SLOVENIA BACK ON ITS FEET - WHAT PRICE IS TO BE PAID FOR GREED? 1

This article is a modest effort of trying to understand why Slovenia, following a sixteen-year period of sustained high growth, slumped into a deep, W-shaped recession, one of the deepest and the longest lasting in both the region and the Eurozone. It concentrates on the mistakes, especially those r...

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Bibliographic Details
Published in:Unia Europejska.pl 2016-05, Vol.238 (3), p.30
Main Author: Somai, Miklós
Format: Article
Language:English
Subjects:
Austerity policy
Economic conditions
Economic growth
Economic policy
GDP
Gross Domestic Product
LBO
Leveraged buyouts
Privatization
Recessions
Studies
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Summary:This article is a modest effort of trying to understand why Slovenia, following a sixteen-year period of sustained high growth, slumped into a deep, W-shaped recession, one of the deepest and the longest lasting in both the region and the Eurozone. It concentrates on the mistakes, especially those related to the so-called second wave of privatisation between 2005 and 2008, whereby the new elite - using their leading positions in both enterprises and state-owned banks and forcing the latter to finance the former to carry out MBOs and LBOs with loans tied to the value of the acquired assets pledged as collateral - exposed the financial sector to extreme risks and played a crucial role in overheating the economy. It concludes that, following years of hesitation over the seriousness of the crisis and the necessary economic policy measures to overcome it, the combined effects of austerity policy, engaged since the end of 2011, and the comprehensive bank recovery measures implemented, as of the end of 2013, under pressures coming from both financial markets and international (including European) institutions, the Slovenes could, at the price of their traditionally cautious attitude about privatization, bring their economy back from the brink.
ISSN:2085-2694