Eurogroup head says Slovenia must press on with reforms

Eurogroup chairman Dijsselbloem arrives at an euro zone finance ministers meeting in Luxembourg
Eurogroup chairman Jeroen Dijsselbloem (R) arrives at an euro zone finance ministers meeting in Luxembourg June 20, 2013. REUTERS/Francois Lenoir

LJUBLJANA (Reuters) - The chairman of the group of euro zone finance ministers said the bloc stands ready to support Slovenia, but the country must not stray from the path of fiscal reform, a newspaper reported.

Jeroen Dijsselbloem, due to discuss reforms and the overhaul of Slovenia's struggling banks with policymakers in Ljubljana later on Monday, said the government's credibility was likely to suffer if deficit and debt levels rose.

"For Slovenia it is very important that in retains access to financial markets," he told daily Delo in an interview.

The visit will be Dijsselbloem's first to Slovenia which, weighed down by some 7.9 billion euros ($10.8 billion) of bad loans in the mostly state-owned banking sector, is struggling to avoid becoming the next euro zone state to take an international bailout.

Dijsselbloem, who is also Dutch finance minister, declined to speculate on whether Slovenia will need aid.

"We need to support Slovenia to continue its work. Any speculation regarding a possible bailout does not help with that," Dijsselbloem said.

The government says reforms including tax increases, spending cuts and privatizations will help it avert a bailout.

"Banks themselves are responsible for the bank overhaul as are their shareholders and investors. The second in line is the government which can invest in bank capital," said Dijsselbloem.

"If it cannot do that alone, and only in those circumstances, the ESM (European bailout fund) enters (the equation)."

($1 = 0.7302 euros)

(Reporting By Marja Novak; Editing by John Stonestreet)