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Slovenia needs to set priorities for post-corona times, economist says

Ljubljana, 24 April - An online debate hosted on Friday by the STA has heard that the European Commission has promptly responded to the crisis caused by the coronavirus pandemic, while member states are still to agree an instrument to help the most affected countries.

Ljubljana
A videoconference on the EU's response to the Covid-19 pandemic; pictured STA journalist Jernej Šmajdek (top, left), Economy Ministry State Secretary Simon Zajc (top, right), economist Mojmir Mrak and Zoran Stančič, head of the European Commission Representation in Slovenia.
Photo: STA

Zoran Stančič, the head of the European Commission Representation in Slovenia, which co-hosted the debate, said the Commission was well prepared at least for the economic part of the coronavirus crisis, so it could react promptly.

It relatively quickly relaxed the Stability and Growth Pact and "expeditiously" processed the state aid measures announced by member states.

It also prepared the SURE plan to prevent massive layoffs and the EIB's guarantee fund to support small and medium-sized companies, said Stančič in the debate termed The EU and the Novel Coronavirus: Economic Consequences and Measures.

Economist Mojmir Mrak shared this view, but warned that fiscal measures were in the jurisdiction of member states, whereas the European Council needs more time to take measures.

Stančič also pointed to the fact that Slovenia's state aid under both emergency laws amounted to some 10% of its GDP, which put it among the states with the largest volume of aid to businesses and households.

Mrak believes the corona state aid will put members in different positions in terms of how their public finances are fit when reviving the economy.

With its public debt expected to reach 90% of its GDP, Slovenia will not be among the most indebted countries, said Mrak.

Mrak moreover urged introducing a pan-EU instrument which would be based on a higher degree of solidarity than similar schemes so far.

If there is no solidarity, "there will be no common European market tomorrow", said the professor of the Ljubljana School of Business and Economy.

He welcomed Thursday's EU summit decision to work towards a recovery fund, even if it is not yet clear whether it would be based on loans or guarantees. "I think it will combine both."

Mrak however disagrees with the EU leaders that a decision on the 2021-2017 budget should be adopted as soon as possible, saying the new budget would kick in only next year, whereas the EU needed a feasible instrument now.

The participants also pointed to challenges after the pandemic, with Mrak noting Slovenia had lacked a serious development strategy ever since the mid-2000s.

Since he expects long-term development to be different, entailing some de-globalisation, he believes Slovenia should draft a concept with priorities defining "where we want to be players and where we will merely follow developments".

State Secretary at the Economy Ministry Simon Zajc admitted the pandemic had exposed some of Slovenia's issues, for instance in food and energy self-sufficiency.

Stančič meanwhile said that "we will be able to protect our interests only if we get even more integrated in the EU".

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© STA, 2020