Slovenia ruling bloc renews pact, targets economic reforms

LJUBLJANA Fri Feb 14, 2014 10:14am EST

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LJUBLJANA Feb 14 (Reuters) - Slovenia's four ruling parties signed an amended coalition pact on Friday, reaffirming governing stability and pledging to press on with reforms to revive the economy after narrowly avoiding an EU/IMF bailout last year.

"Until the end of the mandate we will focus on reviving the economy. That includes restructuring companies, new legislation, better management of state assets, improving competitiveness, creating new jobs," Prime Minister Alenka Bratusek said after the signing ceremony.

Since taking the helm in March last year, Bratusek's government has overhauled the euro zone member state's banking sector by pumping 3.3 billion euros into troubled local lenders. It also cleaned up bad loans worth nearly 8 billion euros, the equivalent of almost one quarter of national output.

Analysts said stability among the four parties, ranging from Bratusek's centre-left Positive Slovenia to the Pensioners' Party, was crucial for Slovenia to avoid further trouble, as it struggles to reduce public debt and deficit.

The next election is due in late 2015.

When Bratusek took office following the previous centre-right government's loss of a parliamentary majority, she said her coalition would operate for a year and then review its own status. She sought and won a confidence vote in parliament in November, leading to the tweaking of the coalition pact.

"We continue to see government stability as the main potential source of risk here," said Otili Dhand of Teneo Intelligence, a London-based think-tank.

Bratusek said stability was now unquestionable, despite earlier media reports of disagreements about the pace and scope of reforms and privatisation. "The signatories of the agreement have confirmed their mutual trust," she said.

"Unless we truly enforce reforms, with as much wilingness to tackle urgent tasks as as we've had so far, we will remain hanging somewhere between heaven and hell," said Gregor Virant, leader of centre-right Civic List (DL).

The government plans to sell more than a dozen state-controlled firms including Telekom, the top national telecom group, Ljubljana airport, flag carrier Adria Airways and No.2 bank NKBM. It has sold two smaller companies since October.

"The main priority of the government should be to prevent another similar crisis in the future - a clean-up of the banking system and privatisation will be the key factors," said Teneo's Dhand.

(Reporting by Almir Demirovic; writing by Zoran Radosavljevic; editing by Mark Heinrich)

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