Slovenia: Solid fundamentals protect during the international crisis

Slovenia: Solid fundamentals protect during the international crisisJuly 2011Ministry of FinanceRepublic of Slovenia

AAAAAAAAAAAAAAAAAAAAAAAA?123451234566AAAAAAAA123456123456123456123456UBS Warburg

*Table of Contents

Country Overview Key StrengthsStrong Economic Performance over the Past YearsPolicy response to global financial crisis Financing Programme


*Key ConsiderationsEuro area member for over four years (joined January 1st, 2007)Prudent fiscal policy track record and steady competitiveness positionLow government debt with low borrowing requirement in the futureSound banking system Solid economic fundamentals and adequate policy response to crisis to mitigate its impact Government committed to stability and sustained reform


*Country Overview


*Slovenia: Member of the Euro area for 4 yearsPopulation of 2 million

Track record of strong macroeconomic performance

GDP per capita 87 % of EU average

Stable multi-party democracy

Joined the Euro area in January 2007

Joined OECD in June 2010AustriaSloveniaHungaryCroatiaItaly


*A strong sovereign credit in the euro zoneDouble A credit rating (Aa2 / AA /AA) Well diversified and open economySustained real convergenceLow public debt burden (38.1 % of GDP in 2010)ECB eligibility for government paperWell recognised economic stability

Peer credit ratingsSource: Moodys (July 12, 2011)/ Standard & Poors/Fitch (July 12, 2011)


Also a strong credit in European UnionSource: Standard&Poor`s, July 12, 2011*

Sheet1

AAA AU; DK; FI; FR; DE; LU; NL; SE; UKAU;DK;FI;FR;DE; LU;NL;SE;UK

AA+ BEBE

AA SLOVENIA; ES; IRLSLOVENIA; ES; IRL

A+ IT; CY; SKIT; CY; SK

A MT; CZ; EEMT; CZ; EE

A- PT; PLPT; PL

BB+ GRGR

BBB BG; LTBG; LT

BB+ RORO

BB LVLV

BBB- HUHU

Source: Standard & Poor`s, August 19,2010

AAA AU; DK; FI; FR; DE; LU; NL; SE; UK

AA+ BE

AA SLOVENIA; ES

A+ IT; SK

A MT; EE; CZ;

A- PL,CY

BBB BG; LT

BBB+ IRL

BBB- HU, PT

BB+ RO, LV

CCC GR

Source: Standard & Poor`s, February 18,2011

Sheet2

AAAAU;DK;FI;FR;DE; LU;NL;SE;UK

AA+BE

AASLOVENIA; ES; IRL

A+IT; CY; SK

AMT; CZ; EE

A-PT; PL

BB+GR

BBBBG; LT

BB+RO

BBLV

BBB-HU

Source: Standard & Poor`s, August 19,2010

BB+ RO

AAA AU;DK;FI;FR;DE;LU;NL;SE;UK

AA+ BE

AA SLOVENIA; ES; IRL

A+ IT; CY; SK

A MT;CZ; EE

A- PT; PL

BBB+ GR

BBB BG;LT

BB LV

BBB- HU

Sheet3

AAA AU; DK; FI; FR; DE; LU; NL; SE; UK

AA+ BE

AA SLOVENIA; ES

AA- IRL

A+ IT; CY; SK

A MT; EE; CZ

A- PT, PL

BBB BG; LT

BBB- HU

BB+ GR, RO

BB LV

Source: Standard & Poor`s, October 26,2010


*Strong Economic Performance over Past Years


*High and sustained degree of real convergenceSource: Eurostat, 21.06.2011


*Growth led by exports and investments Source: Eurostat, 21.06.2011


*Industry, agriculture and services value added, 2009

Slovenia has a highly diversified economyComparable to EU member statesGrowth is driven by manufacturing and servicesSuccessful and growing tourism industrySmall agricultural sectorSource: SORS

Chart1

734.7

130

6025.3

3173.2

4312.1

2335.1

8085.5

5226.6

23.6

Valueadded2009

Value added by activities and GDP, constant prices, original data, Slovenia, quarterly

Constant previous year prices (mio EUR)

2009Q12009Q22009Q32009Q4

Agriculture and fishing156.8207.7185.6181.4734.7

Mining and quarrying31.631.532.434.5130

Manufacturing14111509.91542.31562.16025.3

Utilities and Construction579.8586.6603.8518.13173.2

Trade, Hotels and restaurants151.4178225.51604312.1

Transport and communications575.8613.5590.3555.52335.1

Financial, business and personal services390.8382.2381.5368.78085.5

Government and social services473.9478.9480.9481.85226.6

Other5.95.965.823.6

Value added, total7180.67635.47709.37520.430045.7

Source: Statistical Office of the Republic ofSlovenia.

Use and publicaton of data is allowed provided the source is

acknowledged.

Data before 2007 are recalculated using the fixed exchange rate

between tolar and euro (239,64 tolars for one euro).

Linked content:

- (seznam HREF= http://www.stat.si/doc/metod_pojasnila/03-002-ME.htm

target=_blank) Methodological explanations

- (seznam

HREF=http://www.stat.si/eng/koledar.asp?pod=03&kon=002&DatumOd=1.1.20-

05&DatumDo=Date() target=_blank) Release Calendar

Valueadded2009


*Export driven economyFocus on high value-added exports

More than two thirds of exports destined for EU

16 bn exports of goods and services in 2010; 46.8% of GDPExports of goods jan 2011Geographic distribution, 2010Source: SORS

Chart1

0.0349178469

0.0914216909

0.1480888009

0.3343548427

0.3912168185

IZVOZ

Izvoz in uvoz po Standardni mednarodni trgovinski klasifikaciji, Slovenija, kumulativni podatki

2010M122011M01

IzvozUvozIzvozUvoz

1000 EUR0 ivila in ive ivali593648127332549334105181

1 Pijae in tobak7226516795237068767

2 Surove snovi, razen goriv70491211804335088489338

3 Mineralna goriva in maziva779580255477887985266075

4 Olja, masti in voski ival. in rastlin. izvora10438592757904332

5 Kemini proizvodi29620402713658224156230244

6 Izdelki, razvreni po materialu40459213828061356836295763

7 Stroji in transportne naprave70778375816516594256431356

8 Razni izdelki19665811968883149012150265

9 Proizvodi in transakcije246497555820358557

Sheet1


2010M122011M012011M01

IzvozUvozIzvozUvozv%

1000 EUR0 ivila in ive ivali593648127332549334105181Food and beverages53,0403.5%Food and beverages

1 Pijae in tobak7226516795237068767Fuels and raw materials138,8699.1%Fuels and raw materials

2 Surove snovi, razen goriv70491211804335088489338Chemicals products224,94614.8%Chemicals products

3 Mineralna goriva in maziva779580255477887985266075Manufactured goods507,88333.4%Manufactured goods

4 Olja, masti in voski ival. in rastlin. izvora10438592757904332Machinery and equipment594,25639.1%Machinery and equipment

5 Kemini proizvodi296204027136582241562302441,518,994100.0%



8 Razni izdelki19665811968883149012150265


1518994

Sheet1

Exports of goods jan 2011

Chart1

0.012474263

0.066936212

0.0149505937

0.7157805316

0.0680408914

0.0532267719

0.0685907363

CIS; 5,3%

IZVOZ


2010M122011M01

IzvozUvozIzvozUvoz

1000 EUR0 ivila in ive ivali593648127332549334105181

1 Pijae in tobak7226516795237068767

2 Surove snovi, razen goriv70491211804335088489338

3 Mineralna goriva in maziva779580255477887985266075

4 Olja, masti in voski ival. in rastlin. izvora10438592757904332

5 Kemini proizvodi29620402713658224156230244



8 Razni izdelki19665811968883149012150265


Sheet1


2010M122011M012011M01

IzvozUvozIzvozUvozv%

1000 EUR0 ivila in ive ivali593648127332549334105181Food and beverages53,0403.5%Food and beverages

1 Pijae in tobak7226516795237068767Fuels and raw materials138,8699.1%Fuels and raw materials

2 Surove snovi, razen goriv70491211804335088489338Chemicals products224,94614.8%Chemicals products

3 Mineralna goriva in maziva779580255477887985266075Manufactured goods507,88333.4%Manufactured goods

4 Olja, masti in voski ival. in rastlin. izvora10438592757904332Machinery and equipment594,25639.1%Machinery and equipment

5 Kemini proizvodi296204027136582241562302441,518,994100.0%



8 Razni izdelki19665811968883149012150265


1518994

Sheet1

Exports of goods jan 2011

Sheet2

Izvoz in uvoz po dravah, Slovenija, kumulativni podatkiEUEFTAIzvoz in uvoz po dravah, Slovenija, kumulativni podatkiCroatiaIzvoz in uvoz po dravah, Slovenija, kumulativni podatkiZDAIzvoz in uvoz po dravah, Slovenija, kumulativni podatkiformer yugoslavijaIzvoz in uvoz po dravah, Slovenija, kumulativni podatkiCIS

IzvozIzvozIzvozIzvozIzvoz

2010M122011M012010M122011M012010M122011M012010M122011M012010M122011M01

1000 EURAT Avstrija14924971129491000 EURCH vica18340921040HR Hrvaka1000 EUR122077483647US Zdruene drave1000 EUR272667191991000 EURBA Bosna in Hercegovina52859132771

BE Belgija20961017275IS Islandija89325MK Makedonija, Nekdanja jugoslovanska republika1402069776

BG Bolgarija13678412280LI Lihtentajn1693120XM rna gora [2005M06-2006M12]--

CY Ciper90143437NO Norveka415092593XS Srbija [od 2005M06]57212439300

CZ eka republika4344533869922750423778124092181847

DE Nemija3613652339631Dec-10Jan-11Dec-10Jan-11Izvoz in uvoz po dravah, Slovenija, kumulativni podatki

DK Danska16375116352EFTA227,50423,7781.2%1.6%IzvozCISIzvoz in uvoz po dravah, Slovenija, kumulativni podatki

EE Estonija272841644Croatia1,220,77483,6476.7%5.5%2010M122011M01Izvoz

ES panija22930719617USA272,66719,1991.5%1.3%00 Drave - SKUPAJ1000 EUR1823787115189942010M122011M01

FI Finska436064190EU13,054,3131,163,70771.6%76.6%1000 EURAM Armenija499465

FR Francija1477871148105Other former Yugoslavia1,240,92181,8476.8%5.4%AZ Azerbajdan6438248

GB Zdrueno kraljestvo45018843626CIF970,74355,3655.3%3.6%BY Belorusija458631859

GR Grija622375210other1,250,94991,4516.9%6.0%EE Estonija272841644

HU Madarska54376347731total18,237,8711,518,994100.0%100.0%GE Gruzija811966

IE Irska223181800KG Kirgizistan3947256

IT Italija2222573180522KZ Kazahstan46694667

LT Litva601254126LT Litva601254126

LU Luksemburg360591749LV Latvija249212269

LV Latvija249212269MD Moldavija, Republika11731246

MT Malta333768RU Ruska federacija53477832570

NL Nizozemska36581435618TJ Tadikistan299974

PL Poljska62978655370TM Turkmenistan251391

PT Portugalska527423472UA Ukrajina17039710695

RO Romunija29430627672UZ Uzbekistan19940489

SE vedska1832082034797074355365

SK Slovaka26510719948

130543131163707

Sheet2


*Good labour market performanceSource: Eurostat


*Maintaining market share in EU-15 Exports of goods from Slovenia to EU-15 as % share of EU-15 intra-EU importsSource: Eurostat

Chart1

0.4

0.42

0.44

0.42

0.4

0.41

0.46

0.46

0.46

Import EU25 Intra

Data and Footnotes

DS-016890-EU27 Trade Since 1995 By CN8

Short Description

Extracted on2010-04-12 11:58:56

PARTNERSLOVENIAPRODUCTTOTAL

PERIOD/REPORTEREU15 (AT, BE, DE, DK, ES, FI, FR, GB, GR, IE, IT, LU, NL, PT, SE)ImportEU25intraImportEU25extraImport total% SLO

Jan.-Dec. 19995297

Jan.-Dec. 20006283

Jan.-Dec. 200165691626058927387

Jan.-Dec. 200268321634749882047

Jan.-Dec. 200372281646923875832

Jan.-Dec. 200473781768057969901

Jan.-Dec. 2005750518855381112948

Jan.-Dec. 2006876221105581265809

Jan.-Dec. 20071027822192921329537

Jan.-Dec. 20081030722368071435186

Jan.-Dec. 2009843118138141113286

20010.40.0026

20020.420.0027

20030.440.0029

20040.420.0027

20050.40.0025

20060.410.0026

20070.460.0029

20080.460.0028

20090.460.0029

Data and Footnotes

Import EU25 Intra


*Strong investment over the past yearsSource: Eurostat, 21.06. 2011Current account balance % GDP (2010)Slovenias current account balance (% GDP)

Source: Eurostat, 21.06.2011


*Good financial position and sound banking systemLow external indebtedness of the economyLowest household indebtedness in EMU 30% of GDP in 2008 and 33% in 2009Banking sector assets in GDP only one third of EMU averageBanking systems cross-border indebtedness has fallen from 46% of GDP in 2009 to about 32% at the end 2010Comfortable banking system capital adequacy of 11.3% and Tier 1 of 9.6% (March 2011)Short-term net creditor position of domestic banking system vis-a-vis euro area ???Banking systems external debt maturity profile is spread out (bulk more than 2 years)Source:IMF

Chart3

103.9828130087

166.2813554358

167.7428708568

213.3686440678

235.7750729656

242.1515082039

247.8592496374

270.7972843879

300.3339568012

334.4501318253

370.8338514558

433.4726976822

744.6665090912

1419.4291409599

Outstanding gross external debt in euro area % GDP (2009)

Sheet3

AMECO RESULTS

Gross domestic product at current market prices (UVGD)/ExternalDebt

CountryUnit200920092009

SlovakiaMrd EURO-SKK63.3316265.854104

SloveniaMrd EURO-SIT34.8938758.022166

ItalyMrd EURO-ITL1520.872551.151168

GermanyMrd EURO-DEM2407.25136.21213

FinlandMrd EURO-FIM170.971403.107236

SpainMrd EURO-ESP1051.1512545.378242

GreeceMrd EURO-GRD237.4985588.662248

FranceMrd EURO-FRF1921.9245204.518271

AustriaMrd EURO-ATS276.8921831.601300

PortugalMrd EURO-PTE163.8911548.134334

BelgiumMrd EURO-BEF337.7581252.521371

NetherlandsMrd EURO-NLG570.2082471.696433

MaltaMrd EURO-MTL5.7115542.532745

IrelandMrd EURO-IEP163.5432321.3771419

Sheet3

Outstanding gross external debt in euro area % GDP (2009)

AmecoCurrent

AMECO RESULTS

Gross domestic product at current market prices (UVGD)/ExternalDebt

CountryUnit20092009

European Union (27 countries)Mrd ECU/EUR- Standard aggregation11807.43

European Union (15 countries)Mrd ECU/EUR- Standard aggregation10937.18

Euro area (16 countries)Mrd ECU/EUR- Standard aggregation8980.545

Euro area (12 countries)Mrd ECU/EUR- Standard aggregation8859.662

EU15 (including D_W West-Germany)Mrd ECU/EUR- Standard aggregationNA

EA12 (including D_W West-Germany)Mrd ECU/EUR- Standard aggregationNA

BelgiumMrd EURO-BEF337.7581252.521

BulgariaMrd BGN66.25627

Czech RepublicMrd CZK3627.188

DenmarkMrd DKK1659.705

GermanyMrd EURO-DEM2407.25136.21

West GermanyMrd EURO-DEMNA

EstoniaMrd EEK214.8282

IrelandMrd EURO-IEP163.5432321.377

GreeceMrd EURO-GRD237.4985588.662

SpainMrd EURO-ESP1051.1512545.378

FranceMrd EURO-FRF1921.9245204.518

ItalyMrd EURO-ITL1520.872551.151

CyprusMrd EURO-CYP16.94646

LatviaMrd LVL13.24432

LithuaniaMrd LTL92.3533

LuxembourgMrd EURO-LUF37.7551

HungaryMrd HUF26094.82

MaltaMrd EURO-MTL5.7115542.532

NetherlandsMrd EURO-NLG570.2082471.696

AustriaMrd EURO-ATS276.8921831.601

PolandMrd PLN1341.881

PortugalMrd EURO-PTE163.8911548.134

RomaniaMrd RON491.2737

SloveniaMrd EURO-SIT34.8938758.022

SlovakiaMrd EURO-SKK63.3316265.854

FinlandMrd EURO-FIM170.971403.107

SwedenMrd SEK3057.056

United KingdomMrd GBP1395.872

CroatiaMrd HRK333.0628

Macedonia FYRMrd MKD406.5652

TurkeyMrd TRY948.219

IcelandMrd ISK1500.162

NorwayMrd NOK2408.326

SwitzerlandMrd CHF535.5678

United StatesMrd USD14185.32

JapanMrd JPY474218.8

CanadaMrd CAD1524.927

MexicoMrd MXN11807.37

KoreaMrd WON1056296.6

AustraliaMrd AUD1320.503

New ZealandMrd NZD182.8212

Sheet1


*Banking system still to catch up Source: Bank of Slovenia Annual Report 2009; EU banking structures; Statistical Office RS, Eurostat, elaboration by Institue of Macroeconomic AnalysisTotal Assets of Financial Credit % GDP, 2009


*Policy response to global financial crisis


*Global financial crisis and collapse of tradeSource: Eurostat, 22.06.2011


*External openness strongly affected growth and investmentSource: Eurostat, 22.06.2011


*Stabilization and gradual recovery in line with major trading partners Source: Eurostat, 22.06.2011


*The downturn also reflected in inflation trendsSource: Eurostat


*Coordinated EU policy response to crisis.Source: European Commission. Ameco


*in line with existing debt levelsSource: Eurostat

Chart1

142.8

119

96.8

96.2

93

83.2

81.7

72.3

68

62.7

60.8

60.1

55

48.4

43.6

41

38.5

38

18.4

16.2

2010

General Government debt % GDP 2010

Sheet0

[tsdde410] - General government debt

General government consolidated gross debt as a percentage of GDP

geo\time199519961997199819992000200120022003200420052006200720082009

European Union (27 countries)::68.366.465.861.96160.461.962.262.861.558.861.874

European Union (25 countries)68.770.368.566.76662.161.260.662.162.563.26259.462.574.7

European Union (15 countries)69.771.669.86867.163.262.361.663.163.464.3::::

Belgium130.4127.3122.7117.4113.7107.9106.6103.598.594.292.188.184.289.696.2

Bulgaria::105.179.679.374.367.353.645.937.929.221.617.213.714.7

Czech Republic14.612.513.11516.418.524.928.229.830.129.729.4293035.3

Denmark72.669.465.461.458.152.449.649.547.245.137.832.127.434.241.4

Germany (including former GDR from 1991)55.658.459.760.360.959.758.860.463.965.86867.664.966.373.4

Estonia97.46.25.565.14.85.75.654.64.43.74.67.2

Ireland82.173.564.353.648.537.835.632.23129.727.424.82544.365.5

Greece9799.496.694.594103.4103.7101.797.498.6100106.1105110.3126.8

Spain63.367.466.164.162.359.355.552.548.746.24339.636.139.853.2

France55.55859.259.458.957.356.958.862.964.966.463.763.867.578.1

Italy121.5120.9118.1114.9113.7109.2108.8105.7104.4103.8105.8106.6103.6106.3116

Cyprus40.642.846.751.251.848.752.164.668.970.269.164.658.348.358

Latvia15.113.911.19.612.512.31413.514.614.912.410.7919.736.7

Lithuania11.914.315.616.622.823.723.122.321.119.418.41816.915.629.5

Luxembourg7.47.47.47.16.46.26.36.36.16.36.16.76.713.614.5

Hungary85.271.46259.959.8555255.658.459.161.865.766.172.378.4

Malta35.340.148.453.457.155.962.160.169.372.370.163.461.763.168.6

Netherlands76.174.168.265.761.153.850.750.55252.451.847.445.358.260.8

Austria68.368.364.464.867.266.567.166.565.564.863.962.159.362.567.5

Poland4943.442.938.939.636.837.642.247.145.747.147.74547.150.9

Portugal6159.956.152.151.450.552.955.656.958.363.663.962.765.376.1

Romania711.115.216.621.722.525.724.921.518.715.812.412.613.423.9

Slovenia::::::26.82827.527.22726.723.422.535.4

Slovakia22.131.133.834.547.950.348.943.442.441.534.230.529.627.835.4

Finland56.65753.948.445.743.842.541.544.544.441.739.735.234.143.8

Sweden72.2737169.164.853.654.452.652.351.150.8454038.241.9

United Kingdom51.251.349.846.743.74137.737.53940.942.543.444.552.168.2

Iceland::::::::::2627.929.157.4:

Liechtenstein:::::::::::::::

Norway::::::29.236.144.345.644.555.452.650.244.1

Switzerland:::::::::::::::

Montenegro:::::::::::::::

Croatia:::::::4040.943.243.735.532.928.935.3

Former Yugoslav Republic of Macedonia, the:::::::::::::::

Turkey::::::104.49385.159.252.346.139.439.545.4

:=Not available

:

Source of Data::Eurostat

Last update:22.02.2011

Date of extraction:25 Feb 2011 11:14:12 MET

Hyperlink to the table:http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=0&language=en&pcode=tsdde410

General Disclaimer of the EC:http://europa.eu/geninfo/legal_notices_en.htm

Short Description:The general government sector comprises the subsectors of central government, state government, local government and social security funds. GDP used as a denominator is the gross domestic product at current market prices. Debt is valued at nominal (face) value, and foreign currency debt is converted into national currency using end-year market exchange rates (though special rules apply to contracts). The national data for the general government sector are consolidated between the sub-sectors. Basic data are expressed in national currency, converted into euro using end-year exchange rates for the euro provided by the European Central Bank. Data are compiled on an accrual basis.

Sheet1

[tsdde410] - General government debt

General government consolidated gross debt as a percentage of GDP

geo\time2009nov podatek za leto 20092010

Greece126.8127.1142.8

Italy116116.1119

Belgium96.296.296.8

Ireland65.565.696.2

Portugal76.18393

Germany73.473.583.2

France78.178.381.7

Austria67.569.672.3

Malta68.667.668

Netherlands60.860.862.7

Cyprus585860.8

Spain53.253.360.1

Poland50.950.955

Finland43.843.848.4

Denmark41.441.843.6

Slovenia35.435.441

Czech Republic35.335.338.5

Slovakia35.435.238

Luxembourg14.514.618.4

Bulgaria14.714.616.2

:=Not available

:

Source of Data::

Last update:

Date of extraction:

Hyperlink to the table:

General Disclaimer of the EC:

Short Description:

Sheet1

2010

General Government debt % GDP 2010


*Policy to turn the fiscal position and enhance economic potential 2010 Stabilization Program targets return to 3% deficit by 2013After keeping close to the Program in 2010, a weaker domestic consumption and the need for a systemic bank capitalization prompted the goverment to introduce a supplementary budget to keep the deficit within the Program limits. The supplementary budget is targeting mainly own investments, investment transfers and costs. Until the budget is enacted by the Parliament, the Ministry of finance used its legal powers to minimize expenditures for wages and salaries and for investements and to keep certain subsidies in check.The government has already proposed a number of laws that will streamline the management social transfers and has lowered the indexation of pensions to a minimum.After rejection of 2010 pension reform in a public referendum initiated by the trade unions, the government has reinstated the social dialogue on the issue, intending to propose a new pension law as close to the earliest possible date for the Parliament to pass a new law, which is one year from the referendum.


*Preventive measures to ensure functioning of banking system in line with EUIn 2010, the government has used, in line with EU Commission reccomendations, guarantees to provide four local banks with necessary liquidity. A portion of guaranteed loans has already been replaced with fresh funding withiout state guarantees.

No other measures were necessary and Slovenian banks have passed the first EBA stress test.Measures were phased out end 2010.


Stability Programme submitted to EUGeneral government deficit to return into the scope of Maastricht criteria (3% of GDP) by 2013Source: Ministry of Finance*

Chart1

-5.6

-5.5

-3.9

-2.9

-2

General government deficit as % of GDP

Sheet1

General Government Deficit

20102011201220132014

-5.6-5.5-3.9-2.9-2

Sheet1

General government deficit as % of GDP

Sheet2

Sheet3


Withdrawal of fiscal stimulus and consolidationThe Stabilization Program, approved by the EU Council and last updated in April 2011, foresees a gradual, primarily expenditure driven fiscal consolidation over the medium term. Deficit below 3% of GDP by 2013Rationalization and discontinuation of inefficient government programsRationalization of cost of public administrationRationalization and better targeting of social transfersShifting investment financing towards EU fundsIncrease in excises rates and widening social security contribution tax baseBesides the above and continuing the work on pension reform, the goverment is launching a reform of the health sector in order to achieve a higher efficiency, lower unit cost and more equitable access to the public health services.The government is preparing a liberalization of the labour market.

*


Functioning of minority governmentAt present, Slovenia is run by a minority government, the governing coalition losing two smaller partners out of four. Despite this formal drawback, the regulation proposed so far to the Parliament are being dealt with and several laws from the reform and adjustment package have already been approved and enacted.The government is preparing a strategy on management and privatization of state assets.

*


*Financing Programme


2011 borrowing requirement*Max. gross borrowing: 4.2 Bn. EURPurpose of borrowing:Gross borrowing for 2011 central government budget: 2.9 Bn. EURPre-financing of debt due for redemption in 2012 and 2013: 1.3 Bn. EURAlready executed borrowing:Pre-financing of part of 2011 repayments executed in 2010: 0.3 Bn. EURExpected structure of borrowing at the end of 2011:Short term (end of the year) 30 Ml. EURLong term Up to 3 Bn. EUR


*Further government debt market integrationEstablished issuer in the Euro debt marketInternational structure of primary dealers with strong domestic institutionsAbanka; BNP Paribas; Credit Agricole CIB; Commerzbank; Deutsche Bank; Goldman Sachs; HSBC; JP Morgan; Nova Ljubljanska Banka; RBS; Socit Gnrale CIB; UniCredit Banka SlovenijaNewly issued bonds trading on major international trading platformsMTS Slovenia (www.mtsslovenia.com), Bloomberg (SLOREP Govt ), BondvisionBenchmark size issues to ensure liquidity (minimum 1 bn)Bonds in new S&P Eurozone Government Bond IndexMTS Slovenia established since March 2007 (www.mtsslovenia.com) Currently 17 system participants (14 international and 3 from Slovenia) 8 bonds on the system (http://www.mtsdata.com/content/data/public/rsl/bulletin/, http://www.mtsdata.com/content/data/public/rsl/fixing/) Broaden investor base to increase integration of Slovenias signature in the Euro area


*Strong performance and supportSource: MTS Slovenia, Bloomberg, 24 June 2011; Ministry of FinanceDistribution by regionDistribution by investor type


*Strong relative performance in turbulent timesSource: MTS.


*Favourable state budget debt portfolioStable debt service profileMost debt denominated in local currencySource:Ministry of Finance (financing in 2011 included) Outstanding debt by type of currency (31.12.10)EUR: 99.8%USD: 0.0%Other: 0.2%


*Contact details

Republic of Slovenia Ministry of FinanceTreasury Directorate Botjan Pleec Director General [email protected] Tel: +386 1 369 6410Public Debt Management Department Marija Eber Head of Department [email protected] Tel: +386 1 369 6442

*****Slovenia is located in the centre of Europe, bordering Italy on the west and Austria and Hungary to the north. The only former Yugoslavia country that we share a border with is Croatia, with whom we have good economic and political relations that have further improved since the change in leadership in Zagreb.Slovenia has always been orientated towards western Europe reflecting our heritage and geographic location, and following independence in 1991, we have quickly deepened our political and economic links with the international community. *****Slovenias economic well-being is not dependent upon any single sector, though manufacturing is the most important sector of the economy. The main manufacturing sectors in terms of employment and exports are electrical equipment and appliances [SPECIFIC EXAMPLE?], transport equipment, including vehicles, parts for cars such as [EXAMPLE?] and textiles.Slovenias natural beauty and location between the Alps and the Adriatic supports a successful tourist industry that has the potential to continue to grow*Exports of goods and services are equivalent to % of GDP and totalled almost US$10b in 2000 [CHECK]. .Low-value added, labour-intensive goods represent a relatively small share of exports, while foreign exchange receipts from tourism were US$??? million, up more than 13% in real terms on 1999.The structure of imports has also been changing with the share of machinery and transport equipment gradually rising - estimated to accounted for % of imports last year

************Slovenia has a proven track record of political and economic stability reflected in single A credit statusBut I hope that the key message you take away from this presentation is that Slovenia is not standing stillWithin the next few years Slovenia will become a full member of the European Union and before the decade is out, adopt the euro as its own currencyAs Slovenia converges to Europe, so will its economic and credit fundamentalsI know that for some investors Slovenia is not exciting enough - I make no apology for financial and political stability - but I do believe that those who subscribe to this view will miss what is an exciting opportunity to benefit from Slovenias convergence with Europe

Documents

Slovenia: Solid fundamentals protect during the international crisis