Slovenia plans new debt up to 9.14 bln euros over next two years


By Marja Novak

LJUBLJANA, Oct 12 (Reuters) - Slovenia, struggling to avoidan EU bailout, is planning to take on new debt of up to 9.14billion euros ($11.83 billion) in 2013 and 2014 to finance thebudget, repay the maturing debt and secure bank stability.

According to an official document expected to be approved byparliament in October or November, the government will aim toborrow up to 3.15 billion euros in 2013 to finance the budgetdeficit and maturing debt.

New debt in 2014 could reach up to 3.2 billion euros,according to the same document, published on the parliament'swebsite.

The government would also be able to take on additional debtof 2.8 billion euros in both years to intervene on its sovereigndebt market and ensure stability of the banking sector.

Slovenia will test investor confidence in the coming weeks,when it plans to issue its first sovereign bond this year, a$1.5 billion 10-year bond, after postponing in April a similarissue in euros because the yield demanded exceeded 5 percent.

Since then yields rose further and stood at 6.17 percent onFriday for a 10-year bond, according to Reuters data, afterpeaking at 7.6 percent in August amid speculation that Sloveniacould become the next euro zone state to ask for aninternational bailout.

The country was badly hit by the global crisis due to itsdependency on exports and is struggling with a new recessionafter a mild recovery in 2010 and 2011 due to lower exportdemand and a fall in domestic spending amid the government'sbudget cuts.

The government hopes to reduce budget deficit to below 3percent of GDP in 2013 from 4.2 percent this year by cuttingpublic sector wages by about 5 percent and increasing a numberof taxes, including taxes for students, media, banks andcommunal services.

The government also plans to establish a new state companythat will take over bad loans of Slovenian banks which amount tosome 6.5 billion euros or 18 percent of GDP and another thatwill manage all state assets and speed up privatisation.

It also plans to raise retirement age and ease hiring andfiring of employees from the start of 2013 but trade unions arethreatening to enforce referendums on most of its reforms whichcould delay or reject them.

($1 = 0.7726 euros)(Reporting By Marja Novak; editing by ZoranRadosavljevic/Jeremy Gaunt)

((Marja.Novak@thomsonreuters.com)(Reuters Messaging:marja.novak.thomsonreuters.com@reuters.net))


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