development report 2012 - UMAR

102 Development Report 2012
Indicators of Slovenia’s development
General government
debt
The outstanding amount of the general government
debt at the end of 2011 is estimated at EUR 16.9 bn
or 47.6% of GDP. 1 The debt rose by EUR 3.2 bn in
2011 and includes government borrowing to repay
the debt that matured at the beginning of this year.
After reaching its lowest level in 2008, the trend
decline in the debt-to-GDP ratio (debt ratio) reverted
in 2009, as the debt increased sharply (by 13.4 p.p.)
due to the widening deficit and pre-financing of
the 2010 borrowing requirement (the 7 th highest
increase among EU countries). In the next two years,
debt growth slowed, but remained relatively high
(12.3 p.p. in total). In 2009–2011, the debt ratio thus
increased by as much as 25.7 p.p., almost double the
size reached in 2008.
The bulk of the general government debt is the debt
of the central government (96% of the total at the end
of 2011). However, the share of the local government
non-consolidated debt was also increasing steadily,
particularly in 2008–2011, when it averaged EUR 11
m per year. As a result, the debt-to-GDP ratio of local
governments doubled in the 2009–2011 period.
sovereign debt crisis spreading to Italy and Spain in
July 2011, the spreads of government bond yields
deteriorated significantly in a number of countries in
the EU. The spread of Slovenia’s government bonds
doubled (250 basis points), which was also due
to specific domestic factors. In an environment of
increased systemic risk, the credit rating of Slovenia
was revised downwards one notch by three major
rating agencies in the months of September and
October (Moody’s September 23 rd ; Fitch September
28 th and S&P October 20 th ), stating deterioration of
the banking system, weak policy implementation,
deterioration of fiscal position and lack of a credible
consolidation strategy as the main reasons. 2 In the first
half of November, the government debt spread vis-àvis
German benchmark government bonds reached
600 basis points, the highest level thus far. By the end
of the year, it declined, but remained relatively high
(close to 500 basis points).
In 2009–2011, the general government debt in
Slovenia was rising faster than the EU average.
Totalling 47.6% at the end of 2011, the debt-to-GDP
ratio was still significantly below that in the euro area
as a whole, but it increased relatively more in the past
three years (by 25.7 p.p., the euro area average by 17.9
p.p.). 3
At the beginning of 2011, Slovenia mainly borrowed
by issuing long-term securities on the euro area
market, and at the end of the year, by issuing shortterm
treasury bills on the domestic market. In the
first quarter of 2011, it issued a 10-year and a 15-
year bond (each worth EUR 1.5 bn) on the euro area
market, while in December 2011 it issued 18-month
treasury bills in the amount of EUR 907 m on the
domestic market to pre-finance the 2012 borrowing
requirement. Most of the central government debt
is thus still long-term (92% at the end of 2010). The
weighted average maturity of the debt portfolio is 6.2
years and the debt maturity profile will be relatively
evenly spread in the future years.
Slovenia’s government bond issuance on the euro
area market in the first quarter of 2011 took place
in a still relatively favourable environment but the
conditions deteriorated rapidly in the second half
of the year. The 10-year government debt spread
over benchmark averaged 120 basis points in Q1
2011. Market conditions deteriorated considerably
after the EU Summit in May 2011 as its outcome was
considered insufficient to cater to the needs of euro
area countries affected by the debt crisis. With the
1
Report on the general government deficit and debt – March
(2012 Poročilo o primanjkljaju in dolgu države – marec 2012).
2
Moody's revised further Slovenia's credit rating by one notch
on 22 December 2011.
3
European Economic Forecast – Autumn 2011 (European
Commission), 2011.