Slovenia adopts debt cap to stave off crisis

Associated Press + More

LJUBLJANA, Slovenia (AP) — Slovenia's parliament has adopted a cap on public spending to try to convince investors that it will be able to avoid needing an international bailout.

The vote in the assembly on Friday means Slovenia's constitution will be changed to require that the government budget be balanced — it will not be allowed to spend more than it earns in taxes. The budget should be balanced by 2015.

Slovenia is racing to convince foreign investors it has a credible strategy to reduce debt and stay solvent. In addition to a two percent hike in the retail sales tax, the government has recently pledged to privatize 15 state-run companies.

Public debt is set to surge to 71 percent of GDP in 2014 as the state faces huge costs saving its banks.

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