Keeping Slovenian public finances on a sustainable path

This paper examines various aspects of fiscal policy in Slovenia, in particular fiscal consolidation, pension reform, efficiency of government spending and the tax system. It finds that Slovenia belongs to the group of new EU member countries, which have given in the past a high priority to fiscal prudence. This both stabilised the economy and paved the way for entry to the EU in 2004 and adoption of the euro in 2007. It also created room to counteract the current weakening of the economy. But fiscal policy has to cope with four main challenges:

i) ensuring a return to fiscal consolidation after the current economic downturn
ii) achieving longer-term fiscal sustainability by continuing pension reform
iii) limiting growth of public spending and improving its quality
iv) making the tax system less distorting for job creation and growth.

This Working Paper relates to the 2009 OECD Economic Survey of Slovenia.