Slovenia's economic institute urges government to speed up privatisation, introduce pension reform

By Marja Novak LJUBLJANA (Reuters) - Slovenia's official economic institute urged the government on Wednesday to press ahead with privatisation and introduce pension reform. The euro zone member announced plans last year to sell 15 state companies as it narrowly avoided an international bailout, but only three have been sold so far. "Privatisation is among the most important structural changes that are needed ... better management of firms is a key factor in increasing Slovenia's growth potential," Bostjan Vasle, the head of the institute, told a news conference. He also said the government should implement pension reform as soon as possible to cope with an ageing population. The government of the former communist country still controls about 50 percent of the economy, including its main banks, insurers and energy firms. Prime Minister Miro Cerar's centre-left cabinet, which took over in September, has pledged to pursue privatisation and cut the budget deficit to below 3 percent of GDP in 2015, the official ceiling for euro zone countries, from 4.3 percent seen this year. It has also talked about reforming the state pension system but only plans to implement the reform by 2020. The biggest state asset up for sale is telecom operator Telekom Slovenia, which the government aims to sell by the end of March, along with the country's second largest bank Nova KBM (NKBM). The previous government had to pour more than 3 billion euros into the mostly state-owned banks, including NKBM, last year to prevent them from collapsing under a large amount of bad loans and enable the country to avoid an international bailout. Slovenia's economy has rebounded this year after two years of recession although growth is expected to slow next year. The statistics office reported on Wednesday that exports rose 9 percent year-on-year in October, while industrial output was 3.9 percent higher. Deputy Prime Minister Dejan Zidan said last month that growth this year will be around 2.4 percent, above the government's forecast in September of 2 percent. "The (macroeconomic) figures are relatively good but ... medium-term movements on international markets remain uncertain so we can expect economic growth in 2015 to be lower than this year," Vasle said. Export growth was likely to slow, he said. The institute said in September it expected GDP growth of 1.6 percent in 2015 and in 2016. Around 77 percent of Slovenia's exports, mostly cars and car parts, drugs and household appliances, go to other parts of the European Union. (Reporting By Marja Novak; Editing by Zoran Radosavljevic and Susan Fenton)