Standard & Poor’s has downgraded Slovenia’s credit rating by one level, from A to A-, due to the potential increase in state debt to recapitalize state-owned banks and due to uncertain economic growth prospects, Slovenian media reported on Wednesday.
S&P states that the expected state aid to banks in its predominant ownership to clean them of bad loans this year will increase Slovenia’s state debt by approximately 3 to 4 billion euros, and in that case, by the end of the year, the debt-to-GDP ratio would rise to 59 percent, which is higher than initial forecasts.
As reported by Slovenian media, S&P predicts that Slovenia will achieve the goal of reducing the budget deficit to 3 percent of GDP this year, as new measures are expected alongside last year’s fiscal stabilization measures, but it also warns of political risks in implementing planned reforms after the government lost its parliamentary majority.
