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Under-pressure Slovenia adopts fiscal 'golden rule'

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(GlobalPost/GlobalPost)

Slovenia's parliament on Friday adopted a new balanced budget law and made calling referendums more difficult, in an attempt to restore investor confidence in the embattled eurozone country.

In line with a principle adopted in most European Union countries in response to the eurozone crisis, the general government budget will have to be balanced, with exceptions possible only under "extraordinary circumstances".

Prime Minister Alenka Bratusek's centre-left government wanted the much-delayed "golden rule", which will be written into the constitution, to apply from 2017 but under pressure from the opposition it will enter into force from 2015.

The government is ready to "act for the people's and the state's benefit," Bratusek told lawmakers. The bill was approved by 78 votes against eight in the 90-seat parliament.

Slovenia, once a model EU and eurozone newcomer, has been struggling to jumpstart an economy in recession since 2011.

There is widespread concern that it is at risk of becoming the sixth eurozone country to need an outside bailout after Greece, Ireland, Portugal, Spain and Cyprus.

With Slovenia's banks sitting on a mountain of bad debts, Moody's cut its rating on Slovenian government bonds to "junk" in late April.

Earlier this month, Bratusek presented Brussels with an action plan of privatisations, tax rises and spending cuts aimed at improving the former Yugoslav republic's public finances.

Lawmakers also approved legislation making referendums possible only if an initiative has at least 40,000 signatures. Referendum challenges will also not be allowed for legislation dealing with taxes, the budget or emergency measures.

Previously, a referendum could be called with support of just 30 MPs, and previous referendums have prevented structural reforms that economists say are vital to getting the economy back on track.

Former premier Borut Pahor's centre-left government collapsed in late 2011 after a referendum rejected major changes to the country's pension system.

bk/stu/arp

http://www.globalpost.com/dispatch/news/afp/130524/under-pressure-slovenia-adopts-fiscal-golden-rule-0