Wednesday, February 13, 2013

Slovenian snap election looms as another junior party quits

By Marja Novak

LJUBLJANA (Reuters) - Financially troubled Slovenia has moved closer to holding its second snap election in two years, as the conservative People's Party (SLS) said it would quit the crumbling government but not join any new centre-left coalition.

SLS leader Radovan Zerjav told reporters late on Tuesday his party would leave Prime Minister Janez Jansa's bloc by early March over a corruption scandal that has prompted two other coalition partners to walk out and deprived the government of a parliamentary majority.

"The SLS will not cooperate in forming a new coalition ... after resigning (from this government) we will be a constructive opposition," Zerjav said, adding his party saw early elections as the best option.

Jansa has vowed to stay at the helm of a minority government with only 30 out of 90 seats in parliament, while opposition parties started talks on a possible new prime minister.

However, with the SLS refusing to join a possible centre-left alliance and the centre-left Social Democrats also pushing for an early election, it is virtually impossible for the fragmented opposition to secure a new majority.

"An early election is the only option as parties simply cannot agree on a new prime minister. I think an election will be held in the autumn," Borut Hocevar, a political analyst at daily Finance, told Reuters.

He said Slovenia's credit rating would continue to fall and the political crisis would make it harder for the country to tap international markets and could force it to ask for a bailout later this year or next year.

Analysts say Jansa could resign over the coming months as he will be unable to push the government's agenda through parliament, while the opposition will not be able to unseat him by naming a new prime minister.

DEBT

Standard & Poor's on Tuesday cut Slovenia to A-minus from A, citing the likelihood of the state debt burden increasing due to support of state-owned banks and uncertain growth prospects.

Slovenia, whose banks are nursing some 7 billion euros (6 billion pounds) of bad loans, equal to 20 percent of GDP, is rated A- by Fitch and Baa2 by Moody's, both with a negative outlook.

The country's ratings have fallen several times since September 2011, when parliament ousted the previous centre-left government over its inability to implement reforms.

A snap election in December 2011 brought Jansa's conservative coalition to power. An anti-corruption commission last month reported that he was unable to explain the origin of some income. Jansa has denied any wrongdoing.

Export-oriented Slovenia, which in 2007 became the first ex- communist country to adopt the euro, was badly hit by the global crisis and fell into a new recession in 2012 due to lower export demand and a fall in domestic spending caused by budget cuts.

The government wants to set up a "bad bank" which would take over bad loans of state banks, but the plan has made little progress since the government lost its majority.

In October the country managed to issue its first sovereign bond in 19 months, averting a bailout at least until June.

(Editing by Zoran Radosavljevic and Andrew Roche)

News

Wednesday, February 13, 2013

Slovenian snap election looms as another junior party quits

By Marja Novak