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S&P Preserves Slovenia Rating Despite Pension Reform Rejection

Madrid/London, 07 June (STA) - Rating firm Standard & Poor's has preserved Slovenia's long-term and short-term credit ratings at AA and A-1+ despite the rejection of the government's pension reform in Sunday's referendum. While prospects remain negative, S&P argues future ratings for Slovenia will be linked to budgetary consolidation in difficult political circumstances.

S&P wrote on Monday that the defeat of the pension reform indicates "failing support for the minority centre-left government, possibly complicating its prospects to meet budgetary targets through consolidation, while at the same time raising the probability of a no confidence vote or early elections".

The agency noted that the negative outlook reflects the possibility of a downgrade should the general government debt burden fail to stabilise because of the failure to comply with budgetary targets.

S&P believes that the reform defeat could cause a stalemate in facing long-term challenges for Slovenia's public finances arising from the country's ageing population.

The agency moreover noted that given the one year moratorium after referendum decisions and the general election scheduled for 2012, a new attempt at reforming the pension system will probably not take place before early 2013.

S&P reiterated the importance of the pension reform for the long-term sustainability of Slovenia's public finances.

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