Press release from the meeting of the Governing Board of the Bank of Slovenia on 15 November 2011

1) The Governing Board of the Bank of Slovenia discussed the Overview of Slovenia’s financial accounts 2005-2010. The overview will be published in the Financial accounts of Slovenia 2005-2010, an annual statistical publication, together with detailed figures for economic sectors and financial instruments, and the methodology and process for their compilation. 
2) The Governing Board adopted a Regulation amending the regulation on the general rules for implementing monetary policy, which will be published in the Official Gazette of the Republic of Slovenia. 
3) The Governing Board is monitoring developments on the international financial markets, and the rising spreads on Slovenian government bonds and on the securities of certain Slovenian banks. The rise in the required spreads on securities is the result of several factors, most notably the worsening of the debt crisis in certain euro area countries, the general uncertainty in the international financial environment, and developments and trends in the domestic economic and political environment. 
The domestic macroeconomic and political situation is adverse: official projections for Slovenia’s GDP growth are being cut, there are major macroeconomic imbalances, which are primarily being seen in a primary budget deficit and a rising negative net financial position against the rest of the world, and in addition some political uncertainty,, which is delaying the adoption and implementation of reforms. These were all factors in Slovenia’s sovereign downgrading, an indication of the need for the credible design and implementation of long-term stabilisation and structural policies.

The Governing Board believes that it is vital for politicians and economic policymakers to adopt and implement economic measures as quickly as possible to reduce spreads. Previous policy has led to high external borrowing by the government sector, the banks and other economic entities, as a result of which a greater role needs to be given to responsible common equity capital, both domestic anf foreign.