Business News

Bankruptcies Are Nothing Bad, New Minister Tells Finance

Ljubljana, 19 July (STA) - The new Economy Minister Darja Radic believes that bankruptcy is the least painful solution for companies in trouble and feels that banks should encourage them in order to clean up their own records of failed investments.

"What is worst is that we have companies with no future and banks that cannot raise loans because of scores of bad investments," Radic said in an interview for Monday's business daily Finance.

However, this will be hard to carry out smoothly, so she expects protests, Radic told the daily just before the vote on her appointment in parliament on Friday.

The minister said the state of the Slovenian economy is not as grim as it is being presented. She believes that several companies are in a very unfavourable situation, yet the core of the economy is healthy and can form the basis for a breakthrough.

Radic said tax cuts are currently not possible, yet high excise duties are in fact an issue in certain branches, so she believes there is no more room for tax rises. "If taxes are not raised, the companies will survive."

"For companies that nonetheless cannot cope, the problem is not the taxes alone, but the unsatisfactory quality of their products and services."

Radic pointed to Slovenia's protracted transition as the root of the country's economic problems. "There are still many companies which used to be public property and are co-owned by the state."

A proponent of privatisation, Radic feels that companies need to be given "proper owners as soon as possible, owners with a long-term strategy". She believes that if things run smoothly, it the economy could be restructured within ten years.

The minister also said that the lack of statistical data, including on how many companies are facing bankruptcy, was a weak point of the Economy Ministry and announced changes in this area.

As for the announced pay cuts in the public sector, Radic feels they should go ahead, although she finds lay-offs a better solution. Radic estimates that her ministry could easily miss at least 20% of its current 258 staff.

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