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  1. #1
    Legendry Member milos's Avatar

    Slovenia Scenario !!!

    Last week the market was marked by the crisis situation in Cyprus, where the demand for the adoption of an unexpected tax demand threatened to push Europe back into recession. The euro fell to 1.2785 against the U.S. dollar and by week's end he remained close to this level. After Cyprus follows Slovenia. To true for Slovenia, which has its financial and banking problems to solve as soon as possible. The only real way for the new Slovenian government to avoid a situation in which it was forced to seek financial aid is quickly implement measures to rescue banks. Slovenia would be in May or June at the latest could borrow on international financial markets and create sustainable interest rates to refinance the new government bonds maturing debt in mid-year. The problem will arise if nothing happens to September. Slovenia must seriously implement fiscal discipline and structural reforms.

    Is it possible put options on currency pair Eur/usd?

  2. #2
    Solid Member
    I didn’t know that the Slovenia situation is so exaggerated. Do you think that Slovenian banks will need emergency refinancing?

  3. #3
    Legendry Member milos's Avatar
    In Slovenia, a jump in interest rates on the bonds to 5.4%. Stated as a reason for increased concern regarding the Slovenian economy, which by some estimates could become the next Cyprus.
    In the statement, the State Bank states that the agency Moody rating agency downgraded its long-term rating of deposits in foreign and national currency to "Caa2" from "B3" with a negative outlook, meaning that a further decrease rating possible.
    Problems in Slovenian banks, burdened by a bunch of bad debt prompted the speculation that Slovenia could become the next EU member to seek help after Cyprus..
    According to Moody the bank needs a new injection of capital to meet the requirements of the European Banking Agency to increase the level of capital.
    Unlike most countries that have struggled with credit in the real estate sector, Slovenia had a problem with companies that have operations financed through debt rather than the equity. Large corporate loans were funded much of the economic growth achieved during the decade from 2000 onwards
    Slovenia's public debt was last year accounted for only 52.7% of GDP, and is projected to rise to a maximum of 69% by the end of 2014. Compared to other countries with their own currencies, such as the U.S., especially compared to countries in crisis, such as Greece, it is insignificant sum.
    That Slovenia has its own currency, the problem would be relatively easy to solve. She, however, does not and therefore is on the verge of a precipice.

  4. #4
    Specialist Member marvel's Avatar
    Very interesting insights on Slovenia economy milos! You really have some deeper information about that country! I think it will be much difficult to see Slovenia in default as it is in central Europe and have a lot of connections with other strong economics like Germany and Italy but who knows. We have to take a look there from time to time!

  5. #5
    Legendry Member milos's Avatar
    Unlike Cyprus, which has no industry, one in Slovenia 20% of GDP .. Slovenia is rare among European countries with a positive balance of trade and payments. In Slovenia, now really come to the fore mistakes made in privatization - privatization, in which the shares are public companies once divided the people, and then in privatization of large capital individuals . Then the managers without equity firms that tried to take over the lead, with their Slavic big banks approved loans, finding funds in international financial markets on favorable terms, at a time when Slovenia had a high credit rating. The arrival of the economic crisis and recession, things have changed. The Cypriot crisis because of its effects on the euro area accelerated the need to find solutions in Slovenia in order to avoid a situation in which the country was in need of financial assistance.

  6. #6
    Legendry Member milos's Avatar
    Slovenia raises the current rate of VAT from 20% to 22% increase in a supplementary budget, probably before the June. Government of Slovenia may issue at any time in its sole judgment, the law on the stability of public finances. The lower VAT rate of 8.5 percent, which is valid for the Food and Drug Administration would not be changed. The Slovenian central bank estimate that the increase in the VAT rate increase annual inflation rate by half a percentage point.
    Central Bank of Slovenia has led to an increase in VAT from the crisis so far decided 20 of the 27 member states of the European Union.

  7. #7
    Legendry Member milos's Avatar
    German Finance Minister said this morning that Slovenia has to adopt measure if it wants to avoid a situation in which her international assistance will be required.Last week The Slovenian government announced a package sale of government bonds,the restructuring of the banking sector and increasing taxes by 2%. Expected that the European Commission on this issue it's opinion by the end of March.

  8. #8
    Legendry Member milos's Avatar
    Lawmakers pressed the euro zone Slovenia toughen measures presented last week to address the banking of fiscal. Otherwise the trouble of this country can become the sixth member of European Monetary Union are forced to seek international financial assistance. Slovenia last week pledged to sell 15 state-owned companies and raised value added tax but did not provide further details late and austerity measures, which investors say is needed to stabilize public finance, Slovenian’s banks, mostly are in trouble with bad loans in the amount of seven billions euros and it is required recapitalization. Slovenia’s economy is one of the fastest growing in the euro zone and the previous governments in Slovenia have refrained from unpopular sale of state asset ,including banks, as well as the reform of risky loans accumulated after the global financial crisis kicked into the open culture of bribery and corruptions and found the state banks approved the risky loans to politically connected businessmen. The reform plan includes government transfer 3.3 billions worth of bad loans from three banks into the newly formed bad bank.

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