Post by radovic on Nov 21, 2007 13:51:35 GMT -5
Slovenia's fiscal policy too lax, says ECB official
EMonline
Slovenian economy is growing fast and inflationary pressures are mounting, with the latest numbers exceeding 5%".
A member of the executive board of the European Central Bank (ECB) has pointed to Slovenia as an example of a country which has failed to properly prepare for the challenges of real convergence in the eurozone, Slovene Press Agency reports.
Lorenzo Bini Smaghi said that Slovenia's fiscal policy is "too lax" to ensure macroeconomic stabilisation in the face of mounting inflation.
He said monetary policy was unable to solve this problem, while an overly lax fiscal policy was not the answer either, adding that Slovenia's situation is compounded by the unfinished deregulation of the product and labour markets and quick growth of wages.
"Wages are growing faster than productivity, in particular in the public sector. The risks of a boom-and-bust cycle are looming," he told the Conference on European Economic Integration 2007 hosted by the Austrian central bank, the Oesterreichische Nationalbank.
He said it was wrong for the Slovenian authorities to blame the euro for the country's current economic woes. "This is obviously not the right response, and it won't help the Slovenian people understand where the problems lie", he said.
Bini Smaghi added that whether Slovenia end up being more like Ireland than Portugal in the next few years depended entirely on its policies.
Slovenia's example demostrates that the Economic and Monetary Union should never be viewed as an automatic "recipe for economic success. Countries need to be well equipped in order to thrive in it", he said. ( Slovene Press Agency )
EMonline
Slovenian economy is growing fast and inflationary pressures are mounting, with the latest numbers exceeding 5%".
A member of the executive board of the European Central Bank (ECB) has pointed to Slovenia as an example of a country which has failed to properly prepare for the challenges of real convergence in the eurozone, Slovene Press Agency reports.
Lorenzo Bini Smaghi said that Slovenia's fiscal policy is "too lax" to ensure macroeconomic stabilisation in the face of mounting inflation.
He said monetary policy was unable to solve this problem, while an overly lax fiscal policy was not the answer either, adding that Slovenia's situation is compounded by the unfinished deregulation of the product and labour markets and quick growth of wages.
"Wages are growing faster than productivity, in particular in the public sector. The risks of a boom-and-bust cycle are looming," he told the Conference on European Economic Integration 2007 hosted by the Austrian central bank, the Oesterreichische Nationalbank.
He said it was wrong for the Slovenian authorities to blame the euro for the country's current economic woes. "This is obviously not the right response, and it won't help the Slovenian people understand where the problems lie", he said.
Bini Smaghi added that whether Slovenia end up being more like Ireland than Portugal in the next few years depended entirely on its policies.
Slovenia's example demostrates that the Economic and Monetary Union should never be viewed as an automatic "recipe for economic success. Countries need to be well equipped in order to thrive in it", he said. ( Slovene Press Agency )