development report 2012 - UMAR

106 Development Report 2012
Indicators of Slovenia’s development
Gross external debt
Amid a more moderate growth of gross external
debt, the debt of the general government has
increased rapidly since the beginning of the financial
and economic crisis. After expanding by EUR 0.4 bn
in 2010, gross external debt climbed to EUR 41.6 bn
by the end of 2011 and was EUR 0.9 bn higher than
in December 2010. Also in 2011 most of the increase
was contributed by the gross external debt of the
general government, which rose by roughly the same
amount as a year earlier, by EUR 1.7 bn to EUR 9.8
bn. Gross external debt increased mainly in the first
quarter, when the government issued 10- and 15-
year bonds in the total amount of EUR 3.0 bn. 1 At the
end of the year, general government debt accounted
for 23.7% of the total gross external debt, which is
somewhat more than at the end of 2010 (20.1%).
The debt of affiliated companies (enterprises with a
10% or higher foreign ownership share) also rose to
a similar extent as in the previous year, by EUR 0.6
bn to EUR 5.2 bn; approximately two thirds of debt
was generated by non-banking financial institutions
involved in financial leasing, the rest by non-financial
corporations (companies). After the slight decline in
the previous year, the debt of other sectors (companies,
in particular) also grew last year, by EUR 0.4 bn to
EUR 9.9 bn. Its growth was largely a consequence of
borrowing in the form of short-term and long-term
loans, which companies had been repaying in the
previous year. The volume of short-term commercial
credits used by Slovenian companies to finance the
imports of goods and services expanded again, yet
less than in 2010. Commercial banks were repaying
external debt for the third year in a row. Their external
debt, which amounted to EUR 13.6 bn, was EUR 2.5
bn lower than at the end of 2010 (in 2010 it had
dropped by EUR 0.4 bn). Banks net repaid EUR 2.3
bn in 2011 (EUR 1.5 bn in foreign loans and EUR 0.8
bn in deposits), EUR 0.8 bn more than a year earlier.
They also carried out an early redemption of part of
state-guaranteed bonds. The share of bank debt in
gross external debt thus shrank considerably in 2011,
from 39.3% in 2010 to 32.7%. Owing to the limited
access to foreign sources of finance, banks had to tap
central bank funds last year. Having declined in the
previous two years, the debt of the Bank of Slovenia
thus increased by EUR 0.6 bn last year, to EUR 3.0 bn,
as the Bank of Slovenia borrowed short-term from the
Eurosystem again to provide liquidity for domestic
commercial banks. The long-term debt of the BS in
the form of other debt liabilities remained at the same
level as in 2010.
1
At 4.375% and 5.125% interest rates, respectively.
Looking at the structure of gross external debt, in
2011 public debt increased again, while publicly
guaranteed debt remained around the previous
year’s level and non-guaranteed private debt
declined. Private non-guaranteed debt was dropping
in the past three years, most notably in 2009 and 2010.
In 2011, repayments of liabilities amounted to EUR 0.8
bn, so that private debt declined to EUR 23.4 bn. Public
and publicly guaranteed debt combined rose further in
2011, but at more moderate growth rates than in the
preceding two years. Specifically, public debt 2 grew
by roughly the same amount as in 2010 (EUR 1.7 bn),
while publicly guaranteed debt 3 remained around the
2010 level (EUR 18.1 bn in total, of which public debt
EUR 9.8 bn). The volume of guarantees to domestic
financial institutions declined, while the BS’s liabilities
to the Eurosystem increased. At the end of 2011,
public and publicly guaranteed debts accounted for
43.7% of gross external debt (of which public debt for
23.7% and publicly guaranteed debt for 20.9%), which
is 20.4 p.p. more than in 2008. Excluding liabilities to
affiliated entities, which are not tracked for maturity,
long-term debt represented 76.7% of total gross
external debt, which is 0.2 p.p. more than in 2010.
Slovenia remains among the least indebted
countries in the euro area. At the end of 2011, its
gross external debt climbed to 116.6 % of GDP (a 1.7
p.p. higher figure than a year earlier). This is still much
less than the average debt in the euro area, which
had already reached 209.2% of GDP in 2010. As the
euro is the predominant currency in the currency
structure of external debt and with trade and capital
flows in euros representing the prevailing share in the
structure of flows, the fluctuations of the exchange
rate do not pose a significant risk of an increase
in the share of gross external debt in GDP or for its
repayment. The risks are related to possible major
shocks that could reduce economic growth and to a
pronounced tightening in borrowing conditions.
2
External public debt is generated with borrowing of the
institutional government sector (according to ESA 95) on
foreign financial markets. The government may borrow from
international financial institutions, foreign governments or
government agencies, foreign commercial banks, and even
from private lenders in the event of an issue of transferrable
securities on a foreign financial market.
3
Publicly guaranteed debt is a liability of a private legal entity, but
payment is guaranteed by the state. Publicly guaranteed debt
includes Bank of Slovenia liabilities to the Eurosystem incurred by
the transfer of monetary policy from the BS to the ECB.