Slovenian PM Bratusek resigns, wants early election

LJUBLJANA/PARIS Mon May 5, 2014 8:52am EDT

Slovenia's Prime Minister Alenka Bratusek speaks during a news conference in Ljubljana April 29, 2014. REUTERS/Srdjan Zivulovic

Slovenia's Prime Minister Alenka Bratusek speaks during a news conference in Ljubljana April 29, 2014.

Credit: Reuters/Srdjan Zivulovic

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LJUBLJANA/PARIS (Reuters) - Slovenian Prime Minister Alenka Bratusek resigned on Monday after losing the leadership of her party 10 days ago, paving the way for an early election in the tiny euro zone member that narrowly avoided an international bailout last year.

Bratusek told Reuters in an interview she hoped an election could be held by the summer and signaled she may form a new party for the poll. She also dismissed fears that political uncertainty might slow or derail plans to sell off state assets.

Economists said Slovenia was unlikely to need outside financial help for now. Bratusek's center-left coalition government staved off a bailout in December by pumping some 3.3 billion euros of state funds into Slovenia's troubled banks.

"Yes, I do want an election to be held before the summer. If everybody in Slovenia that is talking about this is ready, then we can do it," she said in Paris on the sidelines of a meeting of the Organisation for Economic Cooperation and Development.

"Slovenia is on the right track and elections will not change that," said Bratusek, 44, a former finance ministry official. "All the macro economic data show that we are on the right track."

The European Commission on Monday raised its forecast for Slovenia growth economic growth to 0.8 percent this year and 1.4 percent in 2015 after a contraction of 1.1 percent last year.

Slovenia has already covered its financial needs for 2014 by issuing four bonds with a total value of some 4.5 billion euros.

The former Yugoslav republic has until now been reluctant to sell its major firms, which include banks, insurers and energy companies. More than 20 years after the fall of communism and a decade after Slovenia joined the European Union, the government still controls about 50 pct of the economy.

Bratusek's government, which will continue for now in a caretaker capacity, had planned to cut the budget deficit this year to 4.2 percent of GDP from 14.7 percent in 2013, when the deficit was boosted by the capital injections into local banks.

It has started to privatize the largest telecoms operator Telekom and planned to sell another 12 state firms by 2015, including Slovenia's second largest bank, Nova KBM.

"BAILOUT SPECULATION"

Saso Stanovnik, chief economist at the investment firm Alta Invest, said markets would want a "clear signal" from Ljubljana that it would press on with reform plans.

"We need the election as soon as possible so that a new government can come in and carry on with reforms," said Stanovnik, adding that a bailout could not be ruled out in the longer term.

"If the new government is not sufficiently reform-oriented, we could be facing bailout speculation again at the end of 2015," he said.

Following Bratusek's resignation on Monday, the yield on Slovenia's 10-year benchmark bond rose by 0.066 percent to 3,528 percent, Reuters data showed.

President Borut Pahor and all the parliamentary parties have said they favor an election, even though the rules allow them to nominate candidates for prime minister from the existing legislature within 30 days without resorting to fresh polls.

"Parliament is expected to acknowledge the prime minister's resignation in the coming days and after that it is up to the parties to agree when the president should dissolve the parliament and determine the election date," parliamentary spokeswoman Gordana Vrabec told Reuters.

The president has to call an election 40 to 60 days after the parliament is dissolved, so it remains unclear whether the ballot could be held as early as June or July.

Bratusek quit her ruling Positive Slovenia party along with a number of other lawmakers after losing the party leadership on April 26 to her rival, Ljubljana Mayor Zoran Jankovic.

In her interview, Bratusek indicated she wanted to stay in politics and may try to form a new party.

"I am discussing this with my collaborators - all the people who have assisted me with the work we have done - and I think it would be too easy to leave now," she said.

(Editing by Gareth Jones)

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