S&P: Slovenia to need reforms

Standard & Poor's said in a report that without concerted policy and fiscal reforms, the aging Slovene population will lead to intense pressure on the public finances and the ratings on the sovereign.

"Absent further reforms, total age-related public expenditure in Slovenia (AA/stable/A-1+) will rise to 29.9% of GDP in 2050, up from 19.0% in 2005," said S&P credit analyst Tim Reid.

"Without any measures on the fiscal or structural policy front, general government deficits and net debt would rise sharply from the mid-2020s to reach 27% and 308% of GDP, respectively, by 2050."

A fiscal deterioration of that magnitude would not be compatible with the current AA long-term sovereign rating on Slovenia, S&P said.

After 2015, it would fall into the A category and would then drop further into the BBB category by 2020, the agency noted, adding that in 2025, Slovenia's fiscal indicators would have weakened to the extent that they would be more typical of performances currently associated with speculative-grade sovereigns.

This scenario is not a prediction by S&P, the agency said, adding that it is a simulation that highlights the importance of age-related spending trends as a factor in the evolution of sovereign creditworthiness.

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