(Updates with quotes, details, background)
By Marja Novak
LJUBLJANA Dec 15 The Bank of Slovenia urged the
government on Thursday to pursue structural reforms including
cutting red tape and enhancing privatisation as a way to ensure
the longer-term continuation of current positive trends.
Local banks, both state-owned and private, also had to
reduce their level of bad loans, it said in a report.
"The situation of the economy and the financial sector in
Slovenia is stimulating in 2016," it said.
"Economic activity continues to grow, the banking sector is
resistant to possible shocks. However, structural reforms are
needed to retain these good trends."
As a part of the government's reform drive, the parliament
was due later on Thursday to pass new legislation aimed at
attracting investment of at least 100 million euros by Canadian
car parts maker Magna International, which is
considering expanding in the region.
The new law will speed up the purchase of private land in
northeastern Slovenia where Magna might build a new factory.
The central bank said a reform of public administration was
needed to attract more foreign investment and more investment in
research and development would improve productivity.
It also called for more privatisation while urging
state-owned firms to improve their management.
Slovenia has been reluctant to sell major state-owned
companies and banks so the government still controls about 50
percent of the economy.
The bank said local banks had to further reduce their level
of bad loans, which has already dropped to 6.4 percent of all
loans in September from as much as 18.1 percent of all loans in
November 2013, when Slovenia was in severe financial crisis.
In 2013, the previous government had to pour more than 3
billion euros into local banks to prevent them from collapsing
under a large amount of bad loans. This helped the country to
narrowly avoid an international bailout.
After that bank overhaul, Slovenia returned to growth in
2014. The government expects the export-oriented economy to
expand by 2.9 percent next year versus growth of 2.3 percent
seen in 2016.
(Reporting by Marja Novak; Editing by Tom Heneghan)