Slovenia achieves medium overall compliance with international standards and codes, with a score of 58.3 out of 100 in our Standards Compliance Index. Slovenia fares very well in the areas of macroeconomic fundamentals and financial supervision. However, it has a "no compliance" rating in insurance supervision, due to inadequate supervision and a failure to meet the revised insurance core principles. Slovenia's compliance in the area of market infrastructure is mixed, ranging from "compliance in progress" in anti-money laundering to "no compliance" in its insolvency framework, due to flaws in its insolvency law. Slovenia is working toward aligning its auditing and accounting practices with international standards, requires its payment systems to conform to international codes, and has a comprehensive corporate governance code, albeit with weak enforcement.

Macroeconomic Policy and Data Transparency

Slovenia has been a subscriber to the International Monetary Fund's (IMF) Special Data Dissemination Standard (SDDS) since August 1996, and has been meeting the SDDS specifications since July 2000. Its metadata are posted on the IMF's Dissemination Standards Bulletin Board (DSBB). The Statistical Office of the Republic of Slovenia (SORS) is the main producer of national statistics. In addition to linking and harmonizing the statistical system, its most important tasks are international co-operation, determination of methodological and classification standards, anticipation of users' needs, collection, processing and dissemination of data and taking care of their confidentiality. However, documentation on methodology and sources used in preparing exchange rate statistics is not clearly disseminated according to information provided on the IMF's DSBB. More »

Slovenia adopted the Euro in January 2007. Thus, its monetary policy is no longer governed by the Slovenian Central Bank. Rather, the Governing Council of the European Central Bank (ECB) determines Slovenian monetary policy, and the Eurosystem (consisting of the ECB and the central banks of the member states that have adopted the Euro) is responsible for its implementation. According to the International Monetary Fund (IMF), the Eurosystem and the ECB maintain high transparency standards and a commitment to openness. The ECB observes the IMF's codes and standards for monetary policy transparency and pursues an active policy of communication with the public. More »

In its 2002 Report on the Observance of Standards and Codes, the International Monetary Fund (IMF) assessed Slovenia as meeting the requirements of the fiscal transparency code in several important respects, although Slovenia has not yet adopted all the requirements of the code. Slovenian legislation and practice harmonizes with those of the member countries of the Organization for Economic Cooperation and Development (OECD) and the European Union (EU). Roles and responsibilities of the relevant institutions and different governmental levels are clearly specified, and the publication of information comports with international practices. The IMF deemed the budget preparation process and structure to be "quite advanced." The budget preparation process also includes the development of the macroeconomic framework. The independence of the Court of Audits and the Statistical Office is mandated by statute. More »

Institutional and market infrastructure

The results of various European Bank for Reconstruction and Development (EBRD) legal assessment projects suggest that insolvency law in Slovenia remains in need of serious legislative reforms to reach acceptable standards. As noted in the EBRD's 2004 Insolvency Sector Assessment, the insolvency law in Slovenia is missing many of the elements generally recognized in international insolvency standards and best practices as being critical to a well-functioning insolvency legal regime and was assigned an overall rating of 'Low compliance.' In a subsequent 2006 assessment of commercial laws in Slovenia, the EBRD noted that the insolvency system as a whole scored somewhat better results in the EBRD Legal Indicator Survey conducted in 2004. Whereas the assessment measured the extensiveness of the legislation, the Legal Indicator Survey measured the effectiveness of the system. The survey gave the system relatively high marks for efficiency, speed, and transparency/predictability in terms of both creditor and debtor initiated processes. The results of the survey, taken with the results of the assessment, seem to indicate that the system has developed some level of functionality despite the flawed insolvency law. More »

In 2004, the World Bank published a Report on the Observance of Standards and Codes (ROSC) on Accounting and Auditing in Slovenia which recommended, among other issues, that public interest entities adopt International Financial Reporting Standards (IFRSs). In line with the European Commission (EC) Regulation No 1606/2002, Slovenia requires IFRSs in the consolidated accounts of listed companies. Moreover, Slovenia opted to permit but not require listed companies to use IFRSs in their annual accounts. Slovenia also permits the use of IFRSs in the annual and consolidated accounts of all types of companies which decide to use IFRSs for at least five years. Further, banks and insurance companies are required to use IFRSs in their annual and consolidated accounts. All other companies apply Slovenian Accounting Standards (SASs). In its 2004 ROSC, however, the World Bank found some fundamental differences between SASs and IFRSs. In December 2005, Slovenia promulgated a revised set of SASs with effective date January 1, 2006. According to a 2006 presentation by Meta Duhovnik of the Slovenian Institute of Auditors (SIA), SASs are a simplified version of IFRSs suitable for the needs of the Small and Medium-size Enterprises (SMEs) and are basically in line with the Fourth EU Company Law Directive. SASs cover a wider scope of activities than IFRSs and also provide internal accounting guidelines. More »

In the 2004 World Bank Report on the Observance of Standards and Codes (ROSC), the corporate governance framework in Slovenia was found to be strong when assessed against the Organization for Economic Cooperation and Development (OECD) Principles of Corporate Governance. Slovenia's legislation complied with European Union (EU) Directives, and its corporate governance legal and regulatory framework was comparable to that of many EU member states. However, the 2004 ROSC identified several areas where changes to the laws would increase compliance with the OECD guidelines. Particularly, the enforcement of corporate governance rules remained a key challenge. The European Bank for Reconstruction and Development (EBRD), in its 2004 Corporate Governance Sector Assessment which assessed corporate governance related 'laws on the books' against the OECD Principles, confirmed the World Bank's findings and pointed to major weaknesses with respect to 'disclosure and transparency' and the 'role of stakeholders.' Overall, the EBRD assigned 'medium compliance' to Slovenia. The 2005 EBRD Legal Indicator Survey found Slovenia's legal framework to be relatively effective, but with some shortcomings, especially regarding the time needed to reach an executive judgment in case of an action for redress or disclosure. More »

On May 17, 2006, Directive 2006/43/EC of the European Parliament and the Council came into force requiring all statutory audits to be carried out on the basis of International Standards on Auditing (ISAs) as adopted by the European Commission (EC). European Union (EU) member states shall adopt and publish the provisions necessary to comply with this Directive before June 29, 2008. Member states may impose additional requirements relating to the statuary audits of annual and consolidated accounts for periods expiring on June 29, 2010. Effective from 2001, the Slovenian Auditing Act requires that all statutory auditors apply ISAs. In its 2004 Report on the Observance of Standards and Codes (ROSC) on Accounting and Auditing, the World Bank concludes that Slovenia complies with almost all provisions of the EU Directives and Recommendations on auditing and provides a solid environment for the implementation of ISAs. The Slovenian Institute of Auditors (SIA), which adopts and publishes accounting and auditing standards in Slovenia, is responsible for the translation of the ISAs and, according to its 2005 self-assessment, uses a translation process, which is in line with the requirements of the International Federation of Accountants' (IFAC). In a subsequent self-assessment published in 2007, the SIA points out, however, that the translation is a continuous process and that due to frequent changes of the standards, the SIA cannot avoid time lags. Slovenia applies the IFAC Code of Ethics for Professional Accountants. More »

In its 2005 report on Anti-Money Laundering and Combating the Financing of Terrorism in Slovenia, the European Committee on Crime Problems (CDPC) concludes that the 2002 Law on Prevention of Money Laundering largely complies with international standards and covers all relevant aspects with respect to organizations (financial institutions) and designated non-financial businesses and professions. Terrorist financing is a separate criminal offense in Slovenia, according to the CDPC report, and the provisions on terrorist financing in Slovenia meet the requirements of the 1999 United Nations Convention on the Suppression of Terrorist Financing. The report also states that the Office for Money Laundering Prevention, the Slovenian Financial Intelligence Unit (a constituent body within the Ministry of Finance) is operationally independent. It compiles comprehensive statistics from all relevant agencies and reports annually to the government on the performance of the Slovenian anti-money laundering system. More »

Although the International Monetary Fund in 2001 conducted a Financial System Stability Assessment (FSSA) of Slovenia's two major payment systems, the real time gross settlement (RTGS) system and the GIRO Clearing system, the Bank of Slovenia (Banka Slovenije, or BoS) in a 2003 Annual Report stated that as per a resolution adopted by the Governing Board of the BoS only the RTGS system is defined as a systemically important payment system (SIPS). Furthermore according to a 2006 Annual Report by the BoS, as of January 1, 2007, the RTGS system was discontinued owing to Slovenia's link up with TARGET 2 (the European Union payment system) and was replaced by the German RTGS system, RTGSplus. In its 2001 FSSA report, the IMF stated that Slovenia was fully/largely compliant with Principles 2, 4, 6, 8, 9 and 10. The 2003 Annual Report by the BoS notes that the RTGS system, the GIRO Clearing system and all other payment systems will have to comply with the Bank for International Settlement (BIS) Core Principles for Systemically Important Payment System (CPSIPS). However after the 2001 IMF FSSA there is little information as to Slovenia's compliance with the CPSIPS. More »

Financial Regulation and Supervision

The 2004 International Monetary Fund (IMF) update to the 2001 Financial System Stability Assessment (FSSA) found Slovenia to be compliant or largely compliant with 27 out of 30 Basel Core Principles for Effective Banking Supervision. The report further noted that banking supervision had improved in some areas and very few downgrades had been made relative to the 2001 FSSA. The IMF went on to state that prudential regulations and powers were strong and the supervisory process, overall, was effective. Nevertheless, some areas could still be improved. In its 2007 Article IV Consultation with Slovenia, the IMF concluded that steps have been taken to strengthen banking supervision, particularly by increasing cooperation and information sharing with foreign bank supervisors. However, the IMF suggested that supervisors more closely monitor credit risks and exposures to foreign markets. More »

According to the 2001 International Monetary Fund (IMF) Financial System Stability Assessment (FSSA), Slovenia largely implemented the Objectives and Principles of Effective Securities Regulation promulgated by the International Organization of Securities Commissions (IOSCO) and, at the time of the assessment, complied with 25 of the 30 IOSCO principles. Operational independence, powers, and oversight of self-regulatory organizations, arrangements for information sharing and cooperation and principles governing issuers, as well as secondary market arrangements were sound. However, the IMF assessment also revealed shortcomings, such as the absence of a graduated corrective action framework and the limited scope for the supervisor to enforce penalties. In a 2004 FSSA update, the IMF reiterated that securities market supervision had a high degree of compliance with the IOSCO principles and that the Slovenian authorities have undertaken reforms to address the remaining weaknesses identified in the IMF's 2001 assessment. Similarly, the European Bank for Restructuring and Development (EBRD), in its 2005 Securities Markets Legislation Assessment, found Slovenia to be in 'high compliance' with the IOSCO Objectives and Principles of Securities Regulation. More »

The International Monetary Fund's (IMF) 2001 Financial System Stability Assessment (FSSA) found Slovenia compliant in 11 of the 17 International Association of Insurance Supervisors Core Principles promulgated in 2000. In 2001, the oversight of insurance and pensions was in transition; a new independent supervisor was being established. This was the Insurance Supervisory Agency (ISA), which has an extensive regulatory mandate. In 2004, the IMF issued an FSSA update to compare Slovenia's insurance supervisory framework against the revised Insurance Core Principles (ICPs) based on a more demanding methodology that had been promulgated in 2003. In the update, Slovenia's rating was downgraded in a number of areas. The insurance sector was found to lack transparency and the ISA was judged to have limited independence. The IMF recommended strengthening ISA's autonomy, both administratively and budgetarily, from the government, giving supervisors protection from legal action, and enhancing the technical skills of the staff. The IMF was also concerned about the unclear responsibilities for the supervision of the pensions sector carried out by the securities market supervisor and the ISA. More »

Legend:

Credit Ratings

Moody's Aa2/Positive

Fitch AA/Stable

Standard & Poor's AA/Stable

Macroeconomic Data

2007 GDP (Current Prices): 46.1 billion USD (IMF)

2007 GDP (Per Capita): 22,933 USD (IMF)

2008 GDP (Growth Forecast): 4.1% (IMF)

2008 Inflation (CPI): 3.9% (IMF)

2007 Unemployment: 4.6% (CIA)

2006 Foreign Direct Investment

FDI (Inward): 0.4 billion USD (UNCTAD)

FDI (Outward): 0.7 billion USD (UNCTAD)

2006 Official Development Assistance

ODA (Received): N/A million USD (OECD)

ODA (Disbursed): N/A million USD (OECD)