as it cut Slovenia's long-term foreign currency rating to BBB-plus from A-minus, warning more cuts could be on the way.

Analysts say the privatisations may prove too ambitious, particularly given the tensions within the coalition that the that the Social Democrats' opposition to the plan has generated.

"The risk factor is that privatisation processes fails... particularly due to the stance of the Social Democrats," Grahek added. "Trade unions could also oppose the privatisations."

Social Democrat deputy president Dejan Zidan, Slovenia's agriculture minister, said his party would not allow tensions over the plan to bring down the government.

"The privatisation list was not agreed within the coalition so we do not support those privatisations ... but we will not cause a political crisis over them," Zidan told Reuters.

Slovenia expects its budget deficit to almost double this year to 7.9 percent of economic output, mainly due to capital injections into state banks that are burdened by most of the country's bad loans.

Slovenia bought some time in early May when it sold two bonds worth a combined $3.5 billion. But it will have to tap the markets again no later than the first quarter of next year before a 5-year 1.5 billion euro bond matures in April.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.