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Tuerk: Govt Needs to Provide Clear Strategy for Spending Cuts, Growth (interview)

Ljubljana, 05 June (STA) - President Danilo Tuerk has said that the government needs to give clearer and more comprehensive answers about how it intends to cut public spending and promote growth. These are short-term needs that require quick but balanced measures, the president suggested in an interview with the STA.

He said that while some measures, including pension reform, should be implemented gradually, others are more pressing. "These include the sustainability of the budget, the government deficit and public debt, where the right balance for reducing public spending and promoting economic growth must be found."

As regards pension reform, Tuerk advocates a carefully thought out approach. "We must take time to find a path to a solution that includes an increase in the retirement age but also a system of bonuses for those who were very young when they got their first job and those who perform difficult work."

According to him, solutions in this area can be "sustainable only if a suitable level of consensus is reached".

Tuerk praised the government for its measures related to welfare in time of crisis. "The situation did not deteriorate significantly. In terms of unemployment, Slovenia is one of the least affected countries in the EU."

But the president believes that the government should have proposed measures to boost competitiveness at the same time. "The government was not fast enough in this respect and failed to provide the right solutions."

"We're not talking only about potential changes in the area of taxes, but also questions regarding openness to foreign capital, where bolder steps must be taken."

Asked about Slovenia's privatisation strategy, Tuerk said that an important feature of this policy is a mechanism for sound management of companies which have remained in state ownership. "The OECD can help us greatly in this respect."

"As far as privatisation goes, I support the government's approach of differentiating between strategic companies, which should remain in state ownership, and others, which can be put up for sale."

He said that new solutions must be found for providing capital to state-owned companies in need of fresh money. "These solutions must be such as not to depend on the government and public money."

"Gorenje is a positive example of this," said Tuerk in a reference to the fresh capital that will be pumped into the home appliance maker by the International Financial Corporation (IFC).

Asked about EU efforts to overcome the crisis, Tuerk highlighted the need to preserve the role and autonomy of the European Central Bank (ECB). Moreover, he said he saw no obstacles to turning to the IMF for help in cases where eurozone countries face serious financial problems.

"We lost a great deal of time earlier this year on debates that were completely unnecessary...on whether the IMF should enter or not. Of course it has to enter. This is the only institution in the world which has the money - including European money - and the necessary experience and know-how in shaping stabilisation packages."

The president also believes that financial discipline must be promoted with suitable sanctions. "It makes no sense to have a system without sanctions, among which there must be the possibility of suspension from the eurozone. The EU as a whole and the eurozone are systems based on solidarity, but such systems also require responsible behaviour from its members."

He believes that the financial crisis has reduced the will of the EU to expand to the Western Balkans. Tuerk is therefore adamant that efforts should be made to keep the enlargement issue in the forefront.

"But the countries of the Western Balkans must also be made to understand that they have to implement conditions, including specific conditions such as cooperation with the International Criminal Tribunal for the Former Yugoslavia."

Asked about the impact of the crisis on the international community, Tuerk said "we are in the midst of the construction of a multipolar world", but warned that this may bring about more crises and tensions in the future.

"The onset of China, India and Brazil is taking place in relative dialogue. The G20 has been formed, which represents an appealing framework.

"But of course the process of globalisation has created significant differences. Europe, which currently has the lowest rate of growth, is finding out all of a sudden with great surprise that globalisation is not necessarily beneficial."

"We must therefore take measures to promote a knowledge-based society and innovation, while the main task facing Slovenia should be to grasp this process. This is why short-term measures are so important, why prospective business must be provided assistance and people need to be educated."

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