News 2015

A deeply divided Slovenian Government coalition does not intend to privatize the key state-owned companies

27.05.2015

  • Miro Cerar’s Government seems weak and divided on issues regarding privatization of the state assets
  • Slovenian Government’s strategy for privatization does not foresee the privatization of key state-owned companies that fund and support the “old boys network” and its media monopolies
  • The Government's position on privatization is in a stark contrast with the recent recommendations from the European Commission and the OECD, which recommends Slovenia to step up privatization efforts
Slovenian Government proposed two documents which should allow Slovenia to step up its efforts to privatize state assets. But the proposed Strategy of Capital Investments Management and the Classification of Capital Investments actually mean that the old way of ownership and management of state property in Slovenia will continue also in the future and that the state will continue to use the taxpayers' money in order to rehabilitate the state-owned companies. With proposed Strategy and Classification, Cerar’s Government continues to block the Slovenian economy from foreign competition and hinder the privatization process. Slovenian Democratic Party is deeply disappointed with the prepared documents because the Government is not only halting the privatization but also the future development of these companies and normalization of Slovenian economy.

Classification of particular state-owned companies was a hot topic on Government’s agenda for the last couple of months. The parties forming the Government coalition have been confronting each other privately and publicly for the past five weeks regarding what companies should be privatized and what companies should stay under the state ownership. Each party strongly defending companies tied to the party leadership and serving its best interests.

The Classification of investments shows that the “portfolio” companies - intended for privatization - in most cases represent only companies with small share of state assets and companies that are already in trouble. Slovenian Sovereign Holding (SSH), which is in charge of managing state assets, will have a difficult job selling assets of these 46 portfolio companies. Miro Cerar’s Government has decided for a dispersed ownership when it comes to investments classified as “strategic”, which means that the Government will keep the influence and power over these companies. In this way the government will be maintaining its power in both, the managing and appointing of the governing bodies of individual economic investments. With dispersed ownership, companies in the process of privatization will not be able to obtain strategic partners or buyers who would ensure further development of the companies, new markets, new knowledge and also new jobs. In addition, the Slovenian Democratic Party is convinced that the Strategy is written in a way that it lacks the essential elements that would allow for a better management of the state property. The strategy also lacks one of the key objectives which should plan revenues, from the asset management, to be higher than the expenditure. According to the content of the strategy the expenses will be significantly higher than revenues.

It is evident, that the current Government does not have objectives and plans for companies which will remain under state ownership and are classified as “strategic”. It is not specified what kind of growth is expected for these companies, their future development, expected profits, dividends, number of employees and so on. The Government has also not yet decided on how it intends to invest the funds obtained with the privatization. Will the funds be used for the payment of debt, future development of companies or for settling of the commitments held by the SSH?

Judging by the poor performance of the Miro Cerar’s Government so far, the proposed strategy is not much of a surprise. The Government has no programme; it is composed of highly ideological and strongly divided coalition partners SMC, DeSUS and SD who have now clearly proven to be the opponents of the privatization and that the privatization will come to a stop under this Government. Due to a severe delay in the adoption of the Strategy and Classification there is a high risk of the GDP decline, rise of unemployment and loss of credibility with the foreign investors. With the proposed “Privatization Strategy”, Slovenia is further closing its markets for foreign investors.

These two documents are in stark contrast with the recommendations of the European Commission and the OECD, which recommends Slovenia to step up privatization efforts. Privatization policy of the ruling coalition is contrary with the promises made to the international and domestic public. Slovenian Democratic Party is convinced, that privatization efforts of the current Government are not transparent and represent an illusion of open Slovenian economy.

And above all, the Government’s decisions will maintain funding for the “old boys network” and preserve old monopolies, especially the media monopoly.