Miro Cerar, Slovenian Prime Minister: New frontiers for the cooperation set

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Serbia is Slovenia’s important political and economic partner in the region, and we also see the country as a future counterpart within the EU. After our Belgrade meeting, I expect new impetus for cooperation in various fields, and renewed political incentive for the economy to break into new markets that are in the common interests of both of our countries.

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I am convinced that joint meetings of the two governments, accompanied with a carefully determined selection of ministers and businessmen, will further strengthen our economic cooperation and simultaneously enhance the already close relations among the people of our two countries, says Miro Cerar, Prime Minister of Slovenia, with whom we discussed the encouraging results of the Slovenian economy, security issues related to the migrant crisis and the prospects of further cooperation between Slovenia and Serbia within the regional and EU context.

In your opinion, what has contributed to Slovenia’s very good economic results at this moment?

I am pleased to state that the annual prognosis for the growth of gross domestic product in 2016 and over the next two years shows a continuation of favourable economic trends. The GDP growth forecast for 2016 stands at 2.3%, while for 2017 and 2018 GDP is expected to reach 2.9% and 2.6% respectively. These forecasts are very positive and show that Slovenia is well on the way to economic recovery, which is a result of the competitive export sector and a sustained policy effort in addressing key economic vulnerabilities.

Recovery in the post-crisis period has been facilitated by good export performance of Slovenian firms and their competitive gains. However, this would not have been enough if the policy effort had not addressed the balance sheet problems of the banking system in a comprehensive manner and carried out a set of policy reforms that enhance economic resilience. Undoubtedly, the approach we have taken to fiscal consolidation has also contributed to the current positive economic performance. The strategy we are following is to gradually eliminate the government deficit without hindering the economic recovery. Last year we reduced the government deficit to 2.7% of GDP, which is below the EU fiscal threshold of 3% of GDP. The deficit will be further reduced to 2.2% of GDP in 2016 and 1.3% of GDP in 2017. This year, general government debt will decrease for the first time after the dramatic increase in the post-2009 crisis period. Overall policy changes have also resulted in an increase in foreign direct investment, which has resulted in historically record high inflows in the last two years.

The progress made in terms of policy implementation and better economic performance has resulted in Slovenia’s credit rating upgrade, exiting the EU processes of Excessive Macro Imbalances and excessive deficit, as well as resulting in improving Slovenia’s rank in the IMD’s World Competitiveness Report, on the World Bank’s Doing Business List and in the World Economic Forum’s Global Competitiveness Report.

Where do you see the key challenges for sustaining positive growth trends in Slovenia and the region?

The major challenge we face is to maintain our recovery on a sustained basis. The crisis has manifested across the region in lower potential growth, which is associated with vulnerabilities from the past, but is also related to lower international trade and investment, which is a key growth lever for small, open economies. While a lot has been done in terms of policies to improve economic conditions, some vulnerabilities are still present, such as the level of non-performing loans in the banking systems and country specific impediments to business, such as red tape and regulations on spatial planning.

In Slovenia’s view, the key challenges of the region remain in ensuring its overall political stability and instilling confidence among economic operators in public and financial institutions. I believe that such increased confidence would in turn attract new investors to the region.

How are your assessments influenced by the continued failure to resolve the refugee crisis and the concentration of migrants in the region?

I firmly believe that the EU must continue its close cooperation with the countries of the Western Balkans and provide further support and assistance. The countries of the EU and the Western Balkans need to become partners in this migrant crisis. At the same time, all the countries should avoid unilateral actions and continue coordinating their response, especially if the pressure continues to build. Of course, all agreements and commitments must be fully respected; the principle of “letting through” can no longer apply.

How wold you evaluate overall relations with Serbia and what were the key topics of the joint session of the two governments in October?

I am glad to highlight that relations between Slovenia and Serbia are very good, dynamic and diverse. Cooperation extends via various areas, which we also confirmed at the recent joint session of our two governments. Serbia is Slovenia’s important political and economic partner in the region, and we also see it as a future counterpart within the EU. I and my Serbian counterpart, Aleksandar Vučić, have confirmed that there are no major outstanding bilateral issues, while those that do exist are being addressed successfully.

With a view to strengthening economic cooperation between our two countries, a concurrent business forum was organised, dedicated to four business sectors: IT, the food processing industry, tourism and the environment. Opportunities for cooperation on third markets were also considered.

We agreed to increase our efforts in further implementing the Agreement on Succession Issues. For Slovenia, the effective resolution of succession issues is of crucial importance. The two countries have indeed enhanced their cooperation recently and achieved considerable progress in this regard. We expect efforts to further intensify in the future.

Another issue on the agenda was Serbia’s EU integration process. As I stressed during the visit, Slovenia will continue to strive for the EU’s door to remain open for this Balkan country, which is part of the European family. We already started providing bilateral technical assistance to Serbia in different negotiation chapters in 2015. Thus far, over 15 Slovenian experts have been engaged to assist in seven chapters, and we intend to continue providing this form of assistance. Additionally, Slovenian experts are also participating in six twinning projects in Serbia.

Migration was another major topic discussed. As I have already mentioned, everyone should avoid unilateral action and continue coordinating their response, especially if the migration pressure continues to build. Having said that, Slovenia is fully aware of the importance of Serbian measures, which is why the Slovenian Police will assist in border controls between Serbia and Bulgaria.

What can the two governments do in their domains to further advance mutual cooperation?

For this last meeting in Serbia, I was accompanied by several ministers from my government and a business delegation. This format of combining ministers and businessmen is, in my opinion, a good starting point for upgrading close ties between our two governments. I am confident that this visit to Serbia will convey a clear message that our governments are complementary in many ways and that we need to use this as a building block.

One of the aims of joint government sessions is to exchange views and suggestions regarding the areas where our cooperation could be further strengthened and improved. It is, however, crucial that all the opportunities identified at the session are then followed through. I now expect new impetus for cooperation in various fields, and renewed political incentive for the economy to break into new markets that are in the common interests of business professionals from both of our countries.

How much is current Slovenian economic growth based on the long-term strategy of strengthening industrial capacity and exports, and in that context how do you view the commercial linking of Slovenia and Serbia?

The essential measures in support of Slovenian companies when breaking into new markets are defined in the governmental Programme for Internationalisation 2015–2020. Individual internationalisation activities, undertaken by partners on selected foreign markets, and an overview of all international activities by partners, are listed in our action plan International challenges 2015–2016. A new two-year action plan is soon to be published. In the already existing one, Serbia is considered a traditional market. In such markets, Slovenia’s focus is now mainly on bringing companies together and promoting joint ventures.

How would you evaluate current trade exchange trends and where do you see the potential for their further development?

We are very pleased that, despite a slight drop in 2014, trade between Slovenia and Serbia maintains a long-term upward trend. The available 2015 figures are particularly good for Slovenian exports to Serbia. In the SEE region, Serbia remains Slovenia’s single most important trading partner. Some untapped potential for economic cooperation and upgrading the exchange, however, exists in various fields, some of which were addressed at the aforementioned business forum. Other possible areas of cooperation are transport and energy infrastructure, energy efficiency, renewable sources of energy and sustainable development, the financial sector, the automotive industry, and joint ventures in third markets, especially in countries with which Serbia has concluded free trade agreements. This is why I and Serbian Prime Minister Vučić called for further enhancement of our economic cooperation. I am also satisfied that Serbian investment in Slovenia is also on the rise.

In parallel with the joint session of the two governments, a business forum was also held at the headquarters of the Chamber of Commerce & Industry of Serbia. In which economic fields should current cooperation be extended?

The joint government session was accompanied by a business event that was carefully targeted, as recommended by the Slovenian Chamber of Commerce and Industry and supported by the Chamber of Commerce and Industry of Serbia. That business forum was focused on four economic sectors where opportunities for advancing our economic cooperation have been identified. They included digitisation of the public administration and economy, the agriculture and food-processing industry, tourism and, last but not least, environmental projects. I am convinced that such meetings will further strengthen our economic cooperation and simultaneously improve the already close relations among the people of our two countries.

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