Slovenian Premier Alenka Brausek Loses Party Leadership

By Leos Rousek 

Slovenia's first female prime minister lost the leadership of her center-left party on Saturday after a year in office, raising the prospect of early elections in this small euro-zone country in the midst of a bank-rescue process.

Premier Alenka Bratusek failed to win a vote to run the Positive Slovenia party after a challenge by a party founder and Ljubljana Mayor Zoran Jankovic. The party's three coalition partners have threatened to quit the government if Mr. Jankovic takes over the ruling party.

"Without the support of my party, I can no longer be the head of government," Ms. Bratusek said during the party's congress, adding that without running her own party she will lack "equal footing" with her coalition partners.

Mr. Jankovic, a millionaire who derives his wealth from a chain of grocery stores, founded the Positive Slovenia party in 2011. It went on to win parliamentary elections that year.

But Mr. Jankovic failed to find coalition partners to get a majority in the legislature. He stepped down as party leader in early 2013 amid corruption allegations that he has denied. He picked Ms. Bratusek as his successor last year, which allowed the party to form the current governing coalition.

Slovenia, once a model economic reformer among former Communist countries in Central Europe, was hit hard by the financial crisis in 2008 and the subsequent euro-zone debt crisis.

Last year, the small former Yugoslav republic of two million people narrowly dodged an international bailout after Ms. Bratusek's government injected $4.4 billion to fix the banking sector, dominated by three state-owned lenders. The government is seeking to slash its budget deficit to 4.2% of gross domestic product this year, in line with demands by the European Commission, after the bank-sector bailout pushed the figure to nearly 15% last year.

After the party leadership vote, Mr. Jankovic urged Ms. Bratusek to stay on as prime minister, but other coalition members are likely to push for an election to be held this year, about 12 months ahead of schedule.

According the Slovenian news agency STA, Ms. Bratusek is likely to hold talks on the future of her cabinet on Tuesday.

"Early elections appear likely which will complicate the reform agenda," said Timothy Ash, a London-based analyst at Standard Bank Group Ltd.

Last year, Ms. Bratusek's government slated 15 state-owned companies--including the country's No. 2 bank in asset terms, Nova KBM, and telecommunications company Telekom Slovenije--for privatization. The process has been slow and the country still hasn't sold its major firms, with about half of the economy in state hands.

However, the country has succeeded to raise sufficient financing of its budget needs through early 2015.

"The plus is that the [Finance Ministry] has used the past year or so to get ahead of the curve by significantly pre-financing itself," Mr. Ash said.

Write to Leos Rousek at [e-mail]

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