Slovenia has similar challenges to Japan in terms of huge government debts and an aging population, and both countries can learn from each other, Slovenian Finance Minister Andrej Bertoncelj said this week in Tokyo.
In an interview with The Japan Times on Wednesday, Bertoncelj, who also serves as the country’s deputy prime minister, said his country has cut its public debt, which stood at 82.6 percent of gross domestic product in 2015, by 12.5 percentage points between 2015 and 2018 — the fastest reduction among all the members of the euro area.
Of 28 European Union countries, 19 have adopted the euro as their currency. European Union rules require its members to keep their public debt in relation to GDP below 60 percent.
“Slovenia is currently at around 70 percent and the goal for this year is 65 percent. We will be at 55 percent within three years,” said the minister, who was set to speak about his country’s success in debt reduction at an IMF conference in Tokyo on Friday.
Among the 19 euro countries the most troubled is Greece, with its public debt amounting to 180 percent of GDP, according to Bertoncelj. Japan’s public debt currently stands at around 230 percent of GDP.
The former professor of management said that Slovenia reduced its massive public debt by privatizing public financial institutions, consolidating and recapitalizing them, while implementing tax cuts to stimulate private consumption. Thanks to these efforts, the country’s long-term rating by Standard & Poors was upgraded to AA- (stable) from A+ (positive) on June 14.
The minister also said that Slovenia, the population of which is greying rapidly with a birthrate of around 1.5 per woman, is also implementing pension reforms. While 90 percent of the proceeds from the privatization of public banks will be spent on public debt reduction, 10 percent of the proceeds are destined for the country’s pension system.
The Slovenian government is also trying to raise the retirement age of company employees to reduce the burden on the pension system. Although the current retirement age is 65 in Slovenia, many people tend to retire in their 50s, according to Bertoncelj.
“What we would like to do is to have younger people enter the labor market sooner and older population exit the labor market later,” he said, adding that the government hopes to raise the retirement age to 67 in two years.
To grow its economy further, the minister said that his country hopes to learn from Japan, especially on how to transform its economy to one based on advanced technology.
“We can learn from the Japanese experience and what the steps were in reforming Japanese industries toward higher added-value industries,” he said. “We are a small economy and you are a global economy. But there are many similarities.”