LJUBLJANA Jan 17 Standard & Poor's kept
Slovenia's rating unchanged on Friday, after the country rescued
its troubled banks last month, but analysts said the government
must now press on with long-delayed market reforms and sale of
After cutting Slovenia's rating several times in 2013, the
rating agency affirmed its foreign and local currency sovereign
credit ratings for Slovenia at 'A-/A-2' with a stable outlook.
But it also pointed to rising government debt and weak
growth outlook, private-sector deleveraging, low investment
levels and weak labour and property markets.
"The good thing is that the agency has assessed the banking
system is being secured, public debt is seen stabilising and
Slovenia should retain access to the capital markets," said Saso
Stanovnik, chief analyst at Alta, a leading local brokerage.
"But it is also evident they expect further fiscal
consolidation, privatisation and reforms... The main risk is
that the government could slow down with implementing measures
to stabilise the economy because there is less pressure now," he
After a year of market speculation that Slovenia might
become the next euro zone member in need of a bailout, the
government announced on Dec. 13 it could overhaul its troubled
banks alone, to the relief of its European Union partners.
It then injected 3.2 billion euros in capital into five
banks and started moving bad loans, amounting to more than a
fifth of national output, to a state 'bad bank'.
"The due diligence, stress tests and the bank overhaul
marked the start of a process to eliminate one of the key
reasons behind the shrinking credit and economic activity in
Slovenia," said Bostjan Vasle, the head of the government's
economic institute, an advisory and forecasting body.
"The response from foreign investors was positive so today's
rating affirmation was expected. But to maintain a stable rating
and its improvement, we need to keep up the current pace of
structural reforms," Vasle said.
This week, leaders of the four parties that make up Prime
Minister Alenka Bratusek's ruling bloc said they would focus on
reforms and economy for the remaining two years in office but
gave few concrete details.
Since Bratusek took office last March, fifteen state firms
have been slated for a sell-off, including number one bank NLB,
the state telecom operator and flag carrier Adria Airways, but
none have yet been sold.
(Writing by Zoran Radosavljevic; Editing by Toby Chopra)