Moody's Says Slovenia’s Ratings Reflect Predictable Govt Policies, Low Debt

Moody’s issued the following statement:

“In its annual report on Slovenia, Moody's Investors Service says the country's Aa2 government bond ratings and stable outlook reflect the government's predictable policy framework, relatively low debt and the benefits that come with membership in the European Union and the eurozone.

"Although Slovenia's economy is contracting sharply this year, the government has exhibited a high degree of resilience in the midst of the global recession," said Vice President-Senior Credit Officer Jonathan Schiffer, author of the report. "The government has not had to rely on EU or IMF financial assistance as have a number of other central and eastern European countries."

Schiffer said the government can access ample funding for its temporarily wider budget deficit mainly in its domestic markets, and its debt metrics are low enough to remain comfortably placed vis-a-vis its rating
peers after assuming the additional debt. The anti-crisis program, while minimalist, also looks to be reasonably effective, although the labor market is being hard-hit.

"The government acted swiftly to impose an unlimited guarantee on bank deposits, a guarantee on new debt issuance by financial institutions, and the allocation of necessary budgetary funds to recapitalize banks and
purchase bank assets," said Schiffer. "To date, the small banking system has weathered the global crisis quite well."

Schiffer predicted that the small, open economy will gradually respond to a pickup in demand from Slovenia's major trading partners, but he said Moody's does not expect the global rebound to be robust.

The issuance of this credit report by Moody's Investors Service is an annual update to the markets and is not a formal action to alter the credit rating of the issuer.”