WEBVTT 00:00:03.523 --> 00:00:07.820 Hello, dear guests, dear PM 00:00:07.940 --> 00:00:11.696 Robert Golob, dear Secretary General of the OECD 00:00:11.816 --> 00:00:15.104 Mathias Cormann, dear Minister of Finance 00:00:15.224 --> 00:00:18.596 Klemen Boštjančič, dear Minister Emilija Stojmenova Duh, 00:00:18.716 --> 00:00:22.002 dear Minister Igor Papič and everyone else 00:00:22.122 --> 00:00:28.665 that is with us via the Internet. Today, the OECD 00:00:28.785 --> 00:00:34.221 will present its 8th economic survey for Slovenia. 00:00:34.481 --> 00:00:37.492 The Organisation prepares this report 00:00:37.612 --> 00:00:41.656 every two years and it is an important basis 00:00:41.776 --> 00:00:45.088 for planning state policy 00:00:45.208 --> 00:00:48.855 and at the same time, it gives us a valuable outside perspective 00:00:48.975 --> 00:00:53.823 on the key challenges we are already facing 00:00:53.943 --> 00:00:59.228 or will face in the future. In these reports, the OECD 00:00:59.348 --> 00:01:04.681 helps us with the experience from other member states. 00:01:04.801 --> 00:01:09.001 Before we hear what this year's survey says, 00:01:09.121 --> 00:01:14.133 I would like to invite the PM to the floor 00:01:14.253 --> 00:01:16.621 for some thoughts. Please. 00:01:25.141 --> 00:01:28.632 Dear Secretary General, Ministers, 00:01:28.830 --> 00:01:32.663 guests. I am very glad 00:01:32.783 --> 00:01:36.166 to be here for this important presentation 00:01:36.286 --> 00:01:39.255 from an even more important institution. 00:01:40.515 --> 00:01:44.621 We live in turbulent times 00:01:45.014 --> 00:01:48.632 where there are external and internal crises 00:01:48.752 --> 00:01:51.967 all the time and populism 00:01:52.087 --> 00:01:57.908 is taking over the public discourse. Therefore, an objective view 00:01:58.028 --> 00:02:01.955 from a respected institution, such as the OECD, 00:02:02.075 --> 00:02:07.963 is very much needed. It is needed for us to see 00:02:08.185 --> 00:02:11.908 whether we have been taking the right measures, 00:02:12.254 --> 00:02:15.751 whether the paths we are taking will bring us 00:02:15.871 --> 00:02:20.755 to the goals, but most of all, to present a clear picture 00:02:21.343 --> 00:02:26.457 to the public not from the politics 00:02:26.577 --> 00:02:30.578 or the governing party, but from the institution 00:02:30.698 --> 00:02:35.468 that observes what is going on in the world and can compare 00:02:35.588 --> 00:02:39.673 policies among all the member states 00:02:39.793 --> 00:02:43.126 and determine which have the best possibilities 00:02:43.246 --> 00:02:48.755 for a successful realisation. We live in times 00:02:48.875 --> 00:02:52.088 where in the past few years, 00:02:52.208 --> 00:02:55.913 we have had a lot of challenges and I want to stress 00:02:56.033 --> 00:02:59.308 two successful stories. You do not hear a lot about them, 00:02:59.428 --> 00:03:03.086 but we are proud of them and I believe 00:03:03.206 --> 00:03:06.461 they are the basis for the fact 00:03:06.581 --> 00:03:10.855 that our economy is in good condition today. 00:03:11.810 --> 00:03:15.175 In 2022, when the energy 00:03:15.296 --> 00:03:19.308 and finance crisis came, 00:03:19.638 --> 00:03:23.081 we made two steps in cooperation 00:03:23.201 --> 00:03:26.432 with the Ministry of Finance. 00:03:26.677 --> 00:03:31.908 The first step was a liquidity injection 00:03:32.223 --> 00:03:37.255 for energy companies. The Ministry of Finance 00:03:37.577 --> 00:03:42.621 invested €800 million 00:03:42.741 --> 00:03:46.688 in Slovene energy companies. This money 00:03:46.808 --> 00:03:50.087 was used as a liquidity shield 00:03:50.207 --> 00:03:53.439 for energy companies that are in good condition today 00:03:53.559 --> 00:03:56.955 and it has already been returned to the state budget. 00:03:57.988 --> 00:04:01.534 This shows that if we react quickly, we can provide 00:04:01.654 --> 00:04:04.467 stability for the energy 00:04:04.587 --> 00:04:08.588 and economy systems without putting public finances at risk. 00:04:09.098 --> 00:04:12.008 The other measure had to do with taking loans. 00:04:12.455 --> 00:04:15.948 The Ministry of Finance successfully took a loan 00:04:16.075 --> 00:04:20.874 above our needs before the interest rates were raised 00:04:20.994 --> 00:04:25.003 and created its own liquidity shield 00:04:26.512 --> 00:04:30.181 before the rise, therefore, the costs of interests 00:04:30.301 --> 00:04:34.938 and financing the state debt remained in the limits 00:04:35.058 --> 00:04:39.184 which we can control. These two measures show 00:04:39.304 --> 00:04:43.821 that if we successfully predict 00:04:44.097 --> 00:04:47.255 the risks that are coming and take decisive measures, 00:04:47.375 --> 00:04:50.905 we can be a successful pillar 00:04:51.025 --> 00:04:54.061 of stability for the national economy. 00:04:54.611 --> 00:04:58.270 This story is not interesting to a lot of people 00:04:58.390 --> 00:05:01.160 because successful stories are not interesting, 00:05:01.280 --> 00:05:07.023 but we have to remember them. They can be an inspiration 00:05:07.143 --> 00:05:09.955 in other, similar or different crises. 00:05:11.082 --> 00:05:14.775 The OECD has been warning us for decades 00:05:14.895 --> 00:05:19.484 that as a small, open economy, 00:05:19.604 --> 00:05:23.171 we stand before big internal challenges 00:05:23.291 --> 00:05:27.355 because of structural changes which everyone keeps promising, 00:05:27.475 --> 00:05:31.990 but they are not carried out. This is why our government 00:05:32.110 --> 00:05:35.175 has a comprehensive reform plan, 00:05:35.295 --> 00:05:38.829 but as I have already said, it will need 00:05:38.949 --> 00:05:42.626 two terms. Dreaming about completing the reforms 00:05:42.746 --> 00:05:46.706 overnight is just that. This is how it used to be, 00:05:46.826 --> 00:05:50.557 therefore, the reforms never happened. We are determined 00:05:50.677 --> 00:05:53.621 and some results are already here. 00:05:53.741 --> 00:05:56.796 We will continue with reforms until the end of this term 00:05:56.916 --> 00:06:00.728 and in the next, so that in the end, all reforms, 00:06:00.863 --> 00:06:06.009 not just one, will be carried out. We already have a plan 00:06:06.129 --> 00:06:09.032 and have presented to the public 00:06:09.152 --> 00:06:12.816 the pension reform and a part of taxation changes, 00:06:12.936 --> 00:06:17.751 we are preparing big taxation changes 00:06:17.871 --> 00:06:21.175 regarding the big burden 00:06:22.005 --> 00:06:26.621 on labour and property costs and we have been making 00:06:27.561 --> 00:06:31.804 a lot of small steps and big changes 00:06:31.924 --> 00:06:35.312 regarding the healthcare system. 00:06:35.432 --> 00:06:40.712 This will determine the welfare of our citizens 00:06:40.832 --> 00:06:44.188 and we will not stop. We know we cannot do everything 00:06:44.308 --> 00:06:47.775 with one measure, but we can do it with a lot of small ones. 00:06:48.206 --> 00:06:51.213 We will not forget about housing policy. 00:06:51.333 --> 00:06:54.501 We are preparing extensive programs which will take 00:06:54.621 --> 00:06:59.134 some time, but this does not mean 00:06:59.254 --> 00:07:02.671 we are any less prepared or determined to do it. 00:07:02.791 --> 00:07:07.855 We will carry them out. I am sure the reforms 00:07:08.662 --> 00:07:11.741 are not only necessary, but in the long run, 00:07:11.861 --> 00:07:16.621 they will bring bigger welfare 00:07:16.936 --> 00:07:20.612 to our citizens. I am sure the package 00:07:20.732 --> 00:07:23.488 we prepared will bring results, 00:07:23.748 --> 00:07:26.920 therefore, we have decided, 00:07:27.040 --> 00:07:29.988 and we have already talked to the Secretary General, 00:07:30.388 --> 00:07:33.620 to ask the OECD as our valued partner 00:07:33.740 --> 00:07:38.276 to help us evaluate the efficiency 00:07:38.396 --> 00:07:42.221 of our measures. We want and we dare 00:07:42.590 --> 00:07:46.061 to present our measures to an objective institution 00:07:46.181 --> 00:07:49.588 to estimate them, and not just any institution, 00:07:49.708 --> 00:07:54.281 but the OECD. We have two goals. 00:07:54.572 --> 00:07:58.488 On one hand, to prove 00:07:58.608 --> 00:08:01.255 that our measures have effects, 00:08:01.375 --> 00:08:05.357 and on the other hand, we want to predict 00:08:05.477 --> 00:08:08.085 which path to take, so that the effects 00:08:08.205 --> 00:08:12.223 for the citizens will be as big as possible. Thank you. 00:08:12.856 --> 00:08:16.211 I wish you a lot of success today 00:08:16.331 --> 00:08:19.429 and that we all come wiser 00:08:19.549 --> 00:08:23.265 from this discussion and we agree on things. 00:08:23.385 --> 00:08:24.985 Thank you. 00:08:32.729 --> 00:08:36.641 Thank you. Now, it is time we hear what the OECD 00:08:36.761 --> 00:08:40.750 has written in its survey for Slovenia. 00:08:40.870 --> 00:08:42.488 Mr. Cormann, go ahead. 00:08:50.860 --> 00:08:57.156 Very good. Good morning, PM Golob, 00:08:57.276 --> 00:09:01.390 Finance Minister Boštjančič, 00:09:01.510 --> 00:09:07.976 colleagues, friends. It is a real privilege to be back in Ljubljana 00:09:08.096 --> 00:09:12.955 to present together with our team from the Economics Department 00:09:13.075 --> 00:09:16.937 the 2024 OECD Economic Survey 00:09:17.057 --> 00:09:20.061 of Slovenia. 00:09:24.169 --> 00:09:25.769 Have I got the right one? 00:09:27.749 --> 00:09:29.349 How does this work? 00:09:33.054 --> 00:09:34.654 It is not. 00:09:41.280 --> 00:09:43.688 Gotta get the technics sorted. 00:09:46.581 --> 00:09:48.181 Okay. 00:09:50.902 --> 00:09:54.922 Very good. Okay. Well, as you can see, 00:09:55.042 --> 00:09:59.577 in the wake of successive external shocks, the Slovenian economy 00:09:59.697 --> 00:10:01.876 has been remarkably resilient. 00:10:01.997 --> 00:10:07.148 Recovered well from the pandemic, it withstood the high inflation 00:10:07.268 --> 00:10:09.755 that followed Russia's aggression against Ukraine 00:10:10.078 --> 00:10:12.482 and it has overcome the economic impact 00:10:12.603 --> 00:10:17.255 of the devastating floods in August 2023. 00:10:17.655 --> 00:10:22.883 Over the past five years, the real GDP growth has been stronger 00:10:23.003 --> 00:10:27.015 than across either the OECD area or the euro area 00:10:27.135 --> 00:10:30.175 as you can see on that slide. 00:10:30.583 --> 00:10:35.606 The labour market remains strong, with the unemployment rate at 3.3% 00:10:35.726 --> 00:10:37.341 in April this year 00:10:37.462 --> 00:10:42.031 which is historical low. Significant labour shortages 00:10:42.151 --> 00:10:44.776 are reflected in the high number of job vacancies 00:10:44.896 --> 00:10:46.896 and have boosted nominal wages 00:10:47.037 --> 00:10:52.477 with real wages recovering. They have been increasing since 2023 00:10:52.597 --> 00:10:57.221 after a temporary decline due to the strong rise in prices. 00:10:57.341 --> 00:11:00.743 But inflation has also continued to decrease. 00:11:00.863 --> 00:11:04.077 Headline inflation has stood at 2.5% in May, 00:11:04.197 --> 00:11:07.175 slightly below that in the euro area. 00:11:07.464 --> 00:11:11.736 Still, inflation in services remains elevated 00:11:11.856 --> 00:11:16.408 and needs to be reduced further to contain price pressures. 00:11:16.715 --> 00:11:21.908 Looking ahead, we project GDP growth to rise to 2.3% 00:11:22.028 --> 00:11:25.076 in 2024 and 2.7% next year, 00:11:25.196 --> 00:11:28.455 up from 1.6% last year. 00:11:28.840 --> 00:11:32.585 The higher real wages are expected to drive private consumption 00:11:32.705 --> 00:11:36.492 and disbursement of EU Recovery and Resilience Funds 00:11:36.612 --> 00:11:41.621 and strengthening demand will also support investment and exports. 00:11:41.741 --> 00:11:45.078 Headline inflation is projected to decline further 00:11:45.199 --> 00:11:50.352 before increasing slightly to 3.5% in 2025. 00:11:50.472 --> 00:11:54.595 Core inflation, which excludes energy and food, 00:11:54.715 --> 00:11:58.061 is projected to decline at a similar pace. 00:11:58.336 --> 00:12:01.914 We highlight in our survey four policy priorities 00:12:02.034 --> 00:12:05.101 to strengthen resilience and growth in Slovenia. 00:12:05.221 --> 00:12:10.688 First, continuing fiscal reforms to help rebuild fiscal space. 00:12:11.120 --> 00:12:14.579 Reforms to accelerate fiscal consolidation 00:12:14.699 --> 00:12:18.290 are needed to stabilize public debt and to insure 00:12:18.410 --> 00:12:21.796 fiscal sustainability in the long run. More needs to be done 00:12:21.916 --> 00:12:23.883 to improve spending efficiency 00:12:24.004 --> 00:12:29.408 and to optimise tax revenues, including by rebalancing the tax mix 00:12:29.636 --> 00:12:33.314 with reductions in taxes on labour and increases in taxes 00:12:33.434 --> 00:12:35.821 on consumption and immovable property. 00:12:36.260 --> 00:12:40.629 Together with structural reforms, such as to contain pension spending, 00:12:40.749 --> 00:12:45.086 our projections show that Slovenia could stabilise its public debt 00:12:45.206 --> 00:12:47.844 at just below 60% of GDP, 00:12:47.964 --> 00:12:52.621 subject to making the necessary decisions. 00:12:53.404 --> 00:12:57.642 Non-targeted energy support needs to be phased out. 00:12:57.762 --> 00:13:00.648 Fiscal support, implemented during the energy crisis, 00:13:00.768 --> 00:13:03.718 has uttered further fiscal pressure 00:13:03.839 --> 00:13:10.459 on public finances and the planned expiry of energy support measures 00:13:10.579 --> 00:13:13.688 by the end of 2024 is certainly welcome and will help 00:13:13.925 --> 00:13:17.954 reduce spending demand and price pressures. 00:13:18.269 --> 00:13:20.485 Aging related costs, 00:13:20.605 --> 00:13:23.688 notably for pensions, healthcare and long-term care, 00:13:24.026 --> 00:13:26.702 will need to be contained. Annual spending on pensions 00:13:26.822 --> 00:13:28.450 is projected to increase 00:13:28.571 --> 00:13:32.382 from 9.8% of GDP in 2022 00:13:32.502 --> 00:13:37.308 to 13.7% over the next five decades. 00:13:37.614 --> 00:13:40.651 The minimum retirement age and the minimum contribution period 00:13:40.771 --> 00:13:44.049 required for full pension need to increase. 00:13:44.169 --> 00:13:49.908 The minimum retirement age should be linked to life expectancy. 00:13:50.653 --> 00:13:54.867 The second priority we are focusing on relates to the opportunity 00:13:54.987 --> 00:13:58.504 to further improve gender equality. Slovenia does quite well 00:13:58.624 --> 00:14:02.023 when it comes to female labour market participation. 00:14:02.143 --> 00:14:05.155 Female labour market participation is high, 00:14:05.407 --> 00:14:10.676 but there is opportunity to do more for the benefit of the economy. 00:14:10.796 --> 00:14:13.288 More working-age women are part of the labour force 00:14:13.408 --> 00:14:15.018 in Slovenia with 72% 00:14:15.139 --> 00:14:19.209 compared to 66.6% in the OECD on average. 00:14:19.329 --> 00:14:24.397 But to build on this, Slovenia could further provide incentives to work, 00:14:24.664 --> 00:14:29.609 including trough reform of the tax and transfer system 00:14:29.729 --> 00:14:35.675 and by focusing on increase income after tax 00:14:35.795 --> 00:14:41.308 in terms of after tax labour earnings. 00:14:41.428 --> 00:14:44.686 This would require reducing high marginal effective tax rates 00:14:44.806 --> 00:14:48.308 on low income and second earners who are often women. 00:14:49.550 --> 00:14:53.524 Child care responsibilities could also become more balanced. 00:14:53.644 --> 00:14:57.258 With a recent reform having increased the parental leave for fathers, 00:14:57.378 --> 00:15:01.554 and the flexibility for working part time 00:15:01.674 --> 00:15:04.399 which are measures we very much welcome 00:15:04.519 --> 00:15:09.621 and this reform certainly will encourage fathers' uptake 00:15:09.741 --> 00:15:13.988 of parental leave and may help reduce gender stereotypes. 00:15:15.631 --> 00:15:18.249 Strengthening women's role in the labour market will also help 00:15:18.369 --> 00:15:21.108 contain further widening of the gender wage gap. 00:15:21.229 --> 00:15:24.034 The gender wage gap in Slovenia is relatively small, 00:15:24.154 --> 00:15:28.255 though it has increased to 8% in 2022. 00:15:28.671 --> 00:15:32.088 It reflects differences in education sector and occupational structures 00:15:32.208 --> 00:15:35.595 as well as the specifics of the tax and benefits system 00:15:35.715 --> 00:15:39.204 in Slovenia. Affordable, high-quality child care 00:15:39.324 --> 00:15:42.627 as well as flexible work arrangements and policies 00:15:42.747 --> 00:15:44.890 addressing gender stereotypes, 00:15:45.011 --> 00:15:49.221 education and career choices can help reduce gender wage gaps. 00:15:49.785 --> 00:15:53.602 The third policy priority is to strengthen the housing market 00:15:53.722 --> 00:15:55.768 by boosting residential construction 00:15:55.888 --> 00:15:58.472 and by making housing more affordable 00:15:58.593 --> 00:16:04.288 and sustainable. The housing supply needs to be enlarged 00:16:04.408 --> 00:16:08.121 by boosting construction. Slovenia's housing market 00:16:08.241 --> 00:16:12.403 faces growing tensions as the supply of housing has been slow 00:16:12.523 --> 00:16:17.562 to respond to growing demand. Despite some recent improvements 00:16:17.682 --> 00:16:21.303 investment in home building continues to lag behind peer countries. 00:16:21.423 --> 00:16:25.345 House prices have risen more than ten percentage points faster 00:16:25.465 --> 00:16:28.255 than income since 2015. 00:16:28.548 --> 00:16:31.621 Improving financing conditions 00:16:31.741 --> 00:16:36.508 can contribute to more residential construction. Mortgage market 00:16:36.628 --> 00:16:40.088 is under developed and lending margins as disproportionately high. 00:16:40.692 --> 00:16:42.960 Fostering financial literacy and insuring 00:16:43.080 --> 00:16:45.264 a competitive banking sector, 00:16:45.385 --> 00:16:48.407 including by monitoring market power, can help create 00:16:48.527 --> 00:16:50.405 a more robust mortgage market 00:16:50.526 --> 00:16:53.988 that supports the prospective home owners. 00:16:54.756 --> 00:17:00.388 Housing governance, notably spatial planning and permitting processes 00:17:00.780 --> 00:17:04.488 are fragmented and slow and could be made more efficient. 00:17:05.146 --> 00:17:07.571 These processes could be streamlined through improved 00:17:07.691 --> 00:17:09.775 inter-municipal or regional coordination 00:17:09.896 --> 00:17:13.855 and simplified one stop shop permit arrangements, 00:17:13.975 --> 00:17:16.148 leading to enhanced land use efficiency 00:17:16.268 --> 00:17:17.991 and increased responsiveness 00:17:18.112 --> 00:17:21.155 of housing supply to growing demand. 00:17:21.766 --> 00:17:26.457 More social housing would also have addressed affordability concerns. 00:17:26.577 --> 00:17:31.355 Slovenia's social housing sector is comparatively small 00:17:31.475 --> 00:17:35.695 when compared with other European countries with it representing 00:17:35.815 --> 00:17:40.431 just 4.7% of the total stock in Slovenia 00:17:40.551 --> 00:17:45.175 compared with more than 20% in the Netherlands, Austria or Denmark. 00:17:45.911 --> 00:17:49.454 The new housing law should improve the ecosystem around social housing 00:17:49.574 --> 00:17:54.556 by facilitating the creation of housing associations 00:17:54.676 --> 00:17:57.008 and limited profit of developers. 00:17:58.010 --> 00:18:01.964 Fourth area relates to accelerating the decarbonisation of the economy 00:18:02.084 --> 00:18:05.821 to help achieve the climate transition. 00:18:06.167 --> 00:18:09.462 Per capita greenhouse gas emissions are as high 00:18:09.582 --> 00:18:14.445 as 35 years ago in Slovenia. Climate change is a key challenge, 00:18:14.565 --> 00:18:18.088 as evidenced by the devastating floods last year. 00:18:18.777 --> 00:18:21.447 The authorities have responded swiftly 00:18:21.567 --> 00:18:24.108 in terms of climate adaptation measures 00:18:24.229 --> 00:18:27.908 and also in terms of measures to reduce climate risks. 00:18:28.028 --> 00:18:30.156 However, emissions reductions, especially in energy 00:18:30.299 --> 00:18:32.231 and transport, will be needed 00:18:32.358 --> 00:18:37.978 to help meet targets. Harmonising incentives for reductions 00:18:38.098 --> 00:18:40.715 is an important part of efficient mitigation 00:18:40.835 --> 00:18:45.959 with the priority that should be pursued is to remove regulated prices 00:18:46.079 --> 00:18:48.737 and reduced tax rates on fossil fuels, 00:18:48.857 --> 00:18:52.782 which provides counterproductive incentives. 00:18:53.077 --> 00:18:58.855 Environmental policies and carbon prices that vary across sectors, 00:18:59.124 --> 00:19:01.329 Regulated prices and reduced tax rates 00:19:01.450 --> 00:19:05.227 for diesel, heating and gas continue to hold back incentives 00:19:05.348 --> 00:19:09.688 to reduce emissions, so there is scope for work across those areas. 00:19:10.055 --> 00:19:12.490 Incentives to decarbonise transportation 00:19:12.611 --> 00:19:16.483 should also be enhanced, with emissions in the transport sector 00:19:16.604 --> 00:19:18.802 almost as high as a decade ago. 00:19:19.067 --> 00:19:25.137 So no tangible, material progress has actually been made. 00:19:25.637 --> 00:19:27.772 Strengthening public transportation 00:19:27.893 --> 00:19:30.389 will be an important part of the response 00:19:30.510 --> 00:19:34.908 by reducing the commuting allowance and ensuring public transport fares 00:19:35.029 --> 00:19:38.008 can be competitive as an alternative option. 00:19:39.573 --> 00:19:42.631 The housing sector also needs to contribute more 00:19:42.752 --> 00:19:44.209 to reducing emissions. 00:19:44.330 --> 00:19:47.326 A large proportion of Slovenian residential buildings, 00:19:47.447 --> 00:19:50.447 predominantly built before the 1980s, 00:19:50.568 --> 00:19:53.159 need upgrades to improve energy efficiency 00:19:53.280 --> 00:19:56.561 and to align with net zero emission targets. 00:19:57.023 --> 00:20:00.321 Regulations including energy performance certifications 00:20:00.442 --> 00:20:03.175 and financial incentives, such as carbon taxes, 00:20:03.296 --> 00:20:07.062 will be important parts of facilitating the retrofitting 00:20:07.182 --> 00:20:10.576 and incentivising investment in the housing stock. 00:20:11.806 --> 00:20:15.061 Adaptation to the consequences of climate change 00:20:15.182 --> 00:20:17.061 will need to be further stepped up. 00:20:17.182 --> 00:20:19.951 Significant efforts have been made in recent years, 00:20:20.072 --> 00:20:21.861 but there is a need to do more. 00:20:21.981 --> 00:20:25.621 Many households are exposed to climate risks, such as floods. 00:20:25.809 --> 00:20:29.652 Slovenia's efforts to raise flood preparedness are of course welcome, 00:20:29.773 --> 00:20:31.855 including investment in the maintenance 00:20:31.976 --> 00:20:34.472 of the water infrastructure, but going forward 00:20:34.593 --> 00:20:37.742 it will also be important to consider exposure to flood risks 00:20:37.863 --> 00:20:40.363 in land-use planning decisions. 00:20:41.179 --> 00:20:45.179 So, in closing, Slovenia is in a strong position, 00:20:45.300 --> 00:20:48.374 well on track to achieve income convergence 00:20:48.494 --> 00:20:51.244 with higher-income OECD economies. 00:20:52.224 --> 00:20:57.808 Our recommendations in this report are really just to provide advice 00:20:57.929 --> 00:21:00.929 on how to continue structure reforms. 00:21:01.059 --> 00:21:05.643 Slovenia could be on an even better trajectory for the future. 00:21:05.918 --> 00:21:09.239 Strengthening public finances, improving gender equality, 00:21:09.359 --> 00:21:13.688 upgrading the housing sector, advancing the climate transition, 00:21:13.809 --> 00:21:19.226 all areas, in which Slovenia can further strengthen the foundation 00:21:19.347 --> 00:21:21.763 and the trajectory to achieve 00:21:21.884 --> 00:21:25.468 long-term, resilient and sustainable growth. 00:21:25.813 --> 00:21:27.413 Thank you. 00:21:33.345 --> 00:21:38.061 Thank you, Mr. Cormann, for this presentation 00:21:38.182 --> 00:21:41.420 and a few words in the Slovenian language as well. 00:21:41.540 --> 00:21:45.485 We now know the content of the economic survey for 2024, 00:21:45.606 --> 00:21:47.698 and now I invite to the stage 00:21:47.819 --> 00:21:50.454 the Minister of Finance, Klemen Boštjančič. 00:22:11.155 --> 00:22:15.084 Esteemed ladies and gentlemen, esteemed guests, 00:22:15.389 --> 00:22:18.314 first, I would like to welcome 00:22:18.536 --> 00:22:23.036 Mr. Mathias Cormann, the Secretary-General of the OECD. 00:22:23.456 --> 00:22:27.141 I would like to thank the PM for the introductory speech 00:22:27.261 --> 00:22:30.621 and of course all of you, who joined us today 00:22:30.742 --> 00:22:35.546 at the public presentation of the economic survey for Slovenia 2024. 00:22:36.053 --> 00:22:40.443 Allow me to also thank the OECD team 00:22:40.717 --> 00:22:44.175 for excellent cooperation in preparing the document, 00:22:44.296 --> 00:22:47.435 which is now the eighth economic survey for Slovenia 00:22:47.556 --> 00:22:49.973 since we became members of the OECD. 00:22:50.498 --> 00:22:54.046 It is a comprehensive review and analysis of key areas, 00:22:54.167 --> 00:22:57.546 which are truly very relevant for Slovenia at this time. 00:22:57.688 --> 00:23:02.935 The document highlights the main recommendations, 00:23:03.229 --> 00:23:07.729 which will greatly help us policymakers in implementing 00:23:07.850 --> 00:23:13.755 some key steps in our reform agenda, which is on the table. 00:23:14.232 --> 00:23:16.691 This year, the review also includes 00:23:16.812 --> 00:23:20.551 a very important issue for Slovenia, housing policy. 00:23:21.094 --> 00:23:23.808 Regarding the macroeconomic situation in Slovenia, 00:23:23.929 --> 00:23:25.531 based on data and forecasts 00:23:25.652 --> 00:23:28.845 from domestic and international institutions, I can affirm 00:23:28.965 --> 00:23:33.215 that Slovenia has emerged from both crises strong and resilient. 00:23:33.336 --> 00:23:36.298 In recent years, economic growth has been higher 00:23:36.418 --> 00:23:39.131 compared to the European Union average. 00:23:39.461 --> 00:23:42.549 Although last year growth slowed down a bit, 00:23:42.670 --> 00:23:46.313 it is expected to strengthen over the next two years 00:23:46.434 --> 00:23:50.287 and be higher than the average of both the EU and OECD. 00:23:50.630 --> 00:23:54.174 This will be influenced by domestic and foreign demand. 00:23:54.294 --> 00:23:57.294 The labour market will remain strong, 00:23:57.415 --> 00:23:59.839 which will also impact wage growth. 00:24:00.020 --> 00:24:04.854 Inflation is gradually easing this year. According to estimates, 00:24:04.975 --> 00:24:09.642 we are expecting to approach the target inflation of 2% in 2026. 00:24:10.144 --> 00:24:13.352 Economic growth will continue to be significantly influenced 00:24:13.473 --> 00:24:15.629 by the high level of state investments. 00:24:15.750 --> 00:24:18.567 For continued growth and development 00:24:18.688 --> 00:24:21.971 it is essential to ensure greater productivity. 00:24:22.411 --> 00:24:25.590 Regarding fiscal policy, I must highlight the fact, 00:24:25.711 --> 00:24:30.559 that planning and implementing fiscal policy is always a challenge, 00:24:30.809 --> 00:24:34.887 especially after two crises, increased investment needs 00:24:35.008 --> 00:24:36.688 and aid in Slovenia, 00:24:36.809 --> 00:24:40.135 especially after last year's catastrophic floods. 00:24:40.255 --> 00:24:45.177 It will be important to gradually consolidate public finances 00:24:45.297 --> 00:24:46.873 and maintain investments, 00:24:46.993 --> 00:24:50.455 so that we do not hinder economic growth in the coming years, 00:24:50.575 --> 00:24:54.588 as was done after the financial crisis, especially in Slovenia. 00:24:55.083 --> 00:24:58.573 As part of the EU, Slovenia follows the common principles 00:24:58.694 --> 00:25:02.355 of economic governance and common fiscal rules. 00:25:02.736 --> 00:25:05.807 Under the new rules, we will need to prepare 00:25:05.928 --> 00:25:09.659 a new four-year structural fiscal plan in the autumn, 00:25:09.989 --> 00:25:13.192 which will include key reforms and investments, 00:25:13.313 --> 00:25:16.074 as well as gradual consolidation of public finances 00:25:16.195 --> 00:25:18.356 for the next medium-term period. 00:25:18.809 --> 00:25:22.541 As Minister of Finance I have a difficult task, 00:25:22.786 --> 00:25:27.308 as we need to find a balance between supporting effective investments 00:25:27.429 --> 00:25:31.048 and increasing needs in the area of long-term care, 00:25:31.169 --> 00:25:34.155 social and healthcare policy on one hand 00:25:34.276 --> 00:25:38.193 and gradually achieving that medium-term balance 00:25:38.314 --> 00:25:42.008 and stability of public finances on the other, 00:25:42.128 --> 00:25:44.962 while simultaneously reducing debt. 00:25:45.502 --> 00:25:49.336 My colleagues in the EU, whom we consult a lot, 00:25:49.457 --> 00:25:53.488 are, of course, facing similar challenges. 00:25:54.039 --> 00:25:56.264 We must consider the great needs 00:25:56.385 --> 00:26:00.100 for significant investments for the green transition. 00:26:00.562 --> 00:26:05.455 At the same time, Slovenia is still burdened with flood recovery, 00:26:05.672 --> 00:26:08.740 the continued adaptation to climate change 00:26:08.861 --> 00:26:11.445 and avoiding future major damage 00:26:11.566 --> 00:26:15.851 that such consequences bring. All of this needs to be included 00:26:15.971 --> 00:26:19.123 in the planning of medium-term fiscal policy. 00:26:19.984 --> 00:26:23.046 We are also aware of the long-term fiscal challenges, 00:26:23.167 --> 00:26:26.178 stemming from rising pension expenditures 00:26:26.299 --> 00:26:29.808 and the fiscal pressures of other social security systems. 00:26:30.187 --> 00:26:32.621 We will tackle this issue 00:26:32.742 --> 00:26:36.814 with planned structural changes that are being prepared. 00:26:37.678 --> 00:26:39.889 Regarding the main OECD recommendations, 00:26:40.010 --> 00:26:43.100 I can first confirm that we agree with them 00:26:43.221 --> 00:26:47.638 and recognise where we need to continue taking action. 00:26:47.923 --> 00:26:51.311 In short, in the area of fiscal consolidation 00:26:51.432 --> 00:26:53.503 I can mention a key reform, 00:26:53.624 --> 00:26:58.055 that will contribute to this goal, and that is the pension reform. 00:26:58.212 --> 00:27:01.703 We have sent our social partners a draft proposal, 00:27:01.883 --> 00:27:03.750 which will, among other things, 00:27:03.871 --> 00:27:07.175 help reduce the pressure on public finances in the long-term 00:27:07.395 --> 00:27:09.996 and provide adequate pensions as well. 00:27:10.117 --> 00:27:13.535 The recommendations also include increasing productivity. 00:27:13.656 --> 00:27:17.206 We recently presented the first part of measures 00:27:17.327 --> 00:27:21.355 in the field of tax policy, aimed at, among other things, 00:27:21.476 --> 00:27:26.088 attracting highly qualified workers from abroad 00:27:26.209 --> 00:27:29.019 and facilitating the operation of start-ups, 00:27:29.140 --> 00:27:32.386 which will positively impact the increase of productivity. 00:27:32.644 --> 00:27:34.925 Part of the measures that we are preparing 00:27:35.046 --> 00:27:36.899 and are recommended by the OECD, 00:27:37.019 --> 00:27:39.597 is the strengthening of the capital market. 00:27:40.035 --> 00:27:45.119 The current topic in the EU is also the Capital Markets Union, 00:27:45.527 --> 00:27:48.938 but we are focused on measures that will ease access 00:27:49.058 --> 00:27:52.798 to alternative sources of financing for our companies, 00:27:52.918 --> 00:27:57.306 to facilitate trading, and equip people with the knowledge 00:27:57.698 --> 00:28:01.775 necessary for the increasing activity in the capital market. 00:28:01.896 --> 00:28:04.456 The measures are focused on key areas 00:28:04.577 --> 00:28:07.376 of our capital market development strategy, 00:28:07.497 --> 00:28:11.645 which are digitisation, increasing the supply of instruments, 00:28:11.766 --> 00:28:13.590 and financial literacy. 00:28:14.105 --> 00:28:16.105 All of this will complement 00:28:16.226 --> 00:28:19.976 the development of the common European capital market. 00:28:20.745 --> 00:28:24.518 A significant part of the report pertains to the green transition. 00:28:24.639 --> 00:28:27.206 The green transition is truly complex 00:28:27.456 --> 00:28:31.714 and requires reforms and measures in many areas. 00:28:32.378 --> 00:28:36.088 In the EU, we are committed to meeting our common goals, 00:28:36.209 --> 00:28:40.970 but we must consider the different starting points of Member States. 00:28:41.525 --> 00:28:43.985 Investments are very highly needed. 00:28:44.439 --> 00:28:49.220 In our new draft of the national energy and climate plan, 00:28:49.341 --> 00:28:53.736 the total estimated value of the required investments is very high. 00:28:54.267 --> 00:28:57.224 We especially need to encourage private investments, 00:28:57.345 --> 00:29:00.488 as we otherwise cannot achieve our set goals. 00:29:00.845 --> 00:29:04.228 Here too, a common capital market is important, 00:29:04.478 --> 00:29:08.985 which could further help in addressing financing issues. 00:29:09.595 --> 00:29:13.283 The last field, which is more thoroughly analyzed, 00:29:13.408 --> 00:29:16.853 is the field of housing policy in Slovenia. 00:29:17.072 --> 00:29:20.025 A field that has been neglected for several years 00:29:20.146 --> 00:29:23.313 and which the government wants to address comprehensively. 00:29:23.553 --> 00:29:27.756 We had intensive discussions with the OECD about this last year. 00:29:27.877 --> 00:29:31.752 The OECD listened to us, so this field 00:29:31.873 --> 00:29:36.908 is particularly defined and addressed in this year's report. 00:29:37.029 --> 00:29:39.193 The housing market in Slovenia 00:29:39.314 --> 00:29:43.386 is burdened by high demand and insufficient supply, 00:29:43.506 --> 00:29:45.423 as stated in the draft. 00:29:46.080 --> 00:29:50.417 Slovenia still has a large proportion of homeowners, 75%, 00:29:50.537 --> 00:29:53.311 an underdeveloped rental market 00:29:53.432 --> 00:29:58.302 with significant informality, rising property prices, 00:29:58.466 --> 00:30:01.383 although this growth has now slowed, 00:30:01.504 --> 00:30:05.380 and increasing difficulties for young adults and families 00:30:05.500 --> 00:30:09.879 in finding suitable homes. The government’s task in this field 00:30:10.000 --> 00:30:13.817 is to create conditions to ease administrative burdens. 00:30:14.102 --> 00:30:17.656 Private capital can also provide greater supply 00:30:17.777 --> 00:30:22.175 in connection with public funds and here the state can enable 00:30:22.296 --> 00:30:25.308 first, easier acquisition of building permits 00:30:25.429 --> 00:30:28.810 and simplification of rules for housing construction, 00:30:28.930 --> 00:30:33.180 second, provide social housing for vulnerable groups 00:30:33.356 --> 00:30:36.296 and third, among the options proposed by the OECD 00:30:36.417 --> 00:30:38.707 is also the taxation of real estate 00:30:38.828 --> 00:30:41.738 with the aim of providing additional funds. 00:30:42.012 --> 00:30:45.758 The government has already taken a big step and proposed an act 00:30:45.878 --> 00:30:50.096 that would establish a permanent and solid source of funding 00:30:50.217 --> 00:30:53.040 for the construction and purchase of rental housing 00:30:53.160 --> 00:30:56.060 amounting to up to 100 million euros per year. 00:30:56.181 --> 00:30:58.255 The government has also proposed 00:30:58.376 --> 00:31:02.033 limiting short-term renting through online platforms 00:31:02.154 --> 00:31:06.143 to ensure a greater supply of rental housing on the market. 00:31:06.484 --> 00:31:09.764 So the first steps in this field have been taken. 00:31:10.515 --> 00:31:13.179 I will conclude with two key messages. 00:31:13.300 --> 00:31:15.460 Our economic policy is focused 00:31:15.581 --> 00:31:18.758 on promoting economic growth and competitiveness. 00:31:18.961 --> 00:31:23.226 To this end, we will continue to support innovation and innovators, 00:31:23.679 --> 00:31:27.328 digitisation, and the transition to a green economy. 00:31:27.687 --> 00:31:31.424 Additionally, there is a strong emphasis on social welfare 00:31:31.545 --> 00:31:36.038 with measures to support healthcare, education, and long-term care. 00:31:36.923 --> 00:31:39.621 In addition to the reforms and structural measures, 00:31:39.742 --> 00:31:42.829 the government is preparing a healthcare system overhaul 00:31:42.997 --> 00:31:44.733 and negotiations are underway 00:31:44.854 --> 00:31:47.407 for a change in the public sector wage system. 00:31:47.528 --> 00:31:49.657 In the field of fiscal policy, 00:31:49.778 --> 00:31:53.497 ensuring the stability of public finances is crucial. 00:31:53.617 --> 00:31:58.284 After two crises and the catastrophic floods last summer, 00:31:58.405 --> 00:32:03.355 we are facing challenges that need careful and strategic planning. 00:32:03.898 --> 00:32:08.008 Every policy, developmental, non-developmental, priority or not, 00:32:08.406 --> 00:32:13.008 will have to respect the constraints arising from the fiscal framework. 00:32:13.648 --> 00:32:16.749 My colleagues and I have a difficult task in this regard. 00:32:16.870 --> 00:32:20.281 In the coming years, we will adjust the fiscal goals in such a way 00:32:20.476 --> 00:32:25.093 that they will support growth while maintaining prudence in spending 00:32:25.214 --> 00:32:28.175 and strive to reduce public debt 00:32:28.485 --> 00:32:31.774 to ensure the long-term sustainability of public finances. 00:32:32.376 --> 00:32:34.056 The key message is 00:32:34.177 --> 00:32:38.594 that in all this we need an institution like the OECD, 00:32:38.715 --> 00:32:41.061 as the Prime Minister also said. 00:32:41.356 --> 00:32:44.155 The OECD, with its analyses and reviews, 00:32:44.276 --> 00:32:47.107 provides valuable insights into current challenges 00:32:47.227 --> 00:32:51.270 and offers concrete suggestions for improving policies and practices. 00:32:51.582 --> 00:32:55.775 It also enables the exchange of best practices among Member States. 00:32:56.125 --> 00:33:00.292 Slovenia can thus draw from the experiences of other countries 00:33:00.413 --> 00:33:04.080 that have successfully tackled similar challenges, 00:33:04.201 --> 00:33:08.680 such as the green transition, improving the business environment, 00:33:08.800 --> 00:33:13.293 fiscal stability, tax changes and the reform of social systems. 00:33:13.718 --> 00:33:17.367 The OECD is also a platform for international cooperation 00:33:17.488 --> 00:33:20.187 and coordination among Member States. 00:33:20.449 --> 00:33:22.949 Slovenia can use this platform 00:33:23.070 --> 00:33:26.683 to strengthen its cooperation with other countries 00:33:26.803 --> 00:33:31.194 and to gain support for its international efforts, 00:33:31.315 --> 00:33:33.891 such as issues of climate change, 00:33:34.012 --> 00:33:36.688 trade policy, and financial stability. 00:33:37.470 --> 00:33:40.542 As we heard from Mr. Cormann's presentation, 00:33:40.663 --> 00:33:42.676 Slovenia is on a good trajectory. 00:33:42.796 --> 00:33:46.415 The OECD, as an important guide and partner in development, 00:33:46.609 --> 00:33:51.109 will help us establish an economy of value on our journey. 00:33:51.531 --> 00:33:54.789 Our task is to heed the recommendations 00:33:55.047 --> 00:33:59.624 and continue addressing challenges. Thank you for your attention. 00:34:08.327 --> 00:34:10.243 Thank you, Mr. Minister. 00:34:10.364 --> 00:34:14.804 That concludes the first official part, now for your questions. 00:34:14.924 --> 00:34:19.061 If anything remains unanswered and you would like clarifications, 00:34:19.182 --> 00:34:21.467 you can now register to speak. 00:34:21.588 --> 00:34:25.471 Before you ask a question, please also introduce yourselves. 00:34:25.641 --> 00:34:29.891 Mr. Cormann and Mr. Minister, I invite you to join me on stage, 00:34:30.012 --> 00:34:32.835 so you can answer these questions as well. 00:34:46.184 --> 00:34:49.715 Madam Minister, you are first, go ahead. 00:34:50.262 --> 00:34:54.007 Thank you very much. Thank you for the presentations, 00:34:54.127 --> 00:34:56.441 Mr. Cormann, Minister Boštjančič. 00:34:57.593 --> 00:35:00.303 We did not touch much on artificial intelligence, 00:35:00.424 --> 00:35:04.046 but I would emphasize that Slovenia is very successful in this field. 00:35:04.167 --> 00:35:06.111 After all, it is a founding member 00:35:06.232 --> 00:35:09.070 of the Global Partnership on Artificial Intelligence 00:35:09.190 --> 00:35:13.088 and we are happy that this is now going to the OECD secretariat. 00:35:13.209 --> 00:35:16.656 We are also the first country to establish a network 00:35:16.776 --> 00:35:20.860 of so-called data stewards in cooperation with the OECD 00:35:20.981 --> 00:35:25.329 and we want to be an example of good practice in the field of AI. 00:35:25.450 --> 00:35:29.520 Since artificial intelligence is a field with no limits 00:35:29.641 --> 00:35:34.091 and we want global standards, I am wondering how you see us, 00:35:34.212 --> 00:35:38.232 as other reports, including the European Commission report, 00:35:38.353 --> 00:35:41.818 show us as very successful. Where do you see our role 00:35:41.939 --> 00:35:44.675 and where do you see that we can cooperate even more 00:35:44.796 --> 00:35:47.646 in this field on a global level? Thank you. 00:35:51.202 --> 00:35:58.546 Firstly, AI as a technology offers very exciting benefits for mankind 00:35:58.667 --> 00:36:03.955 in terms of productivity, quality, access to healthcare, education, 00:36:04.076 --> 00:36:07.147 and a whole spectrum of services. 00:36:07.268 --> 00:36:10.268 But it also comes with a whole series 00:36:10.389 --> 00:36:14.755 of new and evolving risks and disruptions. 00:36:14.876 --> 00:36:18.616 So, there is the effort needed to take full advantage 00:36:18.736 --> 00:36:20.881 of the exciting opportunities, 00:36:21.002 --> 00:36:24.308 but there is also a need to work very carefully 00:36:24.429 --> 00:36:27.881 to ensure that we continue to facilitate innovation, 00:36:28.001 --> 00:36:31.524 but we also mitigate some of the associated risks. 00:36:31.868 --> 00:36:34.491 That is a conversation that we are pursuing 00:36:34.612 --> 00:36:36.936 inside the OECD across the membership, 00:36:37.057 --> 00:36:41.391 Slovenia is a very active member in that conversation, 00:36:41.527 --> 00:36:46.087 bringing all of its expertise and capabilites to play. 00:36:46.372 --> 00:36:50.008 But in the end, if we want all the upsides 00:36:50.129 --> 00:36:54.713 and to minimize the downsides, we need global engagement 00:36:54.834 --> 00:36:58.334 and we need to ensure that we work together 00:36:58.455 --> 00:37:03.705 on common standards and common regulatory and policy frameworks. 00:37:04.101 --> 00:37:08.915 And through the global partnership on ii that is one of the platforms. 00:37:09.028 --> 00:37:14.218 Slovenia is doing exceptionally well, but I do think 00:37:14.524 --> 00:37:18.324 that this is an area that is rapidly evolving. 00:37:18.411 --> 00:37:22.838 There is an incredible amount of innovation and change 00:37:22.998 --> 00:37:26.111 even over six to twelve months period. 00:37:26.418 --> 00:37:29.971 This is got a long way to go, but we got to ensure 00:37:30.171 --> 00:37:35.891 that we can take benefits, we can optimize the benefits of the upside, 00:37:36.104 --> 00:37:39.871 but we can ensure that the access can be safe and trustworthy 00:37:39.991 --> 00:37:44.258 and that we follow a framework 00:37:44.518 --> 00:37:47.858 in the way the governance has managed moving forward. 00:37:49.225 --> 00:37:52.945 Thank you, Mr. Cormann. There are surely more questions. 00:37:53.118 --> 00:37:54.891 Marko Milenkovič. 00:37:59.778 --> 00:38:01.651 Marko Milenkovič, RTV Slovenija. 00:38:01.798 --> 00:38:06.985 A question for you, Mr. Cormann. It was said by the premier 00:38:07.091 --> 00:38:12.444 that all the reforms will not be able to be made in this mandate. 00:38:12.564 --> 00:38:16.258 That government will require at least 00:38:16.898 --> 00:38:19.258 two mandates. What's your take on this? 00:38:19.431 --> 00:38:22.684 Is it fast enough? Do we have enough time? 00:38:23.178 --> 00:38:28.591 A structural reform is a marathon, it's not a sprint. 00:38:28.711 --> 00:38:36.391 And for structural reform to deliver sustainable and sustained benefits, 00:38:36.558 --> 00:38:41.658 it's important that it's widely supported by the population. 00:38:41.791 --> 00:38:46.331 And for that ... What is important is 00:38:46.458 --> 00:38:50.871 to get yourself on a best possible trajectory over medium to long-term, 00:38:50.991 --> 00:38:55.358 not necessarily to try and rush things in the short-term, 00:38:55.491 --> 00:39:00.231 but to yourself over on to a positive trajectory over medium to long run. 00:39:00.411 --> 00:39:04.718 So, it is better to have a reform 00:39:04.851 --> 00:39:07.964 that is well explained, well understood and well supported, 00:39:08.211 --> 00:39:13.544 where everybody understands what is to be achieved. 00:39:13.891 --> 00:39:17.798 Where there is a consensus across the population about 00:39:17.958 --> 00:39:21.231 what needs to be done and why. 00:39:21.665 --> 00:39:26.611 Because that gives you a very strong foundation on which you continue. 00:39:26.751 --> 00:39:31.191 My own view with structural reform is always that it's more important 00:39:31.551 --> 00:39:35.778 to achieve the outcome in a sustainable and sustained fashion 00:39:36.104 --> 00:39:38.584 than to rush things quickly. 00:39:38.751 --> 00:39:42.745 If you rush things without doing a necessary homework 00:39:42.898 --> 00:39:45.078 to get the public support you need, 00:39:45.305 --> 00:39:48.278 the risk is that you get a stop-start, stop-start 00:39:48.451 --> 00:39:50.878 that becomes contra productive. 00:39:51.045 --> 00:39:54.958 I would... What we're trying to do here... 00:39:55.105 --> 00:39:57.531 We have the easy job. 00:39:57.718 --> 00:40:02.518 Our job is to make recommendations on what we think should be done 00:40:02.691 --> 00:40:05.551 over the long-term by way of structural reform. 00:40:05.731 --> 00:40:11.251 But the elected government needs to engage its community 00:40:11.538 --> 00:40:15.878 to determine, how best to achieve some of these objectives. 00:40:15.964 --> 00:40:19.384 It's important to do that job right, 00:40:19.518 --> 00:40:24.458 but the bottom line is, a structural reform is a marathon, not a sprint. 00:40:24.585 --> 00:40:27.185 That is what delivers the best outcomes. 00:40:29.831 --> 00:40:31.538 Thank you. Simon. 00:40:33.845 --> 00:40:37.858 Hello. I'm Simon Savšek, head of EIB Group office in Slovenia. 00:40:38.031 --> 00:40:40.385 I have a question for both of you. 00:40:40.525 --> 00:40:46.718 I'm a bit worried, how investments are going to be financed in future. 00:40:46.904 --> 00:40:51.064 Minister of finance, you said affordable housing, green transition. 00:40:51.218 --> 00:40:55.764 The Minister of the digitalization talked about their needs. 00:40:55.971 --> 00:41:00.251 Here is Jerneja Jug Jerše, my colleague from European Commission. 00:41:00.378 --> 00:41:03.664 We know that RIF is slowly, let's say... 00:41:05.191 --> 00:41:07.731 Going down in coming years 00:41:07.874 --> 00:41:10.328 with a potential stop already in 2026. 00:41:10.628 --> 00:41:13.904 How do you see the financing mix in the coming years? 00:41:14.104 --> 00:41:16.824 Currently we are using a lot of grants, 00:41:16.978 --> 00:41:22.731 on the other side, a European investment bank has a lot of loans. 00:41:23.498 --> 00:41:27.744 How do you see this mix? We are also supporting the capital markets 00:41:27.864 --> 00:41:31.651 that you spoke about. I would like to hear your opinion. 00:41:33.191 --> 00:41:37.044 I might just say from my point of view. 00:41:37.324 --> 00:41:41.591 Slovenia is in a comfortable fiscal position. 00:41:41.764 --> 00:41:46.371 But it's important to keep an eye on the trajectory. 00:41:47.985 --> 00:41:50.744 There are structural challenges on the horizon 00:41:50.864 --> 00:41:52.871 that are not unique to Slovenia. 00:41:52.991 --> 00:41:57.571 In particular the economic and fiscal implications of population aging. 00:41:57.771 --> 00:42:01.691 From pension systems to healthcare 00:42:01.804 --> 00:42:07.005 and long-term care arrangements, but also the participation effect, 00:42:07.165 --> 00:42:10.165 which is a drag on productivity and growth. 00:42:10.418 --> 00:42:17.098 But you go into this in a comparatively strong fiscal position. 00:42:17.224 --> 00:42:22.624 After having had to deploy a lot of resources to deal with the pandemic 00:42:22.898 --> 00:42:27.391 and impact of high inflation on the back of high energy prices 00:42:27.484 --> 00:42:30.791 in the wake of war aggression in Ukraine and other challenges. 00:42:30.951 --> 00:42:35.951 There has been a high level of expenditure and we recommend 00:42:36.138 --> 00:42:39.411 that there is a need to accelerate the level of fiscal consolidation 00:42:39.511 --> 00:42:43.978 to rebuild fiscal space and to also ensure that 00:42:44.171 --> 00:42:48.564 that is in a sustainable position. In my presentation I set 00:42:48.718 --> 00:42:51.304 by making some sensible decisions. 00:42:51.578 --> 00:42:56.678 Slovenia can comfortably get its debt position 00:42:56.811 --> 00:43:00.004 to below 60% GDP over the long run. 00:43:00.284 --> 00:43:04.398 There is opportunity on the revenue side 00:43:04.624 --> 00:43:07.171 and on the spending side of the budget. 00:43:07.478 --> 00:43:12.631 On the revenue side there is scope to improve the growth friendliness 00:43:12.931 --> 00:43:17.298 of the tax system. Your marginal tax rights 00:43:18.331 --> 00:43:23.951 are comparatively high when you look at what's happening in the EU. 00:43:24.038 --> 00:43:28.271 That's got a negative effect on participation and productivity. 00:43:28.538 --> 00:43:37.031 We suggest that it would be sensible to reduce marginal taxes on labour. 00:43:37.344 --> 00:43:42.471 There is scope to increase the taxes on consumption and property. 00:43:42.711 --> 00:43:46.751 That means that you could maintain 00:43:46.965 --> 00:43:49.571 your level of taxation 00:43:49.685 --> 00:43:53.445 by improving the tax mix by making it more growth friendly, 00:43:53.565 --> 00:43:56.738 delivering the growth dividend, a revenue dividend 00:43:56.998 --> 00:44:00.345 without increasing the level of taxation. 00:44:00.545 --> 00:44:05.331 On the spending side of the budget we certainly think 00:44:05.618 --> 00:44:10.618 that there is opportunity to improve the level of efficiency and pursue 00:44:10.758 --> 00:44:14.558 longer-term structural reforms, including when it comes to pensions. 00:44:14.804 --> 00:44:19.318 We think that retirement age in Slovenia is too low. 00:44:19.458 --> 00:44:21.798 It's well below the OECD average. 00:44:22.498 --> 00:44:24.871 Both for men and women. 00:44:25.011 --> 00:44:31.311 There ought to be a linkage of the retirement age to life expectancy. 00:44:31.691 --> 00:44:34.725 We all live longer and live longer healthier 00:44:35.151 --> 00:44:38.364 and we've got to accept and work within a system, 00:44:38.531 --> 00:44:42.831 where in that context we work longer. 00:44:43.025 --> 00:44:48.308 I might just listen very carefully to what the Minister has to say. 00:44:51.658 --> 00:44:54.545 When I became a Minister, 00:44:54.991 --> 00:45:00.411 I was new in politics, but I quickly understood the numbers 00:45:01.371 --> 00:45:05.315 and I established that with budget financing only 00:45:05.448 --> 00:45:09.948 we can't provide for all needs and expectations 00:45:10.288 --> 00:45:15.105 in Slovenia or in any other Western economy. 00:45:15.258 --> 00:45:18.358 On one side social politics, 00:45:18.625 --> 00:45:23.638 on the other promoting of investment and taking care for economic growth. 00:45:24.011 --> 00:45:28.445 It is clear that the budget can't finance these needs in the long run. 00:45:28.598 --> 00:45:31.691 This is not possible now and it won't be in the future. 00:45:31.905 --> 00:45:33.905 The only answer to this is 00:45:34.165 --> 00:45:36.078 to invite private equity. 00:45:36.318 --> 00:45:39.971 A lot of politics is such 00:45:40.224 --> 00:45:45.011 that it is necessary to include a private equity. 00:45:45.158 --> 00:45:49.158 Green transition, for example, and many more. 00:45:49.298 --> 00:45:54.304 Because of this, one of the politics 00:45:54.478 --> 00:45:59.144 or strategies we are implementing and I advocate for it as a Minister, 00:45:59.304 --> 00:46:01.144 is a development of capital market. 00:46:01.351 --> 00:46:04.931 As you know, it is undeveloped in Slovenia. 00:46:05.431 --> 00:46:07.431 There is a lot of work ahead of us. 00:46:08.111 --> 00:46:12.204 This morning I had another meeting with my colleagues 00:46:12.411 --> 00:46:15.044 from Directorate for financial system, 00:46:15.164 --> 00:46:19.338 where we talked about the milestones, 00:46:19.498 --> 00:46:21.658 where are we and what measures we are implementing. 00:46:21.824 --> 00:46:25.151 We are working on more than 30 different measures. 00:46:25.551 --> 00:46:28.732 I am quite content with this 00:46:29.005 --> 00:46:32.345 because with the exception of a small part of the professional public, 00:46:32.498 --> 00:46:36.431 the public doesn't engage in this and people leave it alone. 00:46:36.564 --> 00:46:40.164 You don't ask us every two weeks, what is going on, 00:46:40.291 --> 00:46:42.711 when can you expect the measures... 00:46:42.844 --> 00:46:46.724 We are working intensely on this 00:46:47.424 --> 00:46:52.264 and today, but even more in the future, the answer is: 00:46:52.611 --> 00:46:56.744 I believe that the competitiveness of individual states 00:46:56.978 --> 00:47:01.031 in future years will greatly depend also on 00:47:01.184 --> 00:47:04.791 the development of capital markets and inclusion of private equity 00:47:04.904 --> 00:47:06.884 in the national projects. 00:47:07.118 --> 00:47:10.904 I strongly believe in public private partnerships in different areas. 00:47:11.044 --> 00:47:12.938 Today as well in the future years. 00:47:13.091 --> 00:47:17.838 We are directing our attention to this at the Ministry of finance 00:47:17.998 --> 00:47:22.705 and on meetings of European Ministers of finance as well. 00:47:23.411 --> 00:47:26.411 I am looking forward to the next meetings, 00:47:26.531 --> 00:47:31.058 because in the last year, also within the European Commission 00:47:31.198 --> 00:47:34.645 or the meetings of Ecofin, it became clear 00:47:34.918 --> 00:47:39.171 that we are getting louder, mainly the Ministers 00:47:39.358 --> 00:47:42.758 who believe in it and demand for it to become 00:47:42.958 --> 00:47:45.004 one of the main topics, 00:47:45.264 --> 00:47:47.444 not only in debates, but also in measures 00:47:47.571 --> 00:47:50.291 that the European commission is adopting. 00:47:50.458 --> 00:47:56.244 It is not only our local feature 00:47:56.458 --> 00:47:58.244 or our need for the future, 00:47:58.458 --> 00:48:02.604 but when we talk or compare 00:48:03.338 --> 00:48:07.084 the ability of the EU or the European economy 00:48:07.178 --> 00:48:10.678 to compete with the USA and China. 00:48:10.818 --> 00:48:15.405 This is one of the main measures and Slovenia is very active here. 00:48:16.578 --> 00:48:19.078 Thank you. Are there any more questions? 00:48:19.191 --> 00:48:20.791 Go ahead. 00:48:21.131 --> 00:48:25.778 Sorry. Jerneja Jug Jerše, head of the European Commission representation. 00:48:26.724 --> 00:48:29.338 In will continue in Slovenian, the question is for the Minister. 00:48:29.551 --> 00:48:32.631 Minister, you have explained nicely 00:48:32.744 --> 00:48:37.144 what is the position of Slovenia as to the recommendations of OECD. 00:48:37.331 --> 00:48:40.278 Two weeks ago the European Commission 00:48:40.418 --> 00:48:45.525 issued our Country specific recommendation, 00:48:45.631 --> 00:48:49.151 recommendations of the European Commission for Slovenia. 00:48:49.345 --> 00:48:54.511 We haven't heard the response, because it goes to certain councils. 00:48:54.671 --> 00:48:58.204 But briefly. Do you agree with those recommendations? 00:48:59.144 --> 00:49:03.091 Yes, I do, because they are quite similar 00:49:03.238 --> 00:49:06.045 as the recommendations of the OECD. 00:49:06.651 --> 00:49:09.411 In a way, this is a precondition 00:49:09.565 --> 00:49:13.751 that we can do the right things. If we would argue already on 00:49:13.871 --> 00:49:15.931 how we understand the recommendations 00:49:16.151 --> 00:49:21.011 and adapt the politics accordingly, we would have a lot of problems. 00:49:21.251 --> 00:49:23.751 We are not getting into this 00:49:23.878 --> 00:49:28.005 whether the recommendations are right. They are absolutely right. 00:49:28.191 --> 00:49:33.545 We are talking with the European Commission a lot 00:49:33.738 --> 00:49:39.178 and we are already implementing these recommendations. 00:49:39.371 --> 00:49:42.784 There are things that the public talks a lot about 00:49:42.924 --> 00:49:45.044 and less about some others. 00:49:45.278 --> 00:49:48.084 At the end, it's all good. 00:49:55.118 --> 00:49:58.111 Thank you. Bojan Ivanc, Slovenian Chamber of Commerce. 00:49:58.351 --> 00:50:02.218 The Chief Economist. I can ask the question in Slovenian, right? 00:50:02.384 --> 00:50:05.851 I have a question or a comment on a featured chart 00:50:05.984 --> 00:50:07.831 on greenhouse gas emissions. 00:50:07.984 --> 00:50:11.118 There the transport sector stands out in relation to the others, 00:50:11.224 --> 00:50:13.205 because the increase is still quite high. 00:50:13.371 --> 00:50:16.471 I would like to explain. It bothered me on the chart 00:50:16.625 --> 00:50:22.345 that there is no explanation, why the increase is so high. 00:50:22.471 --> 00:50:27.005 Slovenia is a country of transit and there is a lot of tourism here, 00:50:27.198 --> 00:50:30.025 because the whole region is attractive for tourists. 00:50:30.125 --> 00:50:33.665 A lot of transport is going through Slovenia 00:50:33.778 --> 00:50:35.618 and we are building a transport infrastructure. 00:50:35.751 --> 00:50:37.511 On railways and on roads as well. 00:50:37.711 --> 00:50:41.951 A natural process or a position of our country is such 00:50:42.145 --> 00:50:46.571 that it determines a very high portion of the transport in GDP. 00:50:46.765 --> 00:50:50.518 Subsequently, the chart of the greenhouse emissions 00:50:50.718 --> 00:50:52.664 is a result of this increasing volume. 00:50:52.878 --> 00:50:55.775 I would suggest that you try to complete 00:50:55.911 --> 00:50:58.664 this part of the report and check, 00:50:58.804 --> 00:51:03.965 how much this sector increased the emissions per transhipment unit 00:51:04.078 --> 00:51:08.271 by distance category. This is a comment about methodology. 00:51:08.485 --> 00:51:10.885 I have another one about housing. 00:51:11.025 --> 00:51:16.611 You have a forecast about housing and you are optimistic for Slovenia. 00:51:16.764 --> 00:51:19.598 For this year you predict 6% growth on housing 00:51:19.831 --> 00:51:21.838 and 3 or 4 for next year. 00:51:22.071 --> 00:51:27.238 I understand your calling that the government interprets 00:51:27.365 --> 00:51:30.311 certain changes of the constitution to place the objects easier, 00:51:30.485 --> 00:51:34.551 but on housing you are relatively optimistic for Slovenia. 00:51:34.745 --> 00:51:37.591 I would like you to comment this 00:51:37.778 --> 00:51:40.564 why you are still so optimistic on housing, 00:51:40.744 --> 00:51:43.031 because rate of interest have increased, 00:51:43.198 --> 00:51:46.398 which is disincentive for the construction sector 00:51:46.498 --> 00:51:51.418 as well as for those, who are buying a property with a loan. 00:51:54.838 --> 00:51:58.958 In relation with a housing market we are optimistic 00:51:59.058 --> 00:52:01.104 that the government will follow OECD advise 00:52:01.264 --> 00:52:05.471 and improve conditions for further development 00:52:05.771 --> 00:52:10.091 and to better respond to demand in the market. 00:52:10.244 --> 00:52:12.571 In relations to transport sector... 00:52:13.144 --> 00:52:17.844 Slovenia has got relatively long distances to travel, 00:52:17.958 --> 00:52:22.765 but you're not as unique as you might think in relation to that. 00:52:22.925 --> 00:52:26.964 I guess, what we notice is that there are all sorts of 00:52:27.371 --> 00:52:30.591 contra productive price incentives 00:52:30.877 --> 00:52:35.524 that perhaps hold back the level of technological innovation 00:52:35.645 --> 00:52:37.451 that you would otherwise see. 00:52:37.658 --> 00:52:42.818 There are subsidies in agriculture 00:52:42.978 --> 00:52:46.884 and various other price subsidies that structurally creates 00:52:47.124 --> 00:52:49.458 some contra productive distortions in the market. 00:52:49.764 --> 00:52:53.211 All we are saying is, that these are areas 00:52:53.431 --> 00:52:59.591 where the government should look at why there is so little progress 00:52:59.724 --> 00:53:02.018 over the last decade in that sector. 00:53:02.224 --> 00:53:04.358 Slovenia could do better. 00:53:04.544 --> 00:53:10.031 By making sure that policy levers are aligned 00:53:10.231 --> 00:53:13.818 and consistent and coherent would certainly help 00:53:13.958 --> 00:53:16.405 drive the necessary innovation 00:53:16.611 --> 00:53:21.178 that then helps to bring carbon intensity for the sector down, 00:53:21.344 --> 00:53:25.104 but also the level of emissions for the sector overall. 00:53:27.851 --> 00:53:29.838 Are there any more questions? 00:53:30.624 --> 00:53:34.091 We were comprehensive enough. Thank you very much, 00:53:34.211 --> 00:53:36.691 Mr. Minister and Mr. Cormann. 00:53:36.978 --> 00:53:38.765 You can applaud.