May 27, 2014 / 3:05 PM / 4 years ago

Slovenia must pursue fiscal consolidation, privatisation -central bank

LJUBLJANA, May 27 (Reuters) - Slovenia’s political crisis must not be allowed to derail measures needed to fix the country’s public finances and preserve its credibility with markets, the central bank said on Tuesday.

“It is necessary to prevent a possible increase of uncertainty in the period before the new government is formed,” the Bank of Slovenia said following a regular board meeting.

“It is important to fulfil obligations regarding fiscal consolidation and privatisation of state-owned firms ... which will further strengthen the credibility of the country on international financial markets.”

Prime Minister Alenka Bratusek resigned earlier in May after losing the leadership of the centre-left Positive Slovenia party. On Saturday she will launch her own party, the Alliance of Alenka Bratusek, to compete in early elections that will take place in July or September.

In December, Slovenia narrowly avoided an international bailout by injecting some 3.3 billion euros of funds into local banks burdened by a large amount of bad loans.

Its bond yields have fallen significantly since then, with the benchmark 10-year bond yielding 3.481 percent on Tuesday, down from 3.586 percent a day before.

The European Commission has given Slovenia until 2015 to bring its budget deficit to below the EU’s ceiling of 3 percent of gross domestic product.

The country hopes to reduce the deficit to 4.2 percent of GDP this year after it soared to 14.7 percent in 2013, mainly due to the bank recapitalisation.

Bratusek’s government last year earmarked 15 firms for privatisation, with two sold so far and others, including telecoms operator Telekom Slovenia and the country’s second largest bank Nova KBM (NKBM), due to be sold by 2015.

The outgoing government has said the privatisations will go ahead in spite of the political crisis. It called for expressions of interest in NKBM last week and said it expected binding bids for a controlling stake in its largest airport Aerodrom Ljubljana ARPO.LJ in July. (Reporting by Marja Novak; Editing by Catherine Evans)

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