At the session, Prime Minister Janez Janša explained the draft Act in detail, pointing out that the second anti-corona package opens a two-billion credit line for business entities and individuals engaged in economic activity while addressing the problem of insufficient development funds at the level of local self-government, which is why it also increases the lump sums for the municipalities, which have played an extremely important role during the epidemic. In his address, the Prime Minister also pointed out that EU is still discussing how to ensure, through EU mechanisms, sufficient resources to mitigate the consequences of the epidemic in order to preserve the capacities of the EU economy: “It is now clear that so-called corona bonds, which the whole of the European Union would underwrite in solidarity, are out of the question. This is partly because it would require the unanimity of all EU Member States plus ratification by the parliaments of all the countries. There is no realistic possibility of this happening,” said the Prime Minister, continuing that a realistic possibility, besides the loosening of measures already announced by the European Commission, is a productive combination of the use of the next EU budget together with the reconstruction fund.  According to the Prime Minister, Slovenia supports such an approach, because it is a realistic possibility to arrive at working solutions without the lengthy procedures of harmonisation and ratification.

Below follows an unauthorised transcript of the Prime Minister’s address.

JANEZ JANŠA So, unlike the first anti-corona package, which the Government prepared relatively quickly in, I have to say, quite extraordinary circumstances, the act that is now before you, i.e. the Act on Providing Additional Liquidity to the Economy, along with the next act, i.e. the act amending the first anti-corona package, has been prepared with the participation of practically all the most important stakeholders and other persons who have been involved in the preparation of both legislative materials. The Government set up five working groups, who worked very intensively to identify what was missing in the first package as well as the key problems related to providing liquidity to Slovenia’s economy that need to be addressed as soon as possible.

In addition to what the Government has already presented at the session of the working body responsible, the Minister of Finance will later add certain emphases about the act on providing additional liquidity to Slovenia’s economy. Let me say that besides opening a two billion credit line for business entities and individuals engaged in economic activity, it also addresses the problem of under-funding and development funds at the local self-government level; that is, it also increases the lump sums for the municipalities, which have played an extremely important role during this epidemic. Many things that have made life as normal as possible despite all the restrictions resulted from the good functioning of local self-government, or the right decisions made at the municipal level. Let me again extend my heartfelt thanks to the mayors and all other people involved in this activity in circumstances never before encountered. The funds they will receive in the form of higher lump sums are not funds to eliminate the effects of the coronavirus; rather these are funds that municipalities need for a normal life, while efforts will be made to address all costs incurred by municipalities by the epidemic separately, within the given realistic options.

This act, this two-billion package in front of you, naturally raises the question of whether the amount is sufficient. Is it sufficient to keep Slovenia’s economy liquid also in these times or is it too little? Of course, nobody asks whether it is too much. The answer to this question is that it will, of course, suffice in the short run. In the short term, it is sufficient for Slovenia’s economy, and all individuals involved in business activity can get state guarantees here, with an exceptionally high level of guarantee, for all loans that they have taken out since March 13 or that they will take out by the end of the year to eliminate the effects of the epidemic or to alleviate these shocks, so that they do not resort to measures such as the closure of production that is still viable or the dismissal of employees; in short, to avoid measures that they would be forced to take in the short term but could cause very much damage already in the medium term.

Will it suffice in the medium and long term – well, nobody can answer this question at the moment. It primarily depends on the final estimates of the consequences of this epidemic, which nobody can make right now.

The estimates made at the last videoconference of the EU leaders were very diverse. Although everybody talks about a symmetric shock, Member States are in different situations, affected to a different degree. The estimates ranged from a 5% to a 15% decrease in the gross domestic product in Europe.

That is a ratio of one to three, while such prognoses usually differ by tenths of a percent of gross domestic product. And even with an estimate of from 5% to 15%, nobody could guarantee that this is final. So this is the first thing on which whether the credit line that is now in place or these guarantees are now high enough for the medium term depends.

Another matter on which the answer to this question depends is, of course, the question of how long the epidemic will last. No one has the answer to that question either.  World science is investing tremendous efforts in the development of medicines and vaccines. The information here varies greatly from very optimistic to very sceptical, with speculation that the virus might mutate and that every year or during every new outbreak, a new vaccine will have to be sought.  There is no single answer here. In short, the predictions vary a lot.

World science is making tremendous efforts to find solutions, but we know that all the world’s capacities combined were not enough to provide at least a timely warning about the spread of this virus from Wuhan, even though all the world’s televisions were broadcasting about what was going on there. The rest of the world indeed acted as if there never was a chance of this virus ever coming to us, and even a number of scientists were of such opinion. The World Health Organisation also made such predictions at the beginning. It is therefore necessary to maintain a certain healthy scepticism towards all these predictions, including those concerning medicines and vaccines, while maintaining the hope that we will manage to come up with an effective solution that will cut the epidemic off. As I said before, I cannot know that.

When we learn more about this, we will also be able to determine whether these guarantees are sufficient and whether 2 billion euros is the sum that will provide for the liquidity of Slovenian economy also in the medium term, not to mention the long-term measures. 

At the same time as these issues are being addressed, there is much talk about the so-called exit strategies from the epidemic. These have been the most popular words in the last two weeks. Judging from the exchange of experience with other European leaders through videoconferencing, I can say that there are a lot of predictions and modifications of predictions about this, a lot of predictions of things to come, and also a lot of changes and divergences of opinion. I don't know if anyone else has been following the divergences of opinion between the experts in France and the government’s announcement of the opening of schools in recent days. There are many arguments on both sides and also very different projections from individual countries, for example regarding schools – some countries have already announced that there will be no opening of schools until the autumn, at least in the sense of holding classes in classrooms, while some countries have opted for a combination of both systems. In recent days in Slovenia, experts within the Ministry of Health have prepared a recommendation on schools and education which will be published in the coming days.

At the moment, there is no uniform view of what the exit strategy is supposed to be at the level of the EU, not least because currently there are, for example, a significantly greater number of infected people in the neighbouring countries than at the beginning of the epidemic, which, of course, also influences the dilemma of whether to open up borders. The outbreak of infections in Trieste, so in our immediate neighbourhood, last week, is likely to postpone this development further into the future, even though the ministers of the interior are holding a videoconference right now to discuss how to at least partially loosen the measures applied to European borders for travellers.

In Europe, there is also an ongoing debate on how to provide sufficient resources through European mechanisms to mitigate the effects of the epidemic in order to preserve the capacities of the EU economy. It is now clear that so-called corona bonds, which the whole of the European Union would underwrite in solidarity, are out of the question. This is partly because such a step would require the unanimous approval of all EU Member States plus ratification by the parliaments of the countries. At the moment, there is no realistic chance of this happening. However, a realistic option, in addition to all the loosening of measures already announced by the European Commission, is a productive combination of the use of the next EU budget together with the reconstruction fund. Various figures are mentioned here. In particular Italy and other countries that have been the worst affected are in favour of a 1,500-billion  fund that would be partially financed through loans and partly through so-called helicopter money. In my opinion, not much of this sum will be provided for. The fund will be set up because this is a realistic option, as it is possible to combine the existing formal mechanisms and come up with at least some working solutions without having to enter into long coordination and ratification procedures, and that is why we also support it, because it is better that there are at least some developments in the present time than having to wait for two years before anything is set up at all. That is, we are in favour of solutions that are more realistic, although in our opinion they are also less adequate than the ideal ones.

Imagine, as an illustration, the dilemma that is currently faced by a large part of European politics, being simply a matter of whether, after we have overcome the epidemic, the European Union, after this shock that we are all calling a symmetric shock, in other words no government is to blame for it, unlike what happened, for example, when Greece was being rescued, and that we also need common answers; in short, if there are no such common answers, some EU countries, after the end of this epidemic, though Slovenia, thankfully, is not among them for the time being, will find themselves in a significantly worse economic situation, because they will have to borrow on much worse terms with their ratings falling and so on.

To put it quite trivially, in a few years’ time, this will mean that a member of the upper middle class from Germany or from Netherlands will be able to buy a villa in Tuscany for half the current price, though probably not in Piran, where prices are already, I would say, top-level real estate prices; but of course this is a banalisation by way of comparison – this is also about the price of companies, and, of course, natural resources, that is to say everything that is strategic in the end, and it was in order to avoid any more clashes and wars in Europe on this basis that the European Union was created in the first place, and it first emerged as a steel and coal union. That is to say, we are here at the very beginning and we can only hope that the political class in Europe will be capable of sober judgment.