Ljubljana, 14 January (STA) - S&P's downgrade of Slovenia's sovereign credit ratings is by no means surprising given the country's political crisis and bad economic policies, economist Bernard Brščič told the STA on Saturday, in response to the rating agency's decision to cut Slovenia's main credit rating from AA- to A+.
"Slovenia is sinking, it is going down," Brščič said, adding that the downgrade must be interpreted in light of the negative outlook.
Brščič believes that "if we want to satisfy the financial markets' expectations", Slovenia must forget jump-starting the economy and focus on "one imperative of fiscal policy - the consolidation of public finances".
According to him, Slovenia can only hope to meet the financial market's expectations by introducing extremely conservative, even restrictive, fiscal policies that have to focus on curbing public spending.
Brščič moreover said that the country should reduce its budget deficit to 3% of GDP. Should Slovenia fail in cutting spending by EUR 900m this year, it will face a financial disaster, he added.
Brščič moreover noted that Slovenia was becoming viewed as a problematic country and "the political crisis...certainly doesn't help".
He is also convinced that the state cannot jump-start the economy and that only foreign capital can save it.
In his view, this means "a complete redefinition of Slovenia's attitude toward foreign investors". Slovenia must therefore reform its business environment, as only domestic and foreign entrepreneurship can save the country.