EN    EN  
 EUROPEAN  
COMMISSION 
Brussels, 13.5.2015  
COM(2015) 273 final 
  
Recommendation for a 
COUNCIL RECOMMENDATION 
on the 2015 National Refor m Programme of Slovenia 
 
and delivering a Council opinion on th e 2015 Stability Programme of Slovenia 
 
 
 
EN 2   EN  
 
Recommendation for a 
COUNCIL RECOMMENDATION 
on the 2015 National Reform Programme of Slovenia 
 
and delivering a Council opinion on the 2015 Stability Programme of Slovenia 
 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty on the Functioning of the European Union, and in particular 
Articles 121(2) and 148(4) thereof, 
Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the surveillance of budgetary pos itions and the surveillance and coordination of economic 
policies1, and in particular Article 5(2) thereof, 
Having regard to Regulation (EU) No 1176/2011 of the European Parliament and of the 
Council of 16 November 2011 on the preven tion and correction of macroeconomic 
imbalances2, and in particular Ar ticle 6(1) thereof, 
Having regard to the recommendation of the European Commission3, 
Having regard to the resolutions of the European Parliament4, 
Having regard to the conclusi ons of the European Council, 
Having regard to the opinion of the Employment Committee, Having regard to the opinion of th e Economic and Financial Committee, 
Having regard to the opinion of the Social Protection Committee, 
Having regard to the opinion of  the Economic Policy Committee, 
Whereas: (1) On 26 March 2010, the European Council ag reed to the Commission’s proposal to 
launch a new strategy for growth and jobs, Europe 2020, based on enhanced 
coordination of economic policies, which wi ll focus on the key areas where action is 
needed to boost Europe’s potential for sustainable growth and competitiveness. 
(2) On 13 July 2010, the Council, on the basis of  the Commission's proposals, adopted a 
recommendation on the broad guidelines for the economic policies of the Member 
States and the Union (2010 to 2014) and, on 21 October 2010, adopted a decision on 
guidelines for the employment policies of the Member States, which together form 
                                                
 
1 OJ L 209, 2.8.1997, p. 1. 
2 OJ L 306, 23.11.2011, p. 25. 
3 COM(2015) 273 
4 P8_TA(2015)0067, P8_TA(2015)0068, P8_TA(2015)0069 
 
EN 3   EN the ‘integrated guidelines’. Member States were invited to take the integrated 
guidelines into account in their nationa l economic and employment policies. 
(3) On 8 July 2014, the Council adopted a recommendation on Slovenia’s National 
Reform Programme for 2014 and deliver ed its opinion on Slovenia’s updated 
Stability Programme for 2014. On 28 Novemb er 2014, in line with Regulation (EU) 
No 473/20135, the Commission presented its opinion on Slovenia's draft budgetary 
plan for 20156. 
(4) On 28 November 2014, the Commission adopted the Annual Growth Survey7, 
marking the start of the 2015 European Se mester of economic policy coordination. 
On the same day, on the basis of Re gulation (EU) No 1176/2011, the Commission 
adopted the Alert Mechanism Report8, in which it identified Slovenia as one of the 
Member States for which an in-dep th review would be carried out. 
(5) On 18 December 2014, the European Council endorsed the priorities for boosting 
investment, accelerating structural reforms and pursuing responsible growth-friendly 
fiscal consolidation. 
(6) On 26 February 2015, the Commission published its 2015 country report for 
Slovenia 9. The country report assessed progress in addressing the country-specific 
recommendations adopted on 8 July 2014. Fo r Slovenia, the country report also 
includes results of the in-d epth review under Article 5 of Regulation (EU) No 
1176/2011. The Commission's analysis leads it to conclude that Slovenia is 
experiencing macroeconomic imbalances, which require decisi ve policy action and 
specific monitoring. In particular, the reba lancing is ongoing and decisive policy 
actions, improved export performance and growth conditions have reduced risks 
compared to last year, in particular those linked to external sustainability. However, 
weak corporate governance, a high level of state ownership, high corporate leverage, 
and an increasing public debt pose risks for financial stability and growth and 
warrant close attention. The imbalances are therefore no longer considered as 
excessive but continue to deserve close attention. 
(7) On 30 April 2015, Slovenia submitted its 2015 National Reform Programme and its 
2015 Stability Programme. In order to take account of their inte rlinkages, the two 
programmes have been assessed at the same time.  
(8) Slovenia is currently in the corrective arm of the Stability and Growth Pact. In its 
2015 Stability Programme, the government plan s to correct the excessive deficit by 
2015, in line with the deadline set by the Council, and to reach the medium-term 
objective – a balanced budgetary position in  structural terms – by 2020, i.e. one year 
after the programme period. The government plans to gradually reduce the headline deficit to 2.9 % of GDP in 2015 and to  0.9% of GDP in 2019. According to the 
Stability Programme, the government debt-to- GDP ratio is expected  to peak in 2015 
at 81.6% before starting to  decline. The macroeconomic  scenario underpinning these 
budgetary projections is pl ausible. Based on the Commission's 2015 spring forecast, 
a timely and durable correction of the exces sive deficit by 2015 is foreseen. At the 
same time, the fiscal effort is below wh at is recommended by the Council, based on 
                                                
 
5 OJ L 140, 27.5.2013, p.11. 
6 C(2014) 8813 final 
7 COM (2014) 902 
8 COM(2014) 904 
9 SWD(2015) 43 final/2 
 
EN 4   EN the structural balance a nd the discretionary measur es taken. Assuming a timely 
correction of the excessive deficit as planned, Slovenia will be subject to the preventive arm of the Pact as of 2016. Meas ures to support the planned deficit targets 
from 2016 onwards have not been sufficiently specified. Therefore, in the light of the 
Commission's 2015 spring forecast, there ap pears to be a risk of a significant 
deviation from the required adjustment towards the medium-t erm objective in 2016 
and further measures will be needed. Based on its assessment of the Stability Programme and taking into account the Commission's 2015 spring forecast, the 
Council is of the opinion that there is a ri sk that Slovenia will not comply with the 
provisions of the Stability and Growth Pact. With respect to the fiscal rules, in 2013 
the parliament approved a constitutional ba sis for establishing a general government 
budget balance / surplus rule in structural terms. However, the necessary implementing legislation has yet to be adopt ed. Revisions to the Public Finance Act 
are expected to provide the necessary legi slative basis for the procedural issues 
underpinning the Fiscal Rules Act. 
(9) Slovenia has taken action to alleviate pressu res on the medium-term sustainability of 
the pension system but key parameters stil l need to be adjusted to ensure its 
sustainability beyond 2020. The 2013 pension re form has had a positive impact and 
the legal act establishing a demographic f und is expected to be  adopted in June 2015. 
However, ensuring the long term sustainabi lity of pensions will require further 
reform. No progress has been made as rega rds the long-term care reform. At the end 
of 2013, the government adopted a blueprint for long-term care reform but the adoption of the legislation implementing the reform has been postponed to the end of 
2015 in order to allow prior decisions on health insurance re form including the 
question of sources to finance overall healthcare and long-term care. Age related expenditure on long-term care can be containe d by targeting benefits  to those most in 
need and by refocusing care provision from institutional to home care. 
(10) A Social Agreement was concluded in Ja nuary 2015 providing that public sector 
wage growth will lag behind private se ctor wage growth. The composition and 
indexation of minimum wage s are not covered by this agreement. While still 
relatively high compared to the average wa ge, recent growth of the minimum wage 
has been limited. An evaluation of the 2013 labour market reform shows that labour 
market restrictions have decreased, but st ructural problems persist as regards the 
long-term unemployment and the low employ ment rates of low-skilled and older 
workers. Slovenia has undertaken some acti on to address the skills mismatch and 
numerous other measures are planned until 2020.  
(11) The banking sector has been further stabilis ed through the recapitalisation of Abanka 
and Banka Celje in 2014. A comprehensive ac tion plan for banks has been finalized 
and submitted to the Prime Minister offi ce in January 2015. The Bank of Slovenia 
has ensured follow-up of the shortcomi ngs identified by the 2013 Asset Quality 
Review and will resume on-site inspections  in the first quarter of 2015 to verify 
whether the recommendations have been implemented by banks. The major banks have reorganised and reinforced their wo rk-out and restructuring units. However, 
boosting the long-term profitability a nd reducing non-performing loans in the 
corporate sector are necessary for a hea lthier banking sector. Both the corporate 
restructuring master plan and a centralised  corporate restructuring task force have 
been established.  Further deleveraging of the corporate sector, including through the 
Bank Asset Management Company and by full application of the new insolvency legislation, would help restore the conditi ons for a rebound of private investment. 
 
EN 5   EN Bank lending activity continues to declin e, mainly affecting SMEs. The recent 
banking sector recapitalisa tion is expected to show  full results only in 2016. 
Restrained bank lending and high intere st rates are weighing on the financing 
capacity of SMEs. While the pr oportion of rejected loan applications has decreased 
over the past six years, the number of SMEs reporting a deterioration in the 
willingness of banks to provide loans has increased substantially and is one of the highest in the EU. 
(12) The privatisation programme is progressing, albeit with delays. The restructuring of 
the five major state-owned banks and the wind-down of two smaller domestic banks 
are on track. The Slovenian Sovereign Holding, responsible for the management and divestment of state assets, is now fully  operational. A draft asset management 
strategy is still to be approved by the Slovenian parliament and this is expected to be followed by the release of the divestment schedule for a number of well- targeted 
state-owned assets. A new corporate governance code has been adopted by the Slovenian Sovereign Holding in Decemb er 2014 and in January 2015 a compliance 
officer was appointed.  
(13) The efficiency of the courts further improved in 2014, although at a slower pace. 
While some progress in reducing the length of judicial proceedings at first instance in 
litigious civil and commerc ial cases has been made, including in cases under the 
insolvency legislation, the length of pro ceedings and the number of unresolved cases 
backlogs remain significant. 
(14) An unsupportive business environment in Sloveni a is a key factor for low investment 
levels in Slovenian business and the high number of laws and numerous changes in 
the legislation make it difficult to run a business and comply with local regulation. 
The number of regulated professions ha s decreased from 323 to 242 but remains 
high. Around 25% of measures included in the Single Document to cut 
administrative burden were implemented. Sufficient budgetary autonomy for the 
Competition Protection Agency and inst itutional independence are provided.  
(15) The new government reiterated its commitme nt to fight corruption and adopted a 
new two-year programme of 11 perennial measures in January 2015. Some progress 
has been made regarding transparency and accountability. A comprehensive public-
sector reform is in preparation. No pr ogress has been made regarding reports on 
performance evaluation and qua lity control procedures. 
(16) In the context of the European Semester, the Commission has carried out a 
comprehensive analysis of Slovenia’s ec onomic policy and published it in the 2015 
country report. It has also assessed the St ability Programme and the National Reform 
Programme and the follow-up given to the recommendations addressed to Slovenia 
in previous years. It has taken into acc ount not only their relevance for sustainable 
fiscal and socio-economic polic y in Slovenia but also thei r compliance with EU rules 
and guidance, given the need to reinforce the overall economic governance of the European Union by providing EU-level input  into future national decisions. The  
recommendations under the European Semest er are reflected in recommendations 1 
to 4 below. 
(17) In the light of the Commission's in-depth review and this assessment, the Council has 
examined the National Reform Programme  and the Stability Programme. The 
recommendations under Article 6 of Regulat ion (EU) No 1176/2011 are reflected in 
recommendations (1) to (4) below. 
 
EN 6   EN (18) In the context of the European Semester  the Commission has al so carried out an 
analysis of the economic policy of the euro area as a whole. On the basis of this 
analysis, the Council has issu ed specific recommendations for the Member States 
whose currency is the euro. Slovenia should also ensure the full and timely implementation of these recommendations. 
HEREBY RECOMMENDS that Slovenia take  action within th e period 2015-2016 to: 
1. Ensure a durable correction of the excessi ve deficit in 2015, and achieve a fiscal 
adjustment of 0.6% of GDP towards the medium-term objective in 2016. Adopt the 
Fiscal Rule Act and revise the Public Fina nce Act. Advance long-term reform of the 
pension system. By end of 2015 adopt a healthcare and long-term care reform. 
2. Review, in consultation with the social partners and in accordance with national 
practices, the mechanism for setting the minimu m wage, and in particular the role of 
allowances, in light of the impact  on in-work poverty, job creation and 
competitiveness. Increase the employability of low skilled and older workers. Take 
measures to address long-te rm unemployment and provid e adequate incentives to 
extend working lives.  
3. Bring down the level of non-performing loans in banks by in troducing specific 
targets. Improve credit risk monitoring  capacity in banks. Continue corporate 
restructuring and maintain strong co rporate governance in the Bank Asset 
Management Company. Take measures to improve access to finance for SMEs and micro companies. Adopt a strategy for the Slovenian Sovereign Ho lding with a clear 
classification of assets, implement an annual asset management plan and apply 
performance criteria. 
4. Ensure that the reforms adopted to improve the efficiency of civil justice help reduce 
the length of proceedings. 
Done at Brussels, 
 For the Council 
 The President