Slovenia repaying and reducing its public debt
At the beginning of the week, the Slovenian government tested itself for the first time on the financial markets, as it borrowed one and a half billion euros, overtaking all the other euro countries which are offering more than EUR 40 billions in bonds this week and thereby avoiding pressures following the raising of the interest rate.
The terms of borrowing were favourable, says Minister of Finance Andrej Bertoncelj, who adds that the public debt will be reduced by the end of the year, and interest expenses will also be reduced, and will be under EUR 800 million this year.
Responding to criticism that the government rushed into a one-and-a-half-billion euro debt, the finance minister said that this does not involve an increase in the total debt, but in fact a reduction of the debt.
“We have borrowed this amount, but we are basically refinancing past-due principal with new loans under more favourable terms. The bottom line is that we are reducing the debt,” explained Bertoncelj.
In February, Slovenia will have to repay EUR 2.3 billion in principal, which will be paid out of the funds from the sale of NLB and the budget surplus. Therefore the latest borrowing is lower than the nearly matured liabilities, and thus amounts to a reduction of public debt. The lower level of principal also means that interest expenses will be lower, by more than EUR 300 million over four years.
“In some years, if we look at four-year periods, the level of interest expenses was over EUR one billion, while in 2019 it will be below EUR 800 million,” he adds.
Several euro countries will be issuing bonds this week, including Belgium, Ireland, Portugal, Germany, Austria, Italy and Spain, and therefore Slovenia decided to issue its bonds before the others.
“We decided that this was the best time to issue the bonds, we were bold, we were the first and it paid off,” said Bertoncelj.