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INTERVIEW-New Slovenian finance minister sees no need for faster privatisation
September 30, 2016 / 2:21 PM / a year ago

INTERVIEW-New Slovenian finance minister sees no need for faster privatisation

* Privatisation of NLB still on track

* Debt to be reduced by about 1.2 pct of GDP per year

* Effective corporate tax at 12.85 pct

By Marja Novak

LJUBLJANA, Sept 30 (Reuters) - Slovenia’s new finance minister Mateja Vranicar Erman said on Friday that consolidating the public finances and improving the management of state-owned firms are her main goals, while she saw no need to speed up privatisations.

The country has been more reluctant than some of its central and east European peers to sell its major companies, including banks, insurers and energy firms, and the government still controls about 50 percent of the economy.

“Privatisation has to be well-considered, in the interest of the (current) owner and with the goal of maximizing the sales price. I do not see a need to speed it up,” Erman told Reuters.

The first woman to hold the post, she was appointed to head the finance ministry last week after predecessor Dusan Mramor resigned in July for personal reasons.

Erman said the government is still determined to sell the country’s largest bank, Nova Ljubljanska Banka (NLB) as demanded by the European Commission, although the process has been delayed due to market volatility following Britain’s June vote to leave the European Union.

“We made an obligation to sell NLB by the end of 2017 and we are working towards fulfilling that obligation,” said Erman.

NLB is by far the largest of about 30 state firms that are due to be privatised this or next year.

After the country narrowly avoided an international bailout for its mostly state-owned banks in 2013, Slovenia’s economy has been growing since 2014. It expects an expansion of 2.3 percent this year, similar to the growth rate seen in 2015.

Last year, it managed to reduce the budget deficit to below 3 percent of GDP, the EU ceiling, for the first time in seven years, and Erman said she was determined to keep reducing the budget deficit and national debt in line with EU rules.

She said Slovenia could issue new debt of up to 3.5 billion euros next year to cover its budget needs and repay bonds maturing in 2017, and might also seek to prefinance debt that is due to mature in 2018 and 2019.

Debt should fall by about 1.2 percent of GDP per year in the coming years from 83.1 percent of GDP in 2015, she said.

The government has pledged to bring the deficit to zero by the end of 2020 although Erman said it would have to resist growing pressures to reduce taxes and increase public spending to meet that goal.

Erman said Slovenia’s business environment was favourable even after parliament on Tuesday increased tax on corporate profits to 19 percent from 17 percent to compensate for a cut in personal income tax for those with higher salaries.

“With the change we increased the effective corporate tax rate to 12.85 percent from 11.4 percent previously as we did not cut tax incentives,” Erman said. “Slovenia thus remains the sixth most competitive EU country regarding the corporate tax level according to European Commission data.”

Editing by Catherine Evans

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