Minister says third stimulus package to be development-oriented

He moreover announced a third legislative package, which the government will start to work on in May and will be development-oriented.

"It's important that it focuses on individual companies and lines of business so that they start to perform well and additionally invest. This will increase value added and economic activity, thus leading to the normalisation of the economy and of people's lives".

Šircej said the second stimulus package, adopted yesterday, was designed to provide liquidity for businesses and to help citizens.

To this effect, the government will guarantee for bank loans to companies to the tune of up to EUR 2 billion, and raise the lump sum a municipality gets per resident from EUR 589 to EUR 624.

"The proposals aim to make it easier on companies and thus contribute to preserving economic stability," said Šircelj.

He said it was "a true challenge to find sources for all these funds, but the financial situation in the country is stable, liquidity adequate".

He recalled Slovenia had recently issued new bonds, but within plans, and his ministry would start drafting a supplementary budget in May.

Šircelj expects not only expenditure but also revenue to rise, the latter because some projects have not been carried out. No tax raises are however planned.

As for the EUR 2 billion guarantee scheme, Šircelj said a direct cost to the state in case of loan default is estimated at EUR 485 million.

"But this is a pessimistic scenario," he said, arguing the government hopes, given the portfolio of companies that are to get a loan guarantee, the companies will be able to repay the loans and so the guarantees will not be invoked.

Should that not be the case, the state will repay bank loans in cash, except if the European Central Bank or Slovenia's central bank agree they could be paid with state bonds or SID Bank bonds, he explained.

Šircelj said that the EU had agreed a number of measures to mitigate the Covid-19 crisis yet criteria to benefit from them were yet to be set, so in these hard times Slovenia had to rely on itself.

While the EUR 540 billion the EU will allocate for this purpose may sound a lot, it is a mere 4% of the bloc's GDP, while the financial effect of Slovenia's first stimulus package is over 6% of its GDP, noted Šircelj.

"Slovenia is thus allocating more to cushion the crisis than the EU," he said, at the same time hoping the EU finds a way for joint action to restart the European economy.