Finance

Slovenia says no need for EU bailout

LJUBLJANA, Slovenia (AP) — Slovenia said Wednesday it has enough funds to shore up its indebted banks, indicating the small European Union country will not be seeking an international bailout.

The central bank said in a statement "the government has enough means to carry out the recapitalization" of the banks "extremely swiftly." It said it came to the conclusion after reviewing the EU-supervised "stress tests" conducted by international auditors for 10 mostly state-run banks.

The results of those health tests, designed to see if one of the smallest countries to use the euro currency would need outside financial assistance, will be made public this week. Although the central bank did not reveal details of the stress tests, experts estimate Slovenia will need up to 5 billion euros ($6.8 billion) to heal its banks, which are nursing some 8 billion euros in bad loans, or about 23 percent of gross domestic product.

Slovenian Prime Minister Alenka Bratusek said ahead of the publication of the stress test results that her government has solved the main financial problem and will not be seeking a bailout. "We extinguished the fire, but now we need to create a long-term strategy," Bratusek said.

Slovenia, once an Eastern European model of economic success, has been in recession for the past three years and only a slight recovery is expected in 2015, when the public deficit is set to fall below the 3 percent of GDP threshold set by the EU.

The central bank said that the recapitalization of banks alone will not be sufficient for a substantial economic recovery. "This will above all require thorough changes in the domestic business environment, including improvements in the functioning of the rule of law and consistent respect for it on all levels of decision making," the central bank said.

Associated Press writer Dusan Stojanovic contributed from Belgrade, Serbia.

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