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Minister of Finance visits Faculty of Economics to give a lecture on effective policy measures and future growth challenges of Slovenia

27.03.2018Comments are closed.

Last week Faculty of Economics had an honor to welcome the current Minister of Finance, Mateja Vraničar Erman, MPA, for a guest lecture and discussion. The lecture, entitled “Slovenia: Progress made and future challenges” was attended by numerous professors and students of FELU MBA and IMB programme, who had a chance to discuss different issues and aspects of macroeconomic policy with the Minister.

In her lecture Minister Vraničar Erman presented developments that occurred in times before the crisis, following with undertaken governmental policy measures for ensuring macroeconomic stabilization and growth of Slovenia.

According to the Minister, Slovenian response to crisis had two major elements: first, Slovenia was late in responding to the banking crisis and, second, pro-cyclical decisions of authorities just before the major hit of the crisis resulted in un-favorable developments in the public sector on the expenditures and revenues side that were off-set by temporary and not permanent measures. In addition, reduction of the public expenditures in 2012 that led to a sharp decline in GDP growth. “When you are in good times, you do not see the consequences of some actions so clearly, but when the crisis hits, then you see whether you have a stable source of public revenues and stable projections of expenditures,” said the Finance Minister.

After the years of crisis, Slovenian government aimed to ensure macroeconomic stabilization and growth using different policy measures. Since 2013 country went through bank sector stabilization and recapitalization, reduction of the administrative burden, tax restructuring, improving the business environment and increase in public sector investments. “Stabilization and recapitalization, together with systemic changes in the banking regulation”, she added, “made the banking system more robust and more able to respond to the future changes in the economic developments without using public money to the large extent as was the case in the past”.

The government is now focusing on further graduate fiscal consolidation by providing stable revenues and moderate expenditure growth. Some of the short-term challenges she addressed included ideas for new non-fiscally neutral tax reform, unsustainable public sector wage increases, adoption of expenditure-raising legislation proposals and insufficient readiness of the country’s public finances to offset the next turn in the economic cycle.

Minister Vraničar Erman emphasized that the time for non-fiscally neutral tax reform that many politicians advocate, is not yet adequate. “If we are just cutting taxes without reducing the expenditures, we are heading to a new disaster, the crisis will appear again and it will be more severe,” Vraničar Erman argued. Moreover, Minister said that the increases in wages that public sector unions are suggesting are not sustainable and that country needs moderate increases that could be afforded due to its economic strength. “Even if those expenditures are financed today, in the times of the crisis that will certainly occur, the cuts in social transfers, wages and pensions will be much more severe”.

At the end, Minister Vraničar Erman concluded that providing a sustainable increase in growth and productivity is only possible by further improvements of Slovenian business environment, balancing the output of education system with needs of the economy, smart uses of EU funds and domestic investment opportunities and, finally, by fostering quality of education, innovation and open labor market.

Bruna Ignac


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