LJUBLJANA (Reuters) - The next few weeks will be crucial for Slovenia, which is struggling to avoid a bailout, Bank of Slovenia Governor Bostjan Jazbec said in an interview published on Saturday.
“It is of key importance that the government over the coming weeks prepares a credible reform program..., a credible privatization program and measures to revive the economy,” Jazbec, who also sits on the European Central Bank Governing Council, told daily Delo.
“If it does not succeed in doing that in the coming weeks, we will probably have to ask for help,” he added.
He said that various bailout possibilities “are being discussed” but gave no details.
Slovenian banks, mostly state-owned, are nursing some 7.5 billion euros ($10.13 billion) of bad loans and are at the heart of speculation that the country could become the next euro zone member in need of an international bailout.
The government has until October 1 to send to the European Commission its reform program which should enable the country to reduce the budget deficit to 3 percent of GDP in 2015 from 7.9 percent seen this year.
The head of euro zone’s finance ministers, Jeroen Dijsselbloem, will visit the country on September 30 for talks with top policymakers.
On Friday Jazbec told parliament that taxpayers would face a bill of 15 billion euros if all the country’s banks collapsed but added there was no sign that this was about to happen.
Jazbec also said Slovenia should improve the efficiency of its judicial system as it takes per average about 3 years for a business conflict to be solved in a Slovenian court.
“Sometimes I feel like a diver in a muddy river who does not see anything and only screams from horror when something flows by,” said Jazbec when talking about the numerous problems connected to the Slovenian judicial system.
Slovenia was the fastest growing euro zone member in 2007 but was badly hit by the global crisis due to its dependency on exports.
The steep recession revealed a culture of corruption and cronyism in the country which over the past decades refused to privatize its main banks and a number of other companies so that the government now controls about 50 percent of the economy.
Reporting By Marja Novak; editing by Ron Askew