LJUBLJANA: The International Monetary Fund (IMF) warned Slovenia on Friday against complacency after taking a first step towards fixing its banking system, urging it restructure the corporate and banking sectors.
"There are now some signs of stabilisation of economic activity, coinciding with the gradual improvement in the broader euro area dynamics," the head of IMF's mission to Slovenia, Antonio Spilimbergo, said in a statement published along with the mission's latest report on Slovenia.
He added that Slovenia's December bank recapitalisation reduced uncertainty over the eurozone country's economy, but warned "only a restructuring of the corporate and bank sectors...can create the conditions needed for durable economic growth."
The Slovenian government injected last month over 3.0 billion euros ($4.0 billion) into the country's three largest banks following an EU-supervised asset quality review and stress tests in December.
The European Commission also greenlighted the transfer of toxic assets from the three banks to a "bad bank" in order to enable lenders to resume their normal operations before they are privatised by the state.
The IMF report warned Slovenia against "complacency" after the successful recapitalisation and added its "overleveraged corporate sector is thwarting economic recovery."
It urged Slovenia to continue with the privatisation of state-owned companies and prepare contingency measures in case the planned fiscal consolidation program of spending cuts and tax increases falls short.
It added the poor asset quality and funding problems in the banks, the debt overhang in the corporate sector, and large fiscal consolidation needs "cloud the near-term horizon".
The IMF revised up its forecasts for Slovenia's economy, in recession since 2011, putting the 2013 drop in gross domestic product (GDP) at 1.7 percent instead of the 2.6 percent predicted earlier.
It now expects a further 1.1 percent contraction of of GDP in 2014, instead of 1.4 percent. In 2015 Slovenia's export-orientated economy could start recovering, benefitting from stronger euro area demand, the report said.
Earlier on Friday, rating agency Standard and Poor confirmed its long-term A- rating for Slovenia with a "stable" outlook, estimating the state responded adequately to the banking system problems.
indiatimes.com
"There are now some signs of stabilisation of economic activity, coinciding with the gradual improvement in the broader euro area dynamics," the head of IMF's mission to Slovenia, Antonio Spilimbergo, said in a statement published along with the mission's latest report on Slovenia.
He added that Slovenia's December bank recapitalisation reduced uncertainty over the eurozone country's economy, but warned "only a restructuring of the corporate and bank sectors...can create the conditions needed for durable economic growth."
The Slovenian government injected last month over 3.0 billion euros ($4.0 billion) into the country's three largest banks following an EU-supervised asset quality review and stress tests in December.
The European Commission also greenlighted the transfer of toxic assets from the three banks to a "bad bank" in order to enable lenders to resume their normal operations before they are privatised by the state.
The IMF report warned Slovenia against "complacency" after the successful recapitalisation and added its "overleveraged corporate sector is thwarting economic recovery."
It urged Slovenia to continue with the privatisation of state-owned companies and prepare contingency measures in case the planned fiscal consolidation program of spending cuts and tax increases falls short.
It added the poor asset quality and funding problems in the banks, the debt overhang in the corporate sector, and large fiscal consolidation needs "cloud the near-term horizon".
The IMF revised up its forecasts for Slovenia's economy, in recession since 2011, putting the 2013 drop in gross domestic product (GDP) at 1.7 percent instead of the 2.6 percent predicted earlier.
It now expects a further 1.1 percent contraction of of GDP in 2014, instead of 1.4 percent. In 2015 Slovenia's export-orientated economy could start recovering, benefitting from stronger euro area demand, the report said.
Earlier on Friday, rating agency Standard and Poor confirmed its long-term A- rating for Slovenia with a "stable" outlook, estimating the state responded adequately to the banking system problems.
indiatimes.com
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