LJUBLA Slovenian Prime Minister Alenka Bratusek resigned on Monday after losing the leadership of her party 10 days ago, paving the way for an early election in the small euro zone member that narrowly avoided an international bailout last year.
In a tweet, Bratusek said she hoped an election could be held by the summer. Analysts said the political uncertainty may slow or even halt plans to sell off state assets, but said Slovenia was unlikely to need outside financial help for now.
Bratusek's centre-left coalition government managed to stave off a bailout in December by pumping some 3.3 billion euros of state funds into Slovenia's troubled banks.
"If all are true to their word, we will have an election before the summer," Bratusek wrote in her tweet. However the constitutional rules may make it hard to meet that time frame.
Saso Stanovnik, chief economist of investment firm Alta Invest, said markets would want a "clear signal" from Bratusek's government, which will continue in a caretaker capacity until an election, that there would be no derailment of reform plans.
"We need the election as soon as possible so that a new government would come in and carry on with reforms," said Stanovnik, adding that a new bailout could not be ruled out in the longer term.
"If the new government is not sufficiently reform-oriented we could be facing bailout speculation again at the end of 2015," he said.
Following Bratusek's resignation on Monday, the yield on Slovenia's 10-year benchmark bond rose by 0.066 percent to 3,528 percent, Reuters data showed.
Slovenia has already covered its financial needs for 2014 by issuing four bonds with a total value of some 4.5 billion euros.
Bratusek's government planned to cut the budget deficit this year to 4.2 percent of GDP from 14.7 percent in 2013, when the deficit was boosted by the capital injections into local banks.
It has started to privatise the largest telecoms operator Telekom and planned to sell another 12 state firms by 2015, including Slovenia's second largest bank, Nova KBM.
President Borut Pahor and all the parliamentary parties have said they favour an election, even though the rules allow them to nominate candidates for prime minister from the existing legislature within 30 days without resorting to fresh polls.
"Parliament is expected to acknowledge the prime minister's resignation in the coming days and after that it is up to the parties to agree when the president should dissolve the parliament and determine the election date," parliamentary spokeswoman Gordana Vrabec told Reuters.
The president has to call an election 40 to 60 days after the parliament is dissolved, so it remains unclear whether the ballot could be held as early as June or July.
The political crisis erupted on April 26 when Bratusek's Positive Slovenia party elected her rival, Ljubljana Mayor Zoran Jankovic, as its new president.
Bratusek and a number of parliament members have since quit Positive Slovenia.
(Reporting By Marja Novak; editing by Zoran Radosavljevic and Gareth Jones)