Slovenia adopts austerity action plan to avert bailout

Banking

Slovenia’s government said Thursday it was confident it could avoid a much-dreaded bailout and satisfy the European Union, as it adopted an action plan including privatizations, tax increases and austerity measures. Slovenia pledged to sell 15 state firms and raise VAT, however, the much-anticipated stability package offered no timeframe for the sell-off of state firms including the country’s second largest bank, its biggest telecoms operator and the national airline. Prime Minister Alenka Bratusek said the package will include a rise in general value added tax from July 1 to 22% from 20%, while a separate one on food, newspapers and other everyday products, will go up to 9.5%, from the current 8.5%. No details were given about the size of the property tax. The action plan was expected to raise as much money through tax increases as it would save from spending cuts, for a total €1.0 billion ($1.31 billion) per year. Two-million-strong Slovenia, once a model EU and euro zone nation, has been struggling to jumpstart an economy in recession since 2011, and has repeatedly faced doomsday predictions that it might become the next country to need a bailout.

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