Economist Says Latest Ratings Cut No Surprise

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.