Government expenditures in Slovenia are slightly below European average, reaching 40% of GDP in 2017. Bulk of expenditure consists of social transfers, aimed at income redistribution through welfare programs. Public debt is huge, standing at 75% of GDP in 2017, yet down from its all-time high level of 83% in 2015. Slovenia was able to exit the EU excessive deficit procedure by mid-2016, since it deficits finally fell below the Maastricht threshold, and the budget is nearing balance. But the elevated level of debt still poses significant macroeconomic risk, especially in the case of a new economic downturn. For the time being, the economy is booming, with the growth surpassing 5% in 2017, due to a rise in exports, rising consumption and investments. Unemployment is also historically low,
nearing 6%. Since there has never been a full scale privatization 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. Government is therefore involved in a significant proportion of the overall economy. Troubled SOEs are often 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). This plan was rewritten in 2017, with new company categorization. However, privatization is stalling: for example, the privatization of the biggest bank, the NLB, was cancelled in 2017 but initiated again recently alongside the Abank. Although SOEs are mostly well managed, there are signs of political appointments of their management. Corporate tax stands at 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 on average salary of 43%, which above the OECD average and many more developed European countries.