By Marja Novak
LJUBLJANA (Reuters) - Slovenia's Prime Minister Miro Cerar refused to accept the resignation offered by Finance Minister Dusan Mramor earlier on Monday and praised the minister's achievements in fiscal consolidation.
Over the past year, Mramor reduced Slovenia's budget deficit to some 2.9 percent of gross domestic product, in line with demands of the European Commission, from 4.9 percent in 2014. The government plans to cut the deficit further this year, to 2.3 percent of GDP.
"As the prime minister I have to assess the work of the minister so far and he has managed to achieve the goal of this government ... I do not accept his resignation," Cerar told a news conference.
Mramor offered to resign over the issue of extra income he received when he worked as a dean and professor at Ljubljana's Faculty of Economics.
Local media say Mramor had received about 45,000 euros since 2008 for being on call to work whenever he was needed. Regulators said such ongoing availability was not permitted for professors.
A number of trade unions had demanded Mramor's resignation as well as the resignation of Education Minister Maja Makovec Brencic, who also received extra income for being similarly available as a professor at the same university.
The unions said the finance minister lacks credibility in attempts to curb public spending after he received the illicit extra payments during Slovenia's years of financial crisis.
The previous government had to pour more than 3 billion euros into local banks in 2013 to prevent them collapsing under the weight of bad loans. Injecting the funds helped Slovenia to avert an international bailout.
"Minister Mramor accepted the income believing that it was legal. He apologizes to everyone that was in any way hurt by his action and will return all the money received in that way," the finance ministry said in a statement.
Cerar said that minister Mramor was one of the best financial ministers in Europe and that "past actions should not be the reason for his resignation", particularly since he apologized and obliged himself to return the money.
Analysts said the affair weakened the centre-left government, which took power in 2014, particularly since Mramor has so far been the strongest minister of the cabinet and the creator of its economic policy.
"By rejecting Mramor's resignation Cerar took upon himself the anger of the public... Troubles of the government could escalate particularly in the autumn when budget plans for 2017 will be discussed," Tanja Staric, a political analyst of the national radio station Radio Slovenia, told Reuters.
The next general election is due in 2018.
(Reporting By Marja Novak, editing by Larry King)