EBRD urges privatisation, red tape cuts in Slovenia

LJUBLJANA, June 6 (Reuters) - Slovenia should pursue further privatisation, cut red tape, reduce the tax burden and ease restrictive labour regulation to further strengthen its economy, a senior official of the European Bank For Reconstruction and Development said.

“Possible remaining barriers for growth are tax rates and regulations, ... the relatively high administrative burden, restrictive labour regulations,” EBRD First Vice President Jurgen Rigterink told Reuters on the sidelines of a political and business summit in Slovenia on Thursday.

He also said that Slovenia should aim to further develop its capital markets and added that large-scale corporate deleveraging over the past decade has resulted in potential underinvestment in certain sectors.

He said the EBRD could participate in privatisations as an investor.

“We expect further consolidation in the banking industry and we are ready to help the investors and the government,” Rigterink added.

Slovenia is expected to sell 100% of its third largest bank Abanka by the end of June, while in the coming months it will also sell 10% of its largest bank, Nova Ljubljanska Banka (NLB) , after selling 65% of NLB in November.

The government plans to keep 25% of NLB in state hands in the long run so as to have a say in key business decisions.

The tourism sector would also benefit from reduction of state involvement, Rigterink said. At present about 40% of Slovenian hotels are in state hands and are suffering for lack of investment.

Slovenia narrowly avoided an international bailout for its banks in 2013 but returned to growth a year later and the government expects the economy to expand by 3.4% this year versus 4.5% in 2018, boosted by growth of exports and household spending. (Reporting By Marja Novak Editing by Frances Kerry)