en English
It is Hard to Imagine that Tina Maze Would Call a Referendum on How to Practice Skiing

The guest speaker at the AmCham Business Breakfast was dr. Uroš Čufer, Minister of Finance of the Republic of Slovenia, a former banker and a newcomer to the political arena. Minister, who is usually a man of few words, today surprised all the present businessmen, diplomats and journalists from a variety of media with his address which was exhaustive, yet as usually carrying a clear, sincere and constructive message.

He has proved once again why he gained the reputation of being a man of action in the business public, especially in the international one.

The conversation was led by mag. Barbara Žibret Kralj, Audit Department Director, Deloitte and Matic Vošnjak, Partner and General Manager, Competo.

Matej Potokar, the President of the American Chamber of Commerce – AmCham Slovenia in his opening speech presented his views and the responsibility of AmCham Slovenia for setting the conditions for improving the business and social environment in Slovenia: »I would like to point out the three most important ones«.

The first is definitely the privatization, which will allow foreign enterprises to bring money to solve our financial situation, which is important also from the business perspective as it would gain high standards, a different business perspective, as well examples of good practice as concerns social responsibility and young promising cadres. Therefore the incorporation of Slovenia in the international environment is necessary.

Secondly, I wish to stress that we urgently need to reduce taxation on salaries, as otherwise there will be not much workplaces with high added value anymore.

Third, I would like to say that Slovenians are highly educated, dedicated, loyal and hardworking – and just as Slovenian sportsmen – we have a lot of passion and will for winning. Slovenia may not become the best business model, but definitely must be a winner in some industries and a noticeable niche player«.

Political Stability is a Necessary Instrument to Achieve the Goals that the State Must Fulfill to Surmount Difficulties

At the start of today` s Business Meeting of the American Chamber of Commerce – AmCham Slovenia, the participants together with the Minister, all standing up in expectation for the score, yelled for our skier Tina Maze, who just at the very time of our event won the gold medal at the Olympic downhill. “Well, I did not expect that I would have such a good forerunner as Tina Maze is, today. You put me to quite a challenge”, Minister commented Tina` s victory and his challenges.

»Sportsmen and businessmen have the same mode of action – they set themselves a goal, follow the progress and measure the results. It is somewhat different in politics. It is hard to imagine that Tina Maze would call a referendum on how to practice skiing«, the Minister of Finance made a comparison between sport and politics.

Despite high pressures and expectations, Minister thinks and acts strategically and focuses on essential priorities, which he also presented in his opening speech.

»Sometimes we forget that Slovenia is a small, open economy and that just now, at present – more than ever – Slovenia necessarily needs connections with foreign business environment – more than we are used or would like to«, the Minister realistically explained.

He also pointed out that we have been already for quite some time caught in recession and that the rigidity of the market and structures does not allow us to move the things as fast as we want to.

Priorities of the Minister of Finance

Aware that the time for changes has practically run out, the Minister of Finance spoke about his priorities: »I dedicate ninety percent of my time to some priorities, on which we are focused and are actually the three key priorities of economic policy: economic restructuring and renewal of financial resources, stabilization of public finances and reduction of public debt and privatization and improvement of corporate governance«. Minister expects the first results in restructuring the economy in the first half of the year.

Minister` s Priority Aims:

1. That the Slovenian business environment must become competitive again in comparison with the EU and the Euro Zone, as Slovenian enterprises are still largely unable to enjoy the benefits of expansionary monetary policy in the Euro area;

2. To rectify the inability of banks to reduce their debts;

3. To rebalance the fiscal policy and put it back to normality;

4. To change the rigid ownership structures through the privatization process;

5. and to take decisions – not whichever – but the right ones.

Political stability is a necessary instrument to achieve the goals that the state must fulfill to surmount difficulties “, Minister continued.

The Enterprises are Insolvent, the Banks are Sufficiently Liquid

The Minister said that as concerns the cleaning up the bank balance sheets, they had an ambition last year to re-capitalize banks and to transfer the bad assets to the»bad bank«, however, due to certain reconciliations there came to a delay of two quarters. Banks to enter the financial markets would be helped by a vast transaction of fresh capital into banks and by transfer of bad loans to the bad bank – which would enable the enterprises a much easier access to fresh capital.

The Minister said that there has not any suitable program for restructuring enterprises existed so far and that the new bankruptcy law is essential for the restructuring of the enterprises, which are too often “captives” of awkward ownership structures. ” If we fail in the restructuring of the enterprises, we will also fail in the rehabilitation of the banks. The exercise is not over yet”, said Čufer and added that he believes that after all necessary measures – restructuring of enterprises and consequently consolidating the finances – the growth can be quickly restored. Therefore, the enterprise restructuring, is in his opinion the main priority, which however should be done entirely and not only partially through re-programs or moratoria on loans. »There will be economic growth in the next 6 months, followed by a decrease in interest rates«, was realistically optimistic the finance minister.

DUTB – Key Tool for Enterprise Restructuring

The Minister laid stress on DUTB as the key tool, which in his opinion has financial and human resource capacity to restructure the enterprise.

The Stabilization of Public Finances and the Turn of the Negative Trend in Public Debt

»Addressing the increasing public debt will be the first task after finishing the rehabilitation of banks and restructuring of enterprises«, has announced the Minister of Finance.

Although the restructuring is a longer process, the Minister announces the results in the first six months of this year. He also expects from DUTB to first devote its attention to enterprises restructuring, and only thereupon to realizing assets.

The redemption will, according to minister, gradually contribute to easing the financial crunch and reduction in interest rates on loans. He positively assessed the current sufficient liquidity of banks, but noted that the funds must be properly divided.

As the second key task, Čufer pointed out the stabilization of public finances and the turn of the negative trend in public debt. »Public debt has in recent years increased a lot and almost without effect on growth«, he said. »Therefore, the debt must be first stabilized and then gradually reduced as its burden suppresses the economy«, is convinced the minister.

The Necessity of Redemption of the Public Sector

He spoke about the pension reform, the adjustment of costs and employment in the public sector, the reform of the municipalities, the revision of subsidies and social transfers, and about a complete renovation of EU spending funds so that they will have the greatest possible impact on growth.

Although aware of the potential risks of radical intervention in the public sector, he nevertheless announces structural measures in the public sector as concerns either salaries, pensions or the number of employees, municipal expenditure and social benefits. He also believes that we first need to thoroughly run the private sector so that we can redirect the workforce from the public sector to it.

He also realizes that the measures in the public sector should not be too fast, until in Slovenia the financial channel is restored and the economy would feel at ease again after the crisis, recession and other negative trends.

The Minister pointed out: »The perception of risk will decrease with the gradual redemption of enterprises. I have not seen a pleasant surprise from the fiscal side yet, and I therefore do not even expect it«.

The budget deficit this year dropped from last year` s 4.3 percent to 3.2 percent of GDP.

It is assumed that in 2015, the deficit would drop to 2.5 percent of GDP.

Improved Corporate Governance in State-Owned Enterprises

As the third key task of economic policy, the Minister pointed out the improved corporate governance in state-owned enterprises through the adoption of the Slovenian National Holding company and management strategies of public investment and the privatization of certain state investments.

Minister Čufer is determined: »The management of state investments must be standardized, and the decision-making centralized. The debate within the coalition shows that some partners still wish to have own plots, which is not right. If the policy in this project will fail, also the international community will not take Slovenia seriously«.

Privatization or »The Famous 15«

Minister sees two ways to reduce the public debt – through privatization and the introduction of bad banks. He pointed out that it is however not enough to just reduce the fiscal deficit, but it has to be brought to the point 0, as well.

He said that the transaction in the public sector began in 2012, and in 2013 started the privatization of the first two companies from the list of fifteen, intended for privatization. »We will lose our credibility, if we do not carry out the privatization of all the fifteen. It has to be done. The state has to carry out its promises made to the international markets, because it is “difficult to explain” why the country would own these companies. Given that, there should not be excessive discussions, except in a few sectors or firms«, determinedly said the minister.

»We have to decide what is our strategy and also set our short-term goals«, he outlined the steps of privatization: »At the beginning, we wanted to have the whole picture, but found out that the whole process would took seven to eight months, which seemed absolutely too much. Therefore, we decided for the “shortcut” and first focused on the first five companies. We presented our proposal to the Government, however the National Assembly expected from us to present the overall strategy instead«. Therefore, he is even more convinced that the policy of privatization of all the 15 companies from the list, approved by the National Assembly, should not be brought into question.

The Ministry already prepared the first draft of the strategy and the Minister expects that a broad public discussion is likely to follow in March, after the adoption of the law in the National Assembly.

The Procedures are Too Excessive to Attract Foreign Investments

As the third important “engine” for growth of the Slovenian economy in addition to the restoration of the financial channel and privatization, Čufer sees in the foreign direct investment.

The Minister has announced radical changes in the tax system in the direction of smaller work burden and increasing assets burden in a few years, but as the main reason for the poor uptake of foreign investments, sees in the fact that the procedures take too long and consequently everything regarding the key stakeholders turns too slow. Therefore he plans some thorough changes in this area as well.

The Minister believes that the taxes alone are not the obstacle to attracting foreign direct investments, perhaps only the income tax is exception, otherwise according to the Minister’s assessment, the high taxes do not discourage investors from Slovenia. He sees a bigger problem in the (too) frequent changes in tax legislation and the insufficient absorption capacity of the state. The investor simply can not in a relatively quick time put the plant and run production in Slovenia. Some neighboring countries can do this much faster, for which the investors rather chose them.

Competition Makes Wonders

»The longer I’m in politics, the more I am convinced that it is necessary to privatize as much as possible. It is amazing what competition does – both on a personal, corporate level, as well as in the government sector. Competition makes wonders«, is convinced Minister Čufer