Scope Ratings reviews its ratings either yearly, or every six months in the case of sovereigns, sub-sovereigns and supranational organisations. Monitoring reviews are unrelated to the calendar that outlines public finance rating actions.

Scope performs monitoring reviews to determine whether outstanding ratings remains proportionate. Monitoring reviews are conducted either by performing a portfolio review in terms of the applicable methodology/ies, latest developments, and the rated entity’s financial and operational aspects relative to similarly rated peers; or through targeted reviews on an individual credit. Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for Slovenia (A/Stable; S-1/Stable) on 6 September 2021. This monitoring note does not constitute a rating action nor does it indicate the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated rating history can be found on www.scoperatings.com.

Key rating factors

Slovenia’s long-term ratings at A are underpinned by the following credit strengths: i) stable debt dynamics and a prudent fiscal framework, backed by a track record of sustained fiscal discipline with budgetary surpluses pre-Covid-19 crisis, a substantial cash buffer supporting financing flexibility and gradual reduction of contingent liabilities from the financial sector; and ii) structural improvements in potential growth through gradual reforms of the labour market and the financial sector. Challenges relate to i) a high public debt burden; ii) the strong presence of state-owned enterprises, weighing on the country’s productivity and long-term macroeconomic sustainability; and iii) adverse demographics in the form of a rapidly aging population which places structural pressure on pension expenditures.

The Stable Outlook reflects Scope’s view that risks to the ratings are balanced over the next 12 to 18 months.

The rating/Outlook could be upgraded if, individually or collectively, Slovenia’s: i) medium-term growth prospects notably improve, supported by structural reforms; and/or ii) public debt returns to a firm downward path, supported by fiscal consolidation, along with reduced risks to long-term fiscal sustainability related to the country’s aging population.
Conversely, the rating/Outlook could be downgraded if, individually or collectively, Slovenia’s: i) medium-term growth prospects notably deteriorate; and/or ii) debt sustainability materially weakens due to protracted fiscal deterioration.

For the updated scorecards accompanying this review, click here.

The methodology applicable for the reviewed rating(s) and/or rating Outlook(s) (Sovereign Ratings, 9 October 2020) is available on https://www.scoperatings.com/#!methodology/list.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Jakob Suwalski, Director.

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