November 11, 2013 / 10:47 AM / 6 years ago

Slovenian government to face confidence vote on Thursday

LJUBLJANA (Reuters) - Slovenia’s parliament will hold a vote of confidence on Thursday in the government of the small euro zone country which is trying to avoid an international bailout.

Analysts expect Prime Minister Alenka Bratusek’s centre-left government to win the vote, which a parliamentary spokeswoman said on Monday would be linked to amendments to the 2014 budget.

“The government coalition continues to support Bratusek in spite of some differences between the parties,” said Borut Hocevar, a political analyst at daily Finance.

But he said winning the vote would not solve Slovenia’s financial problems, which depend on the cost of tackling some 7.9 billion euros ($10.6 billion) of bad loans - more than a fifth of economic output - at mainly state-owned banks.

The government says it can avert a bailout by reforms including higher taxes, spending cuts and privatisation. The latest budget amendments focus on taxes on real estate.

The government plans to recapitalise banks later this year or in early 2014 after the results of external stress tests are published on December 13.

It has earmarked 1.2 billion euros for bank recapitalisation but credit rating agency Fitch said on Friday the tests could put the figure at 4.6 billion euros.

According to the amended budget, the central budget deficit, which does not include bank recapitalisation, would fall to 2.9 percent of GDP in 2014 from 4 percent of GDP seen this year.

Slovenia was badly hit by the global financial crisis due to its dependency on exports and fell into a new recession in 2012 due to lower export demand, the credit crunch and the squeeze on domestic spending from budget cuts.

Reporting By Marja Novak; editing by Zoran Radosavljevic and Ruth Pitchford

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