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Slovenia takes decisive action to fight the epidemic and help the population and the economy

“In the fight against the coronavirus epidemic, Slovenia is among the most successful countries in the world. The reputation of a safe and orderly state, which is able to take care of the health of its people, is the best recommendation in times like this,” said Prime Minister Janez Janša in his address to the citizens of Slovenia on the occasion of the adoption of the third anti-corona package, adding that the Government will make the best of the advantage gained with the containment of the epidemic in order to eliminate its consequences. In its most recent forecast, the European Commission assessed the measures adopted so far in Slovenia as very positive. Furthermore, owing to these measures among other things, it forecast a potentially quick recovery for Slovenia and a rebound to almost the pre-crisis level as early as next year. “We will do our utmost to achieve this,” stated the Prime Minister decidedly.

The Government will make the best of the advantage gained with the containment of the epidemic in order to eliminate its economical consequences.

The Government will make the best of the advantage gained with the containment of the epidemic in order to eliminate its economical consequences. | Author Getty Images_KlausVedfelt

In order to control the situation and to mitigate the adverse consequences for the economy and the population in the long term, the Government has adopted a two-stage system consisting of: two packages of intervention measures applicable in the short term, followed by the proposed third package outlining the foundations of an exit strategy.

 #ACP1 and #ACP2 preserved 260 thousand jobs and channelled direct financial aid to 1.3 million people

Since we managed to contain the spread of the virus fairly quickly with the measures introduced in healthcare and the extremely responsible behaviour of each individual, the Government was able to focus on the mitigation of social hardships of people and providing assistance to the economy to overcome the shock of lockdown from its first day in power.

One of the key objectives of the first two packages was to preserve jobs. The state thus provided assistance to workers and their employers in the form of 100% subsidised compensation for temporary lay-off, and exemption from the payment of social security contributions for workers who were temporarily laid off or could not perform their work due to force majeure. Compensation for the loss of income in various branches of agriculture was included in the measures, and assistance to operators of secondary activities is also envisaged.

The social hardship of individuals has been mitigated by the provisional introduction of a basic monthly income, a one-off solidarity bonus, the automatic extension of all the rights to public funds, exemption from payment for public services that have not been available, for example kindergartens and school meals, and a crisis allowance for those workers who were most exposed to the risk of infection during the epidemic.

One of the first and extremely important measures when businesses had to close was the deferred repayment of loans for natural and legal persons, as it alleviated many personal hardships. More than 22 thousand borrowers have resorted to this measure by the beginning of May, with the deferred payments totalling just over EUR 260 million.

Households and other small consumers of electricity were exempt from payment for distribution services in the period from March to May 2020, thus lowering their monthly electricity bills by 25% on average.

#ACP3 – an exit strategy for the economy

The common thread of all three packages is the liquidity of businesses. In the first and second packages, the Government assumed the cost of labour to help companies deal with the consequences of the sudden interruption of financial flows and orders in addition to the abovementioned 12-month deferral of loan repayments, the setting up of a guarantee scheme, writing-off the rent for business premises owned by the state or municipalities, the accelerated issuing of building permits and simplification of administrative procedures in this field.

With the third package, the Government continues with liquidity assistance to companies in the form of favourable and fast-track loans ranging from EUR 5 to 50 thousand and provided by the Slovene Enterprise Fund (EUR 10 million) and the Slovenian Regional Development Fund (EUR 14.4 million). The package also provides an upgrade to these loans with measures to accelerate investments.

Significant attention has been paid by the Government to the launching of an investment cycle, which would include the construction sector and the remaining service activities. The third anti-corona package was adopted simultaneously with the intervention act for the removal of obstacles to the implementation of important investments to re-start the economy after the COVID-19 epidemic. Based on this act, the Government will define a list of key investments totalling EUR 500 million, and make sure that these investment projects are launched as soon as possible in order to kick-start the economy.    For the investments initiated before 30 June 2021, the Government is relaxing the conditions for the allocation of incentives for new jobs and establishing an FDI transparency mechanism. 

Short-time work and extension of compensation for temporary lay-off

With the adoption of the #ACP3, Slovenia has become the 17th EU Member State to introduce short-time work in order to flatten the unemployment curve and encourage companies to re-start their production. Furthermore, the Government extended the compensation for temporary lay-offs to all the branches as the key objective of the third-package.    

Tourism is important due to its far-reaching additional effects on other activities

The most recent package of measures targets tourism, which, according to some forecasts, will need five years to recover.   The state will help tourism and hospitality industries by issuing vouchers to all persons who permanently reside in Slovenia. Persons who are permanent residents of Slovenia and are over the age of 18 will receive EUR 200 in vouchers and those under the age of 18 will receive EUR 50.  State aid in the form of tourist vouchers is estimated at EUR 345 million, with the multiplier effects or payment for additional services estimated at EUR 172 million.

Like other economic sectors, tourism also received support under the first two anti-corona packages. Owing to the multiplier potential of tourism, which was also highlighted by Prime Minister Janez Janša, it seems reasonable to assist this sector in a targeted manner. In a similar manner, assistance is also being provided to the construction sector due to its important impact on other activities.

European funds give Slovenia more room for manoeuvre

“Slovenia’s position in the European Commission’s proposal is favourable,” said Prime Minister Janša, and “enabled us to prolong some measures until the end of June and apply the measure of temporary lay-off to all the branches of the economy.  This proposal gives Slovenia room for manoeuvre and enables it to assist the economy and workers to preserve their jobs at this critical point in time”. The European Commission’s SURE solidarity instrument is the key source of funding for the third package. According to the Ministry of Finance, Slovenia plans to draw EUR 900 million from this instrument.

In the aftermath of the COVID-19 pandemic, the European Commission a few days ago tabled a recovery plan for Europe totalling EUR 1,850 billion: of which EUR 1,100 billion is earmarked for the next multi-annual budget of the EU and EUR 750 billion for the recovery. The recovery package has three pillars: supporting investments and reforms in Member States, helping private investors with solvency support for viable companies and strengthened programmes that proved crucial during the pandemic, for example the reserve capabilities of rescEU as part of the EU Civil Protection Mechanism.  

Slovenia is said to receive EUR 5.1 billion from the first pillar, of which EUR 2.6 billion for grants and EUR 2.492 billion for loans.

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