Republic of Slovenia; 2012 Article IV Consultation—Staff Report; Informational Annex; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the Republic of Slovenia.

Slovenia, among other euro area countries, experienced the largest economic contraction since 2008. The performance of Slovenian banks deteriorated markedly in recent years as a result of the unfavorable operating environment and weak governance. Despite some deleveraging, banks continued to depend heavily on wholesale funding from abroad. Slovenia’s rebalancing required relying on supply-side policies, in particular, the labor market. With the banking system under pressure and the corporate sector highly leveraged, the Executive Board recommended strengthening the regulatory and supervisory frameworks.