Slovenian PM says will ask court to reject referendum demand

Reuters News
Posted: Nov 02, 2012 1:43 PM
Slovenian PM says will ask court to reject referendum demand

By Marja Novak

LJUBLJANA (Reuters) - Slovenian Prime Minister Janez Jansa said on Friday he will ask the Constitutional Court to reject opposition demands for a referendum on a law his government hopes will help lower the risk of needing a bailout.

The opposition on Tuesday called for referendums on two laws but parliamentary speaker Gregor Virant earlier on Friday rejected its call for a referendum on a law that enables an establishment of a state company to take over bad loans of local banks.

Virant said the opposition did not support the demand with the original signatures of the parliamentary members but sent to parliament only copies of signatures which was against the law.

As a consequence the bank law, which was passed by parliament in October, will be enforced next week, while parliament yet has to determine the date for the referendum on the law that would establish a state holding which would manage all state assets and speed up privatization.

Slovenian banks, mostly state-owned, are nursing about 6.5 billion euros ($8.4 billion) of bad loans, amounting to some 18 percent of the small euro zone economy's annual output.

Jansa also appealed to the 30 parliamentary members, mostly of the main opposition party the centre-left Positive Slovenia, who demanded the referendums to remove their demand.

"I appeal to each signatory to consider ... how the referendum will influence the position of the state, our credit ratings and all efforts of Slovenia to get out of dangerous waters by the end of the year," he told a news conference.

Slovenia in October issued its first sovereign bond this year, a 10-year $2.25 billion bond with a yield of 5.7 percent, averting a bailout for at least six months.

But analysts said blocking of the reforms could prevent Slovenia to borrow on international markets in the future. The country needs to return some 2 billion euros of debt in the middle of 2013.

"The success of the recent bond issue was built on the trust of the international markets in Jansa government's ability to implement reforms designed to stabilize government's finances and the banking sector," said Otilia Simkova, an analyst of the Eurasia group.

"If these are rejected in a referendum, it would become very difficult for the government to convince the markets again," she added.

Export-oriented Slovenia was badly hit by the global crisis and is struggling with a new recession because of lower export demand and a fall in domestic spending amid budget cuts.

The government plans to cut public sector wages, increase the retirement age, make it easier to hire and fire employees, reduce unemployment benefits and privatize the main banks to ease the burden on the state budget and help the economy.

Last year a number of laws prepared by the previous centre-left government were rejected at referendums which were demanded by trade unions, students' unions and the opposition. The rejections led to the fall of the government and early election with brought to power Jansa's coalition.

(Reporting By Marja Novak)