November 27, 2017 / 1:58 PM / a year ago

UPDATE 1-Slovenia should curb budget spending, introduce reforms - cenbank

(Updates with details, background)

By Marja Novak

LJUBLJANA, Nov 27 (Reuters) - Slovenia’s government needs to restrain spending and introduce structural reforms including in the national pension and health systems to keep public finances strong, the Bank of Slovenia said on Monday.

The government is under pressure to raise public sector pay, with several trade unions including those for doctors and teachers demanding wage hikes ahead of a general election expected next June.

“The main public finance challenges in the coming year remain controlling pressure to increase spending, speeding up the use of European funds and enforcing structural reforms that would ensure the long-term sustainability of public finances,” the central bank said in a report.

It picked out the pension system, the inefficient national health system and long-term care for the elderly as areas that needed changes.

Economic growth remains high, it said, with “accelerated export growth in the third quarter”. There was brisk activity in the manufacturing sector and rapid growth in private spending, it said.

The statistics office will release gross domestic product (GDP) data for the third quarter on Thursday. The economy expanded 4.4 percent year-on-year in the second quarter.

The bank said the government expects to run a budget surplus next year, after this year’s forecast for a deficit of 0.8 percent of GDP, narrowing from a 1.9 percent shortfall in 2016.

Slovenia, which narrowly avoided the need for an international bailout for its banks in 2013, returned to growth a year later. The government expects the economy to expand 4.4 percent this year, up from 3.1 percent in 2016, thanks to stronger exports and investment.

The International Monetary Fund said earlier this year that Slovenia should raise its retirement age to ensure the sustainability of its pension system.

At present Slovenians can retire at the age of about 59-1/2, but in line with a 2013 pension reform plan that is being gradually raised to 65 by the end of 2019.

Last year the Labour Ministry proposed raising the retirement age further to 67, due to the rapid ageing of the population. But the government has so far not altered its plans from 2013. (Reporting by Marja Novak; Editing by Hugh Lawson)

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