CELEX: 52013PC0911
Language: en
Date: 2013-11-15
Title: Proposal for a COUNCIL OPINION on the Economic Partnership Programme of SLOVENIA

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		52013PC0911
		
			Proposal for a COUNCIL OPINION on the Economic Partnership Programme of SLOVENIA /* COM/2013/0911 final - 2013/0396 (NLE) */
			
				
		
		
			
			   	2013/0396 (NLE)
Proposal for a
COUNCIL OPINION
on the Economic Partnership Programme of SLOVENIA 

THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the
Treaty on the Functioning of the European Union,
Having regard to
Regulation (EU) No 473/2013 of the European Parliament and of the Council of 21
May 2013[1] on common provisions for monitoring and
assessing draft budgetary plans and ensuring the correction of excessive
deficit of the Member States in the euro area, and in particular Article 9(4)
thereof,
Having regard to the
proposal of the European Commission,
Whereas: 
(1)       The
Stability and Growth Pact (SGP) aims at securing budgetary discipline across
the Union and sets out the framework for preventing and correcting excessive
government deficits. It is based on the objective of sound government finances
as a means of strengthening the conditions for price stability and for strong
sustainable growth underpinned by financial stability, thereby supporting the
achievement of the Union's objectives for sustainable growth and jobs. 
(2)       Regulation
(EU) No 473/2013 of the European Parliament and of the Council of 21 May 2013
on common provisions for monitoring and assessing draft budgetary plans and
ensuring the correction of excessive deficit of the Member States in the euro
area sets out provisions for enhanced monitoring of budgetary policies in the
euro area and for ensuring that national budgets are consistent with the
economic policy guidance issued in the context of the SGP and the European
Semester. Since purely budgetary measures might be insufficient to ensure a
lasting correction of the excessive deficit, additional policy measures and
structural reforms may be required.  
(3)       Article
9 of Regulation (EU) No 473/2013 sets out the modalities for economic
partnership programmes, to be submitted by euro area Member States under an
Excessive Deficit Procedure. Setting out a roadmap of measures to contribute to
an effective and durable correction of the excessive deficit, the economic
partnership programme should detail
in particular the main fiscal-structural reforms, notably those referring to
taxation, pension and health systems and budgetary frameworks, which will be
instrumental to correct the excessive deficit in a lasting manner. 
(4)       On
2 December 2009, the Council adopted a decision according to Article 126(6) of
the Treaty, whereby Slovenia is placed in an excessive deficit procedure. The
Council adopted on 21 June 2013 a revised recommendation under Article 126(7) of the Treaty in the
context of an excessive deficit which was opened before the entry into force of
Regulation (EU) No 473/2013. In this context, Slovenia was requested to present
an economic partnership programme by 1 October 2013, setting out
fiscal-structural reforms that aim at ensuring an effective and lasting
correction of the excessive deficit.
(5)       The
economic partnership programme submitted by Slovenia on 1 October includes
measures aimed at reinforcing the budgetary strategy for a durable correction
of the excessive deficit (Council Country Specific Recommendation (hereinafter
CSR) 1), supporting the long-term sustainability of the pension system and
containing ageing costs (CSR2), reforming the labour market (CSR3), assessing
the quality of assets in the banking system (CSR4), improving banks regulatory
framework and supervisory capabilities (CSR5), reforming regulated professions
(CSR6), shortening the length of judicial procedures (CSR7), strengthening
corporate governance of SOEs and privatisation (CSR8) and restructuring companies
and improving the business environment (CSR9). 
 (6)      The
fiscal-structural measures and reforms that Slovenia plans to implement concern
the following: (i) tax system and tax compliance; (ii) fiscal framework; (iii)
pension system; and (iv) long-term care. The set of measures is partially
adequate and could be expected to contribute to the effective and lasting
correction of the excessive deficit situation. Nevertheless, further efforts
and accelerated implementation in some areas are necessary.
(7)       Recent
structural revenue-increasing measures, in particular higher VAT rates and new
real estate tax, are projected to contribute considerably (around 1.3% of GDP)
to the consolidation of public finances. These actions are not complemented
with structural expenditure side measures also essential to achieve the budget
balance/surplus position. On current information it is premature to assess
several administrative measures to strengthen tax compliance, however if
efficient, they would further strengthen the sustainability of public finances.
(8)       The authorities are preparing an overhaul of the legislation
underpinning the fiscal framework in compliance with the Treaty on Stability,
Coordination and Governance in EMU (TSCG) and the EU
legal requirements. The approved constitutional budget balance/surplus rule and envisaged legal acts
specifying its implementation, notably the new Fiscal
Rule Act and amended Public Finance Act, should help
anchor fiscal discipline in national legislation.
(9)       As
a result of the implementation of the December 2012 pension reform monthly
numbers of new old-age pensioners indicate a moderation in their growth. However,
the assessment of implementation of the second Council recommendation about
strengthening the long-term sustainability of the pension system would be
premature. A working group composed of members from academia and public
administration is assessing the implications of the reform. Based on its
findings, the government intends to set out proposals for further adaptations
of the pension system to ensure its sustainability beyond 2020. 
(10)     To
further tackle increasing ageing costs, the government approved a blueprint for
an act on long-term care and personal assistance introducing a new
insurance-based system. The adoption of the new act is foreseen in the first
half of 2014. The funding of the compulsory insurance-based system has to be
clarified, but it will likely be based on compulsory contributions from the
active and inactive population and should not increase the overall social
security contributions rate.
(11)     Over
the last months, Slovenia has stepped up the pace of non-fiscal structural
reforms relevant for the adjustment of macroeconomic imbalances. Crucial
progress is being achieved in the area of the banking sector. Nevertheless, the
key reforms supporting adjustment and growth are still in preparation and
substantially delayed, notably out of court corporate restructuring and
adoption of the classification of state owned assets.
(12)     Implementation
of measures to stabilise the banking sector is on-going, notably a thorough
Asset Quality Review and Stress Tests covering almost 70% of the banking sector
are being conducted and due to be completed before end-2013. Such an assessment
is expected to be followed by a comprehensive strategy of restructuring,
consolidation and recapitalisation of the banking sector, which would also
include plans for disinvestment of direct and indirect public sector
participations in domestic banks. The latter would significantly reduce risks
for reappearance of contingent liabilities in coming years.
(13)     The
reform of the Slovenia Sovereign Holding Law currently discussed, if well
designed and thoroughly implemented, including swift progress with the
privatisation of certain SOEs, could, on the one hand, generate revenues and
reduce contingent liabilities of the general government and, on the other hand,
contribute to an improved and more efficient strategic
management of state owned assets in particular regarding the possibilities to attract
foreign investors,
HAS ADOPTED THIS OPINION: 
The Economic Partnership
Programme of Slovenia presented to the Commission and to the Council on 1
October 2013 includes a set of fiscal structural reforms that is partly
adequate to support an effective and lasting correction of the excessive
deficit and needs to be properly and comprehensively implemented to deliver the
expected results. Specifically, the economic partnership programme illustrates
some progress in meeting the commitments from Slovenia's Stability Programme
and National Reform Programme concerning the tax reform, the strengthening of
tax compliance and of fiscal governance as well as the repair of the banking
sector. The restructuring of the banking and corporate sector and the consolidation
strategy following the release of the Asset Quality Review and Stress Tests for
the banks are key in delivering confidence and attracting foreign investors in
Slovenia, including in sovereign bonds. Work on possible further adaptations of
the pension system has only recently started and information on envisaged
concrete measures and timelines in this field is not available. In general,
nearly all reforms are work in progress which makes their swift adoption and
full implementation of key importance. Slovenia is therefore invited to detail
further and provide additional information on the envisaged reforms in the
upcoming National Reform Programme and Stability Programme, the full assessment
of which will be conducted by the Commission and the Council in the context of
the European Semester.
Done at Brussels, 
                                                                       For
the Council
                                                                       The
President
[1]       OJ L 140, 27.5.2013 p. 11.