LJUBLJANA (Reuters) - The center-left prime minister of Slovenia, which is struggling to avoid a bailout, said she will ask for a confidence vote in parliament later this year, linking it to the vote on 2014 budget.
The budget is designed to cut public spending and raise taxes so as to help reduce the deficit to 3 percent of GDP by 2015, as demanded by the European Commission, from some 7.9 percent seen this year.
The government plans to present it to parliament on September 30, with parliament due to confirm it by the end of December. The budget plan will also be a part of the reform program that has to be sent to the European Commission by October 1.
“I will ask for a confidence vote and I will link it to the adoption of the budget,” Prime Minister Alenka Bratusek told TV Slovenia late on Monday.
“I am confident that the budget, which we agreed upon, will fulfil the expectations of Brussels and mainly the financial markets so that they will trust us and that we will be able to take on new debt as needed,” Bratusek said.
She took power in March after the center-right government collapsed over a corruption scandal. She had previously pledged to ask for a confidence vote no later than March 2014 to enable her coalition partners to oust the government if they were unhappy with its work.
Slovenian banks, mostly state-owned, are being choked by some 7.5 billon euros of bad loans which equals 21.5 percent of GDP and are at the heart of speculation that the country could be forced to ask for a bailout within a year.
Analysts said Bratusek was likely to win the confidence vote but expressed doubt as to whether her budget and reform plans would satisfy Brussels and help avoid a bailout.
“Since the coalition parties have reached a broad agreement on the budget, Bratusek has a good chance of winning the confidence vote in parliament,” said Tanja Staric, a political analyst at daily Delo.
“That could enable her government to last until the end of its term in 2015 - except in the case that Slovenia would need to ask for international help. I doubt any government would be able to survive that,” she added.
The head of the Eurogroup of euro zone finance ministers, Jeroen Dijsselbloem, will visit the country on September 30 for talks with top policymakers.
Slovenia bought some time in May when it issued two bonds in the joint value of $3.5 billion, with a 10-year bond reaching the yield of 6 percent.
It will have to tap the markets again no later than in the first quarter of 2014 before its 5-year 1.5 billion euros bond expires on April 2.
Editing by Alison Williams