Fiscal Austerity Ahead

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Slovenian development minister Mitja Gaspari stated on February 4 that his government would cut the public sector work force by 1% to improve administrative efficiency and as part of a plan to reduce the budget deficit to 1.6% of GDP by 2013. Gaspari simultaneously announced an objective to privatise a large range of state-owned firms, which are estimated to be worth EUR720mn. Despite Gaspari's statement, we maintain that the government will not begin to aggressively address the country's gaping budget deficit (estimated to have totalled 5.9% of GDP in 2009) until 2011 at the earliest. We caution that the necessary