LJUBLJANA Slovenian Prime Minister Alenka Bratusek said on Tuesday she would remain at the helm of her coalition government until an early election, which she said she would like to see by July.
Bratusek, whose policies helped stave off an international bailout last year, lost the leadership of her center-left Positive Slovenia party at the weekend, triggering a political crisis and rattling bond market investors.
"I stand by my words: that I cannot lead the government without support from my own party. Therefore, early elections in Slovenia are a reality," she told reporters after talks with President Borut Pahor.
"I will not stand in the way ... If possible, I would like the election to be held in June or early July," said Bratusek, Slovenia's first female prime minister since its independence in 1991.
Bratusek said her broad coalition government, which includes the Social Democrats, a pro-business party and pensioners, should continue with reforms, including the overhaul of public health and the management of state assets.
"It would be absolutely necessary to continue what we are doing in the economy ... I expect all my ministers to stay in their posts. Then we in the coalition have to agree how to conclude things so that we don't harm the country."
However, analysts say the prospect of an election is likely to hold up the reform program. If it is held after the summer, a new government will not be in place before mid-October, barely in time for the 2015 budget.
Pahor said he would waive his right to ask someone else to try to form a government, improving the chances of a quick election.
Bratusek said she would consult her coalition partners this week to see if any of them was willing to take on the task.
But her partners have already ruled out any cooperation with Positive Slovenia under its new leader, Ljubljana Mayor Zoran Jankovic, who is under investigation for corruption but has denied any wrongdoing. Bratusek herself has announced that she is leaving the party.
Another possible contender for prime minister, conservative opposition leader Janez Jansa, whose center-right government collapsed in early 2013, saw his two-year prison sentence for corruption upheld by a higher court on Monday.
One of the government's main tasks is to cut the budget deficit to 4.2 percent of gross domestic product this year, in line with EU demands.
The deficit had soared to 14.7 percent in 2013, when the state injected 3.3 billion euros of its own funds into troubled local banks, dodging the need for an international bailout.
With its borrowing needs covered for 2014, the tiny ex-Yugoslav republic is unlikely to have to resort to outside help. It expects the economy to grow by 0.5 percent this year after two consecutive years of recession
"Because the financing has been secured, we see no major dangers for short-term economic stability," said Saso Stanovnik, chief analyst at Alta Invest, a leading local brokerage, adding that the main risk was to the government's privatization program.
"This crisis could bring down the potential prices or, in the worst case, completely destroy Slovenia's credibility and finally discourage investors about Slovenia," he said.
Last year, Bratusek's government earmarked 15 firms for sale, including the largest telecom company, Telekom Slovenia, and the number two bank, Nova KBM, in the hope of selling most of them by the end of this year. So far only two have been sold.
Unlike most other ex-communist states in Europe, Slovenia has refused to sell its major state banks, insurers, telecom and energy firms over the past two decades, so the government still controls about half of the economy.
Despite that, it was the fastest growing euro zone member in 2007, but its export-oriented economy crumbled a year later with the onset of the global financial crisis.
($1 = 0.7223 Euros)
(Reporting by Zoran Radosavljevic; Editing by Kevin Liffey)