Slovenia Advances 7 Places on Economic Freedom Index

Ljubljana, 05 January

Slovenia has gained seven places on the Index of Economic Freedom for 2006 to take 38th out of 157 countries surveyed by the Heritage Foundation, a Washington think tank, and the Wall Street Journal. Slovenia received mixed marks in the 10 surveyed categories for a combined rating of "mostly free".

The country's overall score on a 1 to 5 scale (one being the best) was 2.41, a touch better than the 2.64 received last year. The score puts Slovenia ahead of such European economic giants as France and Italy as well as ahead of fellow EU newcomers Poland, Hungary and Latvia.
Slovenia got its best scores in trade policy, government intervention, wages and prices, monetary policy, foreign investment, and regulation; in each category it got grades of 2.
The study found improvement in government intervention, with government consumption falling from 20.2% of GDP to 19.8% of GDP in the period surveyed; and monetary policy, as a result of a drop in the inflation rate.
Slovenia also got a better mark this year in foreign investment, with the study concluding that "Slovenia has opened most sectors to foreign investment". Nevertheless, it notes that there are still "practical impediments" to FDI inflow.
Of the ten categories studied, the country got its worst score in relation to fiscal burden of the government, where it was given 3.6. This is 0.2 points worse than the year before. The report concluded that Slovenia has very high income tax rates and moderate corporate tax rates.
The report also found a moderate level of restrictions in the banking sector, although the system is labelled as "sound", "well capitalised" and "well developed by Central European standards".
Furthermore, there is a moderate level of protection of property rights, with the main problem still being the fact that "the Slovenian court system is marred by inadequate staffing and slow procedural progress, and is in need of further reform".
The report concludes that "Slovenia must complete its privatisation process and continue to liberalise its monopolistic industrial base" if it wishes to maintain its economic edge.
Topping this year's index is Hong Kong, followed by Singapore and Ireland.

Slovenia Advances 7 Places on Economic Freedom Index

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