Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform Programme of Slovenia and delivering a Council opinion on the 2023 Stability Programme of Slovenia
Date: 2023-05-24
Institutions: European Commission, Secretariat-General
Subjects: Slovenia, digital transformation, economic policy, economic recovery, energy policy, fiscal policy, investment policy, stability pact, stability programme

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   EUROPEAN COMMISSION  Brussels, 24.5.2023  COM(2023) 624 final  Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform Programme of Slovenia and delivering a Council opinion on the 2023 Stability Programme of Slovenia {SWD(2023) 624 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the 2023 National Reform Programme of Slovenia and delivering a Council opinion 
on the 2023 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  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular Article 5(2) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the 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) 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council2,  which 
established  the  Recovery  and  Resilience  Facility,  entered  into  force  on  19  February 
2021. The Recovery and Resilience Facility provides financial support to the Member 
States  for  the  implementation  of  reforms  and  investments,  entailing  a  fiscal  impulse 
financed  by  the  EU.  In  line  with  the  European  Semester  priorities,  it  contributes  to 
economic  and  social  recovery  and  to  the  implementation  of  sustainable  reforms  and 
investments,  in  particular  to  promote  the  green  and  digital  transition  and  make  the 
Member States’ economies more resilient. It also helps strengthen public finances and 
boost  growth  and  job  creation  in  the  medium  and  long  term,  improve  territorial 
cohesion  within  the  EU  and  support  the  continued  implementation  of  the  European 
Pillar of Social Rights. The maximum financial contribution per Member State under 
the Recovery and Resilience Facility was updated on 30 June 2022 in accordance with 
Article 11(2) of Regulation (EU) 2021/241. 

(2) 

On 22 November 2022, the Commission adopted the 2023 Annual Sustainable Growth 
Survey3,  marking  the  start  of  the  2023  European  Semester  for  economic  policy 
coordination. The European Council endorsed the priorities of the  survey  around the 

1 
2 

3 

OJ L 209, 2.8.1997, p. 1. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021 
establishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, p. 17). 
COM(2022) 780 final. 

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four  dimensions  of  competitive  sustainability  on  23  March  2023.  On  22  November 
2022,  on  the  basis  of  Regulation  (EU)  No  1176/2011,  the  Commission  also  adopted 
the 2023 Alert Mechanism Report, in which it did not identify Slovenia as one of the 
Member States that may be affected or may be at risk of being affected by imbalances, 
and for which an in-depth review would be needed. On the same date, the Commission 
also  adopted  an  opinion  on  Slovenia’s  2023  draft  budgetary  plan.  The  Commission 
also adopted a recommendation for a Council recommendation on the economic policy 
of the euro area, which the Council adopted on 16 May 2023, as well as the proposal 
for  the  2023  Joint  Employment  Report  analysing  the  implementation  of  the 
Employment  Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights, 
which the Council adopted on 13 March 2023.  

(3)  While the EU  economies are showing remarkable resilience, the  geopolitical  context 
continues  to  have  a  negative  impact.  As  the  EU  stands  firmly  with  Ukraine,  the  EU 
economic  and  social  policy  agenda  is  focused  on  reducing  the  negative  impact  of 
energy shocks on both vulnerable households and companies in the short term, and on 
keeping  up  efforts  to  deliver  on  the  green  and  digital  transition,  support  sustainable 
and inclusive growth, safeguard macroeconomic stability and increase resilience in the 
medium  term.  It  also  focuses  heavily  on  increasing  the  EU’s  competitiveness  and 
productivity. 

(4) 

(5) 

On  1  February  2023,  the  Commission  issued  the  Communication  A  Green  Deal 
Industrial  Plan  for  the  Net-Zero  Age4  to  boost  the  competitiveness  of  the  EU’s  net-
zero  industry  and  support  the  fast  transition  to  climate  neutrality.  The  plan 
complements  ongoing  efforts  under  the  European  Green  Deal  and  REPowerEU.  It 
aims to provide a more supportive environment for scaling up the EU’s manufacturing 
capacity  for  the  net-zero  technologies  and  products  required  to  meet  the  EU’s 
ambitious climate targets, as well as ensuring access to relevant critical raw materials, 
including  by  diversifying  sourcing,  properly  exploiting  geological  resources  in 
Member States and maximising the recycling  of raw materials. The plan  is  based on 
four pillars:  a predictable and simplified regulatory  environment,  speeding up access 
to finance, enhancing skills, and open trade for resilient supply chains.  On 16 March 
2023,  the  Commission  also  issued  the  Communication  Long-term  competitiveness  of 
the EU: looking beyond 20305, structured along nine mutually reinforcing drivers with 
the objective to work towards a growth enhancing regulatory framework. It sets policy 
priorities aimed at actively ensuring structural improvements, well focused investment 
and regulatory measures for the long-term competitiveness of the EU and its Member 
States. The recommendations below help to address those priorities. 

In 2023, the European Semester for economic policy coordination continues to evolve 
in  line  with  the  implementation  of  the  Recovery  and  Resilience  Facility.  Fully 
implementing  the  recovery  and  resilience  plans  remains  essential  for  delivering  the 
policy priorities under the European Semester, as the plans address all or a significant 
subset  of  the  relevant  country-specific  recommendations  issued  in  recent  years.  The 
2019, 2020 and 2022 country-specific recommendations remain equally relevant also 
for  recovery  and  resilience  plans  revised,  updated  or  amended  in  accordance  with 
Articles 14, 18 and 21 of Regulation (EU) 2021/241.  

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COM(2023) 62 final.  
COM(2023) 168 final.  

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(6) 

(7) 

(8) 

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8 

The REPowerEU Regulation6 adopted on 27 February 2023 aims to rapidly phase out 
the  EU’s  dependence  on  Russian  fossil  fuel  imports.  This  will  contribute  towards 
energy security and the diversification of the EU’s energy supply, while increasing the 
uptake of renewables, energy storage capacities and energy efficiency. The Regulation 
enables  Member  States  to  add  a  new  REPowerEU  chapter  to  their  national  recovery 
and  resilience  plans  in  order  to  finance  key  reforms  and  investments  that  will  help 
achieve the REPowerEU objectives. They will also help boost the competitiveness of 
the EU’s net-zero industry as outlined in the Green Deal  Industrial Plan for the Net-
Zero Age and address the energy-related country-specific recommendations issued to 
the  Member  States  in  2022  and,  where  applicable,  in  2023.  The  REPowerEU 
Regulation  introduces  a  new  category  of  non-repayable  financial  support,  made 
available  to  Member  States  to  finance  new  energy-related  reforms  and  investments 
under their recovery and resilience plans.  

On 8 March 2023, the Commission adopted a communication providing fiscal policy 
guidance for 2024. It aims to support the preparation of Member States’ stability and 
thereby  strengthen  policy  coordination7.  The 
convergence  programmes  and 
Commission recalled that the general escape clause of the Stability and Growth Pact 
will be deactivated at  the end of 2023.  It  called  for fiscal  policies in  2023-2024 that 
ensure  medium-term  debt  sustainability  as  well  as  raise  potential  growth  in  a 
sustainable manner. Member States were invited to set out in their 2023 stability and 
convergence programmes how their fiscal plans will ensure that the 3% of GDP deficit 
reference value is adhered to as well as plausible and continuous debt reduction, or for 
debt  to  be  kept  at  prudent  levels  in  the  medium  term.  The  Commission  invited 
Member States to phase out national fiscal measures introduced to protect households 
and  firms  from  the  energy  price  shock,  starting  with  the  least  targeted  ones.  It 
indicated that, if support measures needed to be extended because of renewed energy 
price  pressures,  Member  States  should  target  such  measures  much  better  than  in  the 
past  towards  vulnerable  households  and  firms.  The  Commission  proposed  that  the 
fiscal  recommendations would be  quantified and differentiated  and be  formulated on 
the basis of net primary expenditure, as proposed in its Communication on orientations 
for  a  reform  of  the  EU  economic  governance  framework8.  It  recommended  that  all 
Member States should  continue to  protect  nationally  financed investment and ensure 
the  effective  use  of  the  Recovery  and  Resilience  Facility  and  other  EU  funds,  in 
particular  in  light  of  the  green  and  digital  transitions  and  resilience  objectives.  The 
Commission  indicated  that  it  will  propose  to  the  Council  to  open  deficit-based 
excessive deficit procedures in spring 2024 on the basis of the outturn data for 2023, in 
line with existing legal provisions. 

On  26  April  2023,  the  Commission  presented  legislative  proposals  to  implement  a 
comprehensive reform of the EU’s economic governance rules. The central objective 
of the proposals is to strengthen public debt sustainability and promote sustainable and 
inclusive growth in all Member States through reforms and investments. The proposals 
aim at providing Member States with more control over the design of their medium-
term plans, while putting in place a more stringent enforcement regime to ensure that 

Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council  of  27  February  2023 
amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans 
and  amending  Regulations  (EU)  No  1303/2013,  (EU)  2021/1060  and  (EU)  2021/1755,  and  Directive 
2003/87/EC (OJ L 63, 28.2.2023, p. 1). 
COM(2023) 141 final. 
COM(2022) 583 final. 

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(9) 

Member  States  deliver  on  the  commitments  undertaken  in  their  medium-term  fiscal-
structural plans. The objective is to conclude the legislative work  in 2023. 

On 30 April 2021, Slovenia submitted its national recovery and resilience plan to the 
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant 
to  Article  19  of  Regulation  (EU)  2021/241,  the  Commission  assessed  the  relevance, 
effectiveness,  efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in 
accordance with the assessment guidelines of Annex V to that Regulation. On 28 July 
2021,  the  Council  adopted  its  Decision  on  the  approval  of  the  assessment  of  the 
recovery and resilience plan for Slovenia9. The release of instalments is conditional on 
a decision by the Commission,  taken in  accordance with  Article 24(5) of  Regulation 
(EU)  2021/241,  that  Slovenia  has  satisfactorily  fulfilled  the  relevant  milestones  and 
targets  set  out  in  the  Council  Implementing  Decision.  Satisfactory  fulfilment 
presupposes  that  the  achievement  of  preceding  milestones  and  targets  has  not  been 
reversed. 

(10)  On 14 April 2023, Slovenia submitted its 2023 National Reform Programme and, on 
26 April 2023, its 2023 Stability Programme,  in  line with  Article  4(1) of Regulation 
(EC)  No  1466/97.  To  take  account  of  their  interlinkages,  the  two  programmes  have 
been  assessed  together.  In  accordance  with  Article  27  of  Regulation  (EU)  2021/241, 
the  2023  National  Reform  Programme  also  reflects  Slovenia’s  biannual  reporting  on 
the progress made in achieving its recovery and resilience plan.  

(11)  The Commission published the 2023 country report for Slovenia10 on 24 May 2023. It 
assessed  Slovenia’s  progress 
relevant  country-specific 
in  addressing 
recommendations  adopted by  the Council  between 2019  and  2022 and  took stock of 
Slovenia’s implementation of the recovery and resilience plan. Based on this analysis, 
the  country  report  identified  gaps  with  respect  to  those  challenges  that  are  not 
addressed  or  only  partially  addressed  by  the  recovery  and  resilience  plan,  as  well  as 
new  and  emerging  challenges.  It  also  assessed  Slovenia’s  progress  on  implementing 
the  European  Pillar  of  Social  Rights  and  on  achieving  the  EU  headline  targets  on 
employment, skills and poverty reduction, as well as progress in  achieving the UN’s 
Sustainable Development Goals.  

the 

(12)  Based  on  data  validated  by  Eurostat,11  Slovenia’s  general  government  deficit 
decreased from 4.6% of GDP in 2021 to 3.0% in 2022, while general government debt 
fell from 74.5% of GDP at the end of 2021 to 69.9% at the end of 2022. On 24 May 
2023,  the  Commission  published  a  report  under  Article  126(3)  TFEU;12  the  report 
discussed  the  budgetary  situation  of  Slovenia,  as  its  general  government  deficit  is 
planned to exceed 3% of GDP in 2023. The report concluded that the deficit criterion 
was not fulfilled. In line with the Communication of 8 March 2023,13 the Commission 
did not propose to open new excessive deficit procedures in spring 2023; in turn, the 
Commission  stated  that  it  would  propose  to  the  Council  to  open  deficit-based 
excessive deficit procedures in spring 2024, on the basis of the outturn data for 2023. 

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11 

12 

13 

Council Implementing Decision of 28 July 2021 on the approval of the assessment of the recovery and 
resilience plan for Slovenia (ST 10612/2021; ST 10612/2021 ADD 1). 
SWD(2023) 624 final. 
Eurostat-Euro Indicators, 47/2023, 21.4.2023 

COM(2023) 631 final, 24.5.2023. 

COM(2023) 141 final, 8.3.2023. 

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Slovenia  should  take  account  of  this  in  the  execution  of  its  2023  budget  and  in 
preparing the Draft Budgetary Plan for 2024. 

(13)  The  general  government  balance  has  been  impacted  by  the  fiscal  policy  measures 
adopted to mitigate the economic and social impact of the increase in energy prices. In 
2022,  such  revenue-decreasing  measures  included  temporary  lowering  of  VAT  on 
electricity, gas, distance heating and firewood, and of excise duties on fuels, gas and 
electricity and temporarily lower CO2 tax on fuels; while such expenditure-increasing 
measures  included  increased  child  allowance  for  two  months,  energy  allowance  for 
socially vulnerable people and subsidies for businesses based on prices paid compared 
to 2021. The Commission estimates the net budgetary cost of these measures at 1.0% 
of  GDP  in  2022.  The  general  government  balance  has  also  been  impacted  by  the 
budgetary  cost  of  temporary  protection  to  displaced  persons  from  Ukraine,  which  is 
estimated at 0.1% of GDP in 2022. At the same time, the estimated cost of COVID-19 
temporary emergency measures dropped to 1.0% of GDP in 2022, from 4.1% in 2021. 
(14)  On  18  June  2021,  the  Council  recommended  that  in  2022  Slovenia14  maintain  a 
supportive  fiscal  stance,  including  from  the  impulse  provided  by  the  Recovery  and 
Resilience Facility, and preserve nationally financed investment.  

(15)  According to the Commission estimates, the fiscal stance15 in 2022 was supportive, at 
–1.2%  of  GDP,  as  recommended  by  the  Council.  As  recommended  by  the  Council, 
Slovenia  continued  to  support  the  recovery  with  investments  to  be  financed  by  the 
Recovery  and  Resilience  Facility.  Expenditure  financed  by  Recovery  and  Resilience 
Facility grants and other EU funds amounted to 0.7% of GDP in 2022 (0.8% of GDP 
in 2021). Nationally financed investment provided an expansionary contribution of 0.7 
percentage  points  to  the  fiscal  stance.16  Slovenia  therefore  preserved  nationally 
financed investment, as recommended by the Council. At the same time, the growth in 
nationally  financed  primary  current  expenditure  (net  of  new  revenue  measures) 
provided  an  expansionary  contribution  of  0.4  percentage  points  to  the  fiscal  stance. 
This  significant  expansionary  contribution  included  the  additional  impact  of  fiscal 
policy measures to mitigate the economic and social impact of the increase in energy 
prices  (additional  net  budgetary  cost  of  1.0%  of  GDP),  as  well  as  the  costs  to  offer 
temporary  protection  to  displaced  persons  from  Ukraine  (0.1%  of  GDP).  Slovenia 
therefore  sufficiently  kept  under  control  the  growth  in  nationally  financed  current 
expenditure. 

(16)  The macroeconomic scenario underpinning the budgetary projections in  the Stability 
Programme is optimistic in 2023 and realistic thereafter. The government projects real 
GDP  to  grow  by  1.8%  in  2023  and  2.5%  in  2024.  By  comparison,  the  Commission 
2023 spring forecast projects a lower real GDP growth of 1.2% in 2023 and 2.2% in 
2024, mainly due to lower growth contribution from net exports. 

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16 

Council  Recommendation  of  18  June  2021  delivering  a  Council  opinion  on  the  2021  Stability 
Programme of Slovenia, OJ C 304, 29.7.2021, p. 116. 
The  fiscal  stance  is  measured  as  the  change  in  primary  expenditure  (net  of  discretionary  revenue 
measures), excluding Covid-19 crisis-related temporary emergency measures but including expenditure 
financed  by  non-repayable  support  (grants)  from  the  Recovery  and  Resilience  Facility  and  other  EU 
funds, 
in 
the Fiscal Statistical Tables.   
Other nationally financed capital expenditure provided an expansionary contribution of 0.2 percentage 
point of GDP.  

growth. For  more 

to  medium-term 

see  Box 1 

potential 

relative 

details 

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(17) 

In its 2023 Stability Programme, the government expects that the general government 
deficit  ratio  will  increase  to  4.1%  of  GDP  in  2023.  The  increase  in  2023  mainly 
reflects higher public investment due to an end of the absorption period of the previous 
multi-annual  financial  framework  2014-2020  and  high  subsidies.  According  to  the 
Programme,  the  general  government  debt-to-GDP  ratio  is  expected  to  decrease  from 
69.9% at the end of 2022 to 68.9% at the end of 2023. The Commission 2023 spring 
forecast projects a government deficit of 3.7% of GDP for 2023. This is lower than the 
deficit  projected  in  the  Stability  Programme,  mainly  due  to  lower  public  investment 
because  of  constraints  in  absorption  capacity  and  lower  absorption  of  energy  related 
subsidies/measures adopted to mitigate the economic and social impact of the increase 
in  energy  prices.  The  Commission  2023  spring  forecast  projects  a  similar  general 
government debt-to-GDP ratio, of 69.1% at the end of 2023.  

(18)  The government balance in 2023 is expected to continue to be impacted by the fiscal 
measures adopted to mitigate the economic and social impact of the increase in energy 
prices.  They  consist  of  measures  extended  from  2022  (in  particular:  temporary 
lowering  of  VAT  on  electricity,  gas,  distance  heating  and  firewood,  and  of  excise 
duties on fuels,  gas and electricity and temporarily lower CO2 tax on fuels) and new 
measures such as a new and larger scheme for subsidies for businesses based on prices 
paid compared to 2021 and compensation for distributors of electricity and natural gas 
who  supply  customers  (for  instance  households  or  SMEs)  whose  electricity  and 
natural  gas  prices  are  subject  to  price  ceilings  set  by  the  government.  The  net 
budgetary  cost  of  the  support  measures  is  projected  in  the  Commission  2023  spring 
forecast at 0.9% of GDP in 202317. Most measures in 2023 do not appear targeted to 
the most vulnerable households or firms, and many of them do not fully preserve the 
price signal to reduce energy demand and increase energy efficiency.  As a result, the 
amount  of  targeted  support  measures,  to  be  taken  into  account  in  the  assessment  of 
compliance with the fiscal recommendation for 2023, is estimated in the Commission 
2023  spring  forecast  at  0.1%  of  GDP  in  2023  (compared  to  0.6%  of  GDP  in  2022). 
Finally, the 2023  government balance is  expected to  benefit from  the phasing out  of 
COVID-19 temporary emergency measures of 1.0% of GDP. 

(19)  On 12 July 2022, the Council recommended18 that Slovenia takes action to ensure in 
2023 that the growth of nationally financed primary current expenditure is in line with 
an  overall  neutral  policy  stance19,  taking  into  account  continued  temporary  and 
targeted support to households and firms most vulnerable to energy price hikes and to 
people fleeing Ukraine. Slovenia should stand ready to adjust current spending to the 
evolving  situation.  Slovenia  was  also  recommended  to  expand  public  investment  for 
the  green  and  digital  transitions,  and  for  energy  security  taking  into  account  the 
REPowerEU  initiative,  including  by  making  use  of  the  Recovery  and  Resilience 
Facility and other Union funds. 

(20) 

In  2023,  the  fiscal  stance  is  projected  in  the  Commission  2023  spring  forecast  to  be 
expansionary  (-1.2%  of  GDP),  in  a  context  of  high  inflation.  This  follows  an 
expansionary fiscal stance in 2022 (-1.2% of GDP). The growth in nationally financed 

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19 

The  figure represents the level of annual budgetary cost of those  measures, including current revenue 
and expenditure as well as – where relevant – capital expenditure measures. 
Council  Recommendation  of  12  July  2022  on  the  National  Reform  Programme  of  Slovenia  and 
delivering a Council opinion on the 2022 Stability Programme of Slovenia, OJ C 334, 1.9.2022, p. 197.  
Based  on  the  Commission  spring  2023  forecast,  the  medium-term  (10-year  average)  potential  output 
growth of Slovenia, which is used to measure the fiscal stance, is estimated at 10.1% in nominal terms. 

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primary  current  expenditure  (net  of  discretionary  revenue  measures)  in  2023  is 
projected to provide an expansionary contribution of 0.3% of GDP to the fiscal stance. 
This  is  despite  the  reduced  cost  of  the  targeted  support  measures  to  households  and 
firms  most  vulnerable  to  energy  price  hikes  by  0.5%  of  GDP.  The  expansionary 
contribution of nationally financed net primary current expenditure is therefore not due 
to the targeted support to households and firms most vulnerable to energy price hikes 
and  to  people  fleeing  Ukraine.  The  expansionary  growth  in  nationally  financed 
primary  current  expenditure  (net  of  discretionary  revenue  measures)  is  driven  by 
higher subsidies and an increase in the public sector wage bill. In sum, the projected 
growth  of  nationally  financed  primary  current  expenditure  is  not  in  line  with  the 
Council  recommendation.  Expenditure  financed  by  Recovery  and  Resilience  Facility 
grants  and  other  EU  funds  amounted  to  1.6%  of  GDP  in  2023,  while  nationally 
financed investment provided an expansionary contribution to the fiscal stance of 0.1 
percentage  points20.  Therefore,  Slovenia  plans  to  finance  additional  investment 
through the Recovery and Resilience Facility and other EU funds, and it is projected to 
preserve nationally financed investment.  It plans to finance public investment for the 
green  and  digital  transitions,  and  for  energy  security,  such  as  railway  infrastructure, 
prevention  against  floods,  health,  and  research  and  innovation,  which  are  funded  by 
the Recovery and Resilience Facility and other EU funds. 

(21)  According  to  the  Stability  Programme  the  general  government  deficit  is  expected  to 
decline to 2.8% of GDP in 2024. The decrease in 2024 mainly reflects lower subsidies 
after  a  withdrawal  of  measures  adopted  to  mitigate  the  economic  impact  of  the 
increase in energy prices and lower public investment after the absorption of EU funds 
from  the  previous  multiannual  financial  framework  ends  in  2023.  The  programme 
expects the general government debt-to-GDP ratio to decrease to 66.5% at the end of 
2024.  Based  on  policy  measures  known  at  the  cut-off  date  of  the  forecast,  the 
Commission  2023  spring  forecast  projects  a  government  deficit  of  2.9%  of  GDP  in 
2024. This is higher than the deficit projected in the programme, mainly due to higher 
compensation of employees and social benefits. The Commission 2023 spring forecast 
projects a similar general government debt-to-GDP ratio, of 66.6% at the end of 2024.  

(22)  The  Stability  Programme  envisages  the  phasing  out  of  all  of  the  energy  support 
measures in  2024. The  Commission  also  assumes full  phasing out  of energy support 
measures  in  2024.  This  hinges  upon  the  assumption  of  no  renewed  energy  price 
increases.  

(23)  Council Regulation (EC) No 1466/97 calls for an annual improvement in the structural 
budget balance toward the medium-term objective by 0.5% of GDP as a benchmark.21 
Taking  into  account  fiscal  sustainability  considerations22  and  the  need  to  reduce  the 
deficit  to  below  the  3%  of  GDP  reference  value,  an  improvement  in  the  structural 

20 

21 

22 

Other  nationally  financed  capital  expenditure  is  projected  to  provide  a  neutral  contribution  of  0.0 
percentage points of GDP. 

Cf. Article 5 of Council Regulation (EC) No 1466/97, which also requires an adjustment of  more than 
0.5%  of  GDP  for  Member  States  with  a  government  debt  exceeding  60%  of  GDP,  or  with  more 
pronounced debt sustainability risks. 
The  Commission  estimated  that  Slovenia  would  need  an  average  annual  increase  in  the  structural 
primary balance as a share of  GDP of 0.45 percentage points to achieve a plausible debt reduction or 
ensure that government debt is kept at prudent levels in the medium term. This estimate was based on 
the  Commission  autumn  2022  forecast.  The  starting  point  for  this  estimate  was  the  projected 
government  deficit  and  debt  for  2024  which  assumed  the  withdrawal  of  energy  support  measures  in 
2024.  

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balance  of  at  least  0.5%  of  GDP  for  2024  would  be  appropriate.  To  ensure  such  an 
improvement,  the  growth  in  net  nationally  financed  primary  expenditure23  in  2024 
should  not  exceed  5.5%,  as  reflected  in  this  recommendation.  At  the  same  time,  the 
remaining  energy support  measures (currently estimated by the Commission  at  0.9% 
of GDP in 2023) should be phased out, contingent on energy market developments and 
starting from the least targeted ones, and the related savings should be used to reduce 
the government deficit. Based on Commission estimates, this would lead to a growth 
in  net  primary expenditure below the recommended maximum  growth  rate for 2024. 
In  addition,  according  to  the  Commission  2023  spring  forecast,  the  growth  in  net 
nationally  financed  primary  current  expenditure  in  2023  is  not  in  line  with  the 
recommendation  of  the  Council.  If  this  is  confirmed,  lower  growth  in  net  primary 
expenditure in 2024 would be appropriate. 

(24)  Assuming  unchanged  policies,  the  Commission  2023  spring  forecast  projects  net 
nationally financed primary expenditure to grow in 2024 at 3.0%, which is below the 
recommended growth rate.  

(25)  According  to  the  programme,  government  investment  is  expected  to  decrease  from 
6.4% of GDP in 2023 to 5.5% of GDP in 2024. The lower investment reflects lower 
nationally financed investment and lower overall investment financed by the EU, but 
higher  investment  through  the  Recovery  and  Resilience  Facility.  The  programme 
refers  to  reforms  and  investments,  that  are  expected  to  contribute  to  fiscal 
sustainability  and  sustainable  and  inclusive  growth.  These  include  investments  into 
railway  infrastructure,  health,  research  and  innovations  and  elements  of  green  and 
digital transition which are also part of the Recovery and Resilience Plan.  

(26)  The Stability Programme outlines a medium-term fiscal path until 2026. According to 
the programme, the general government deficit is expected to decline to 2.2% of GDP 
in 2025 and to 1.3% by 2026. The general government deficit is therefore planned to 
remain  below  3%  of  GDP  from  2024  until  the  end  of  the  programme  horizon. 
According to the programme, the general government debt-to-GDP ratio is expected to 
decrease from 66.5% at the end of 2024 to 63.5% by the end of 2026. 

(27)  Healthcare spending is expected to increase by 1.5 percentage points of GDP between 
2019 and 2070 and long-term care costs will double by 2055. Slovenia is facing high 
fiscal sustainability risks in the medium and long term, driven by spending related to 
the  ageing  population.  The  country  has  started  comprehensive  reforms  in  healthcare 
and  long-term  care  in  recent  years.  However,  implementation  of  the  long-term  care 
reform  has  been  delayed  and  its  financing  in  the  medium  and  long  term  is  still  not 
ensured.  The  planning  of  the  healthcare  reform  also  suggests  that  it  will  be 
implemented  in  several  steps,  with  a  focus  on  access  to  high-quality  services  and 
improving  social  rights  and  inclusion.  As  this  will  put  additional  strain  on  public 
finances,  it  will  be  crucial  for  Slovenia  to  put  forward  a  set  of  measures  that 
establishes  a  stable  revenue  base  that  does  not  undermine  the  fiscal  balance  in  the 
medium and long term. 

(28)  The December 2022 amendments to the Personal Income Tax Act reversed most of the 
previous changes approved in March 2022 that had intended to reduce labour taxation 
and  would  have  led  to  a  negative  budget  impact  of  up  to  1.3%  of  GDP  by  2025. 
Compared to the EU aggregate, Slovenia’s tax revenues as share of GDP are slightly 

23 

Net  primary  expenditure  is  defined  as  nationally  financed  expenditure  net  of  discretionary  revenues 
measures and excluding interest expenditure as well as cyclical unemployment expenditure. 

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(29) 

lower,  and  some  relatively  growth-friendly  taxes  are  underused.  Slovenia  relies 
strongly on labour taxation: the share of labour taxes in total tax revenues is above the 
EU aggregate. Recurrent taxes on immovable property  are relatively low in Slovenia 
(0.5% of GDP vs an EU average of 1.1% of GDP). A growth-friendly and green tax 
reform  can  support  fiscal  consolidation  and  sustainable  growth  in  the  longer  term. 
Such a tax reform could facilitate a shift away from labour taxation, through a higher 
share of recurrent property taxes, and support the creation of jobs in the net-zero age 
and  in  other  higher  value-added  industries.  Lower  labour  taxes  would  also  stimulate 
labour supply, including from skilled and foreign workers.  

In accordance with Article 19(3), point (b) and Annex V, criterion 2.2 of Regulation 
(EU) 2021/241, the recovery and resilience plan includes an extensive set of mutually 
reinforcing reforms and investments to be implemented by 2026. The implementation 
of Slovenia’s recovery and resilience plan is underway, however with  increasing risk 
of  delays.  Slovenia  submitted  one  payment  request,  corresponding  to  12  milestones 
and targets  in  the plan and resulting in  an overall  disbursement of  around  EUR 49.6 
million.  To  advance  faster  with  the  implementation  of  its  RRP  in  the  current 
challenging environment, it is necessary to strengthen Slovenia’s governance structure 
and administrative capacity, as well as to ensure that the necessary decisions are taken 
without delays. This concerns in particular the structural reforms of healthcare, long-
term care, pensions and taxation. The addendum of the RRP and the additional chapter 
on  REPowerEU  should  establish  a  realistic  timeline  for  the  remaining  payment 
requests and should be submitted swiftly to avoid any further delay or disruption in the 
implementation of the plan. The swift inclusion of the new REPowerEU chapter in the 
recovery  and  resilience  plan  will  allow  additional  reforms  and  investment  to  be 
financed  in  support  of  Slovenia’s  strategic  objectives  in  the  field  of  energy  and  the 
green  transition.  The  systematic  and  effective  involvement  of  local  and  regional 
authorities,  social  partners  and  other  relevant  stakeholders  remains  important  for  the 
successful  implementation  of  the  recovery  and  resilience  plan,  as  well  as  other 
economic and employment policies going beyond the plan, to ensure broad ownership 
of the overall policy agenda.  

(30)  The Commission approved all of Slovenia’s cohesion policy programming documents 
in 2022. Proceeding with the swift implementation of the cohesion policy programmes 
in  complementarity  and  synergy  with  the  recovery  and  resilience  plan,  including  the 
REPowerEU  chapter,  is  key  to  achieving  the  green  and  digital  transition,  increasing 
economic and social resilience as well as achieving balanced territorial development in 
Slovenia. 

(31)  Slovenia  was  effectively  reliant  on  Russia  as  the  single  natural  gas  supplier  to  the 
country  before  Russia  invaded  Ukraine.  Starting  from  2023,  however,  Slovenia  was 
able  to  secure  approximately  a  third  of  its  natural  gas  supply  through  imports  from 
Algeria.  Gas  still  plays  an  important  role  in  Slovenia’s  energy  mix  (12%)  and  is  an 
essential  energy  source  for  industry,  while  also  providing  flexibility  in  the  power 
sector.  Industry  and  power  sector  decarbonisation  should  therefore  be  advanced 
through the accelerated deployment of renewables and energy efficiency measures. In 
its national energy and climate plan, Slovenia set a 27% target as its contribution to the 
EU’s  2030  renewable  energy  target.  This  is  significantly  below  the  37%  renewable 
share in 2030 based on Annex II to Regulation (EU) 2018/199924. Slovenia reached its 

24 

Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the 
Governance  of  the  Energy  Union  and  Climate  Action,  amending  Regulations  (EC)  No  663/2009  and 

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2021 target for the share of energy from renewable sources in gross final consumption 
of energy (25%) by using the EU mechanism for cross-border cooperation in line with 
Directive  2018/2001/EU25  (through  statistical  transfers).  Permitting  procedures  for 
grid-scale  renewable  energy  installations  remain  a  bottleneck,  largely  due  to  the 
complex  and  lengthy  environmental  procedures,  especially  for  wind  installations, 
where  procedures  can  last  up  to  several  years.  Slovenia  will  need  to  substantially 
strengthen its renewable energy target in its updated national energy and climate plan 
to reflect the more ambitious EU climate and energy targets in the ‘Fit for 55’ package 
and  in  the  REPowerEU  Plan.  Slovenia’s  consumption  of  natural  gas  has  dropped  by 
14% in the period between August 2022 and March 2023, compared with the average 
gas  consumption  over  the  same  period  in  the  preceding  5  years,  slightly  below  the 
15%  reduction  target.  Slovenia  could  enhance  efforts  to  temporarily  reduce  gas 
demand until 31 March 202426. 

(32)  The  Slovenian  recovery  and  resilience  plan  already  includes  significant  reforms  and 
investment  aiming  to:  (i)  raise  the  share  of  renewable  energy  sources  in  gross  final 
energy consumption; (ii) facilitate access to and integration into the electricity grid for 
renewable energy source production facilities; (iii) improve the energy efficiency and 
renovations of public buildings; and (iv) enable the deployment of an alternative fuels 
infrastructure.  While  the  measures  under  the  recovery  and  resilience  plan  are  an 
important step in the diversification away from fossil fuels, more effort could be made 
to  speed  up  the  deployment  of  renewables  across  all  sectors.  This  could  involve  the 
designation of priority areas for renewable energy installations, the further simplifying 
and  shortening  of  permitting  procedures  and  the  strengthening  of  the  grid  and 
improvement of overall grid management (to enable the connection of more renewable 
energy installations, especially on the low- and medium voltage levels). Further focus 
on  zero-emission  transport  and  infrastructure  would  further  help  reduce  greenhouse 
gas emissions and reliance on fossil fuels.  

(33)  Labour  and  skills  shortages  in  sectors  and  occupations  key  for  the  green  transition, 
including  manufacturing,  deployment  and  maintenance  of  net-zero  technologies,  are 
creating  bottlenecks  in  the  transition  to  a  net-zero  economy.  High-quality  education 
and  training  systems  that  respond  to  changing  labour  market  needs  and  targeted 
upskilling and reskilling measures are key to reducing skills shortages and promoting 
labour inclusion and reallocation. To unlock untapped labour supply,  these measures 
need  to  be  accessible,  in  particular  for  individuals  and  in  sectors  and  regions  most 
affected  by  the  green  transition.  Strengthening  teaching  in  science,  technology, 
engineering  and  mathematics  could  reinforce  the  education  system’s  capacity  to 
successfully  equip  learners  with  competences  for  the  green  and  digital  transition.  In 
2022,  labour  shortages  were  reported  in  Slovenia  for  66  occupations  that  required 
specific  skills  or  knowledge  for  the  green  transition.  The  job  vacancy  rate  increased 
across  key  sectors  such  as  construction  (from  3.5%  in  2015  to  7.0%  in  2022)  and 
manufacturing (from 1.2% in 2015 to 2.6% in 2022), with both sectors above the EU 
average of 4.0% and 2.3%, respectively, in 2022.  

(EC)  No  715/2009  of  the  European  Parliament  and  of  the  Council,  Directives  94/22/EC,  98/70/EC, 
2009/31/EC,  2009/73/EC,  2010/31/EU, 2012/27/EU  and  2013/30/EU of  the  European  Parliament  and 
of the Council, Council Directives 2009/119/EC and (EU) 2015/652 and repealing Regulation (EU) No 
525/2013 of the European Parliament and of the Council (OJ L 328, 21.12.2018, p. 1). 
Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the 
promotion of the use of energy from renewable sources (OJ L 328, 21.12.2018, p. 82). 
Council Regulation (EU) 2022/1369 and Council Regulation (EU) 2023/706 

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(34) 

(35) 

In light of the Commission’s assessment, the Council has examined the 2023 Stability 
Programme and its opinion27 is reflected in recommendation (1) below.  

In view of the close interlinkages between the economies of euro area Member States 
and  their  collective  contribution  to  the  functioning  of  the  Economic  and  Monetary 
Union, the Council recommended that euro area Member States take action, including 
through  their  recovery  and  resilience  plans,  to  (i)  preserve  debt  sustainability  and 
refrain  from  broad-based  support  to  aggregate  demand  in  2023,  better  target  fiscal 
measures taken to mitigate the impact of high energy prices and reflect on appropriate 
ways to wind down support as energy price pressures diminish; (ii) sustain high public 
investment and promote private investment to support the green and digital transition; 
(iii)  support  wage  developments  that  mitigate  the  loss  in  purchasing  power  while 
limiting  second-round  effects  on  inflation,  further  improve  active  labour  market 
policies  and  address  skills  shortages;  (iv)  improve  the  business  environment  and 
ensure that energy support to companies is cost-effective, temporary, targeted to viable 
firms  and  that  it  maintains  incentives  for  the  green  transition;  and  (v)  preserve 
macro-financial  stability  and  monitor  risks  while  continuing  to  work  on  completing 
the Banking Union. For Slovenia, recommendations (1), (2) and (3) contribute to the 
implementation of the first, second- and third-euro area recommendations.  

HEREBY RECOMMENDS that Slovenia takes action in 2023 and 2024 to:  

1. 

Wind  down  the  energy  support  measures  in  force  by  the  end  of  2023  using  the 
related  savings  to  reduce  the  government  deficit.  Should  renewed  energy  price 
increases  necessitate  support  measures,  ensure  that  these  are  targeted  at  protecting 
vulnerable  households  and  firms,  fiscally  affordable,  and  preserve  incentives  for 
energy savings.  

Ensure  prudent  fiscal  policy,  in  particular  by  limiting  the  nominal  increase  in 
nationally financed net primary expenditure in 2024 to not more than 5.5%. 

Preserve nationally financed public investment and ensure the effective absorption of 
RRF  grants  and  other  EU  funds,  in  particular  to  foster  the  green  and  digital 
transitions.  

For  the  period  beyond  2024,  continue  to  pursue  a  medium-term  fiscal  strategy  of 
gradual  and  sustainable  consolidation,  combined  with  investments  and  reforms 
conducive  to  higher  sustainable  growth,  to  achieve  a  prudent  medium-term  fiscal 
position.  

Ensure  the  long-term  fiscal  sustainability  of  the  healthcare  and  long-term  care 
systems.  Rebalance  tax  revenues  towards  more  growth-friendly  and  sustainable 
sources. 

Ensure an effective  governance structure and strengthen the administrative capacity 
to  allow  for  a  swift  and  steady  implementation  of  its  recovery  and  resilience  plan. 
Swiftly  finalise  the  REPowerEU  chapter  with  a  view  to  rapidly  starting  its 
implementation.  Proceed  with  the  speedy  implementation  of  cohesion  policy 
programmes, in close complementarity and synergy with the recovery and resilience 
plan.  

Continue efforts to diversify  gas imports and reduce overall  reliance on fossil fuels 
by  accelerating  the  deployment  of  renewables,  in  particular  by  further  simplifying 

Under Articles 5(2) and 9(2) of Council Regulation (EC) No 1466/97. 

2. 

3. 

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and  shortening  the  permitting  procedures,  and  strengthening  the  electricity  grid,  as 
well  as  improving  its  management,  including  through  digitalisation.  Increase  the 
implementation  of  energy  efficiency  measures,  in  particular  in  the  building  sector, 
promote the electrification of the transport sector, and step up policy efforts aimed at 
the provision and acquisition of the skills needed for the green transition. 

Done at Brussels, 

For the Council 
The President 

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