expenditures in Slovenia are slightly below European average, reaching 41.5% of
GDP in 2016. Bulk of expenditure consists of social transfers, aimed at income
redistribution through welfare programs. Public debt is high, standing at 79%
of GDP in 2016, but for the first time since the 2008 economic crisis the debt
is on a downward spiral, mostly due to robust growth and lower deficits, which
enabled Slovenia to exit the EU excessive deficit procedure by mid-2016. But
the debt level still poses significant macroeconomic risk. Economic prospects
for the time being are positive, with solid growth rates, but low investments
compared to other ex-transition economies and still high NPLs within the banks
continue to raise concerns. Since there was never a full scale
program in Slovenia, state-owned enterprises (SOE) are present in many areas of
the economy, especially in banking and insurance, energy, transport and
telecommunications, within an intricate web of cross-enterprise ownership.
Troubled SOEs are usually linked to big state banks with increasing level of
NPLs, which further aggravates risks for public finances. Asset management
strategy for companies in state ownership, adopted in 2015, includes detailed
privatization plans: classifying SOEs to different groups, such as strategic,
important and portfolio. State approach to an individual SOE will depend on its
classification (majority equity, controlling equity, or non-mandatory equity).
However, privatization is stalling or it was even canceled, as in the case of
the biggest bank in the country, the NLB. Corporate tax was recently increased
to 19%, while VAT is at 22% (standard) and 9.5% (reduced) rate. Personal income
tax is highly progressive, with rates of 16%, 27%, 34%, 39% and even 50%.
Social contributions paid by the employee and employer are also high, leading
to overall high tax wedge, above the OECD average.