E
ver since Cyprus reached agreement with the
Troika on a financial assistance package for
the economy and the banking sector, Slovenia’s Prime Minister, Alenka Bratušek, has
struggled almost daily to convince international markets, her country’s European partners, the international media and her compatriots that Slovenia is not Cyprus. The
country faces serious financial problems, poorly capitalized banks,
an overbuilt property sector, too much corporate debt and a slump
in key export markets. The markets are losing faith in the country,
especially after Cyprus’ spat with the other eurozone countries and
yet Slovenia is strongly denying that is going to be the next recipient
of a European bailout, despite the fact that financial analysts around
the globe seem to think it inevitable. In a report published on April
8, 2013, the Institute of International Finance (IIF) stated that
“precautionary ESM support would help ensure smoother access to bond
markets and could require little more than the new government already
plans on its own.”
Speaking in parliament in late March, Prime Minister Bratušek
underscored the differences between Slovenia and Cyprus and her
government’s own assessment that Slovenia will not require outside
financial help: “Slovenia is capable of sorting things out itself,” she
told MPs. She also affirmed the coalition’s determination to sustain
fiscal consolidation and press ahead with bank restructuring and the
establishment of a state holding company to warehouse holdings in
state-owned banks and companies. Fiscal consolidation will take additional work, she acknowledged, saying that “macroeconomic indicators confirm that the situation is not good and austerity is a must.”
She also took note of the IMF’s projection that the fiscal deficit will
exceed its target this year by 1.5% of GDP.
There is a familiar ring to Slovenia’s insistence that it will not
request a bailout and its eagerness to clarify that it does not resemble
Cyprus in any way. Those Cypriot officials who repeatedly denied
the need for outside financial assistance in 2011 and early 2012 were
similarly quick to point out that Cyprus was not Ireland. Indeed!
Cyprus is not Ireland but it still resorte