ECONOMY

Slovenia sees more investment

LJUBLJANA – Foreign investment in Slovenia should rise significantly in coming years, boosted by the planned adoption of the euro in 2007, Prime Minister Janez Jansa told Reuters on Wednesday. «The fact that Slovenia fulfills all criteria for adopting the euro sends a positive message of Slovenia to the world and increases interest of foreign investors,» Jansa said a day after the European Commission said Slovenia can adopt the euro. «At the end of the government’s mandate in 2008 we hope that the total amount of foreign direct investment will double compared to the last year’s figure,» he said in an interview. The figures for 2005 are not yet available but accumulated foreign direct investment in Slovenia amounted to 5.6 billion euros ($7.22 billion) at the end of 2004, up from 5.1 billion at the end of 2003. Interest from banks Slovenia, a small Alpine state of 2 million people which declared independence from the former Yugoslavia in 1991, is set to become the only new EU member to adopt the euro in the first wave of eurozone expansion on January 1, 2007. The country joined the European Union in 2004 in a group of 10 mostly East European states. Jansa said that the recent announcement of Belgian banking group KBC that it may sell its 34 percent share in Slovenia’s largest bank, Nova Ljubljanska Banka (NLB), increased international interest in NLB. «The announcement of KBC brought a lot of interest of other European banks so this was a positive signal to investors in this respect. Until now interest in NLB was small because it was considered a finished matter.» KBC said it may sell its share in NLB because Slovenia’s government refused to allow KBC to become a majority owner of NLB, claiming that would put too much of the country’s banking sector under foreign control. Jansa pointed out that privatization of several state-owned companies which is due over the next few years will also attract foreign investors. Slovenia last week announced it would offer, over the next few years, shares of telecommunication operator Telekom and the country’s second-largest bank NKBM to international and domestic investors in several steps. Curbing pension burden In coming weeks the government is also expected to announce a gradual sale of mostly minority shares in over 200 companies that are owned by government investment funds KAD and SOD. The income from the sale of KAD’s shares will be spent to finance the pension system and reduce its burden on the budget, said Jansa. The European Commission had pointed out the need for pension reform in Slovenia in order to ensure stable public finances in the future. But Jansa said there was no need for radical changes as the pension reform launched in 2000 was still underway. «According to that reform the retirement age is gradually being increased until 2014, so one cannot say that no changes are being introduced. But we realize further changes will be needed around the years 2010 to 2012,» said Jansa. He said that the government was confident it would succeed in reducing the public deficit to at most 1 percent of gross domestic product (GDP) in 2008 from 1.8 percent in 2005. «The deficit is already well below the level allowed for euro members but we are committed to reducing it further. Our goal is a balanced budget,» said Jansa.