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UPDATE 2-Mramor set to return as Slovenian finance minister, new coalition taking shape

Thu 21st August, 2014 12:59pm
* Mramor faces tough task cutting budget deficit 
    * In his last stint as finance minister he raised taxes 
    * Coalition talks expected to be completed next week 
 (Adds details, background) 
    By Marja Novak 
    LJUBLJANA, Aug 21 (Reuters) - Slovenia's next ruling party 
picked former finance minister Dusan Mramor on Thursday to head 
the finance ministry in a new centre-left government that is due 
to be formed within weeks and aims to steer the euro zone member 
out of its economic crisis. 
    Mramor is a 60-year-old economics professor who presided 
over tax hikes in 2002-2004 as finance minister in a previous 
centre-left government. 
    He faces the tough task of cutting Slovenia's budget deficit 
to 3 percent of national output in 2015 from about 4.2 percent 
this year, under a plan agreed with the European Union after the 
tiny ex-Yugoslav republic narrowly avoided seeking an 
international bailout for its debt-laden banks late last year. 
    Prime Minister-designate Miro Cerar, whose newly-formed SMC 
party claimed a convincing win in a snap election in July, said 
late on Wednesday he would invite into his new government the 
Desus pensioners' party and the centre-left Social Democrats. 
    The three-party coalition would control 52 of parliament's 
90 seats, offering the prospect of political stability after 
five or six years of political and financial crisis. 
    Cerar's party issued a statement saying it believed Mramor, 
as finance minister, "will help significantly towards the 
consolidation of public finances and a gradual increase in the 
quality of life in Slovenia". 
    Analysts said they expected Mramor to forge ahead with 
privatisation as his best tool to reduce the budget deficit. 
    "His main task will be to cut the budget deficit to three 
percent next year, which will be very difficult," said Saso 
Stanovnik, chief economist at investment firm Alta Invest.  
    "I expect he will push forward with privatisation and will 
sell Telekom Slovenia as that would bring in a large sum."  
    Mramor could not immediately be reached for comment. 
    Cerar has come out against the sale of important strategic 
firms such as telecoms operator Telekom Slovenia  TLSG.LJ , 
airport Aerodrom Ljubljana  ARPO.LJ , port Luka Koper  LKPG.LJ  
and the railways. 
    But the sales of Telekom and Aerodrom are in their final 
stages and Cerar has said he will not stop them if doing so  
would risk hurting Slovenia's credibility with investors.  
    Both Desus and the Social Democrats are hostile to 
privatisation, a process that successive governments since 
independence in 1991 have ducked, leaving some 50 percent of the 
economy controlled by the state.  
    Slovenia's vital exports hit a wall with the onset of the 
global crisis, driving up bad loans. The previous government 
poured some 3.3 billion euros of state money into the teetering 
banks last December. 
    Cerar, a former law professor and adviser to the Slovenian 
parliament, won July's election just six weeks after entering 
politics as a fresh face untainted by the corruption scandals 
and crises that have dented support for the traditional parties. 
    President Borut Pahor nominated Cerar as prime minister on 
Tuesday and parliament is expected to confirm his nomination on 
Aug 25.  ID:nL5N0QP2CM   
    Cerar will have to nominate his cabinet in early September. 
    Speaking late on Wednesday, Cerar said his party had decided 
against inviting the centre-left party of outgoing Prime 
Minister Alenka Bratusek into the coalition, blaming her former 
party for causing a political crisis in the country. 
    Slovenia held its second early election in a row on July 13. 
The election was prompted by Bratusek's resignation as prime 
minister in May after she lost the battle for leadership of her 
Positive Slovenia party. Bratusek later quit the party. 
 (Editing by Gareth Jones) 
 ((; +386-8-205-6369; Reuters 
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