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Controlling The Slovenian Public Debt

With an educated work force, a relatively strong economy and a stable political scene, Slovenia is the first European Union member to embrace the euro. Until the the economic downturn in 2009, unemployment statistics held below 10 percent, rising just above this figure as the worldwide recession hit.

Slovenian public debt ranks them 69th in the world according to the CIA world fact book, making up 45 percent of their gross domestic product. This figure refers to all government debt owed at the federal, state and local level. The Slovenian public debt is paid with taxes from individual citizens, and is a significant economic indicator.

According to EU business, this figure dropped as low as 37.9 percent in 2010, but has since risen to over 47 percent. The spike was partly due to excessive government spending to cope with rising recessionary pressures.

Slovenia’s new government will attempt to reign in spending and implement austerity measures to control their rising debt. However, foreign investment will have to improve as well.

Slovenia lags behind countries such as China and India, partly due to the cheaper and more flexible labor forces there. Fortunately, this EU member is strategically located between the Balkans and Western Europe, which offers them a logistical advantage over their Eastern counterparts.

The comparably high English language skills of local labor here is another advantage, especially in the competitive automotive, pharmaceutical and electronics industries.

Obstacles

Slovenia’s economic infrastructure has allowed manufacturing, agriculture and service industries to thrive. However, excessive state controls could inhibit future economic growth. With the worldwide recession still a prominent obstacle, local industries will need to adapt to encourage more foreign investment. Combined with fewer state regulations, this approach would ensure the slovenian public debt remains stable. As the eurozone debt crisis continues, there is only a shrinking money supply to rely on for financial assistance.

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