Slovenia: Prime minister steps down amid stalled reform drive
On 27 January, Slovenia’s Prime Minister Marjan Sarec unexpectedly stepped down and called for a snap election, citing lacking parliamentary support for his minority government. His ruling coalition had struggle to legislate since losing its parliamentary majority following the withdrawal of Levica, a left-wing party, in November over disagreements regarding the 2020 budget. The opposition’s recent refusal to approve costly pension and healthcare reforms proved the last straw for Sarec.
Slovenia’s fractured parliament will have the chance to negotiate a new coalition government in the coming months. Nevertheless, a snap election, which is not expected to take place until April at the earliest, remains the most likely scenario. This is all the more likely given that Janez Jansa, leader of the right-wing opposition Slovenian Democratic Party (SDS), also backed an early election.
Going forward, heightened political uncertainty could well weigh on the economy’s outlook somewhat, although it is currently difficult to assess the direct impact. Irrespective, while solid public accounts and healthy tax revenue growth should help keep the fiscal balance in surplus, the new administration will be challenged by subdued demand from the Eurozone weighing on the country’s all-important automotive industry.