The head of Slovenia's central bank, Bostjan Jazbec, has said it will consider asking for outside help if the country's funding costs stay high. His comments are likely to fuel speculation over whether Slovenia will be bailed out by the EU.
He also said Slovenia's GDP would shrink by 2.6 per cent this year, more than April's 1.9 per cent forecast. Slovenia's banks are largely state-owned and saddled with bad loans worth 22.5 per cent of its GDP.
Mr Jazbec said he would consider asking for aid if yields on Slovenia's bonds remained high. During a news conference, he said the country was doing everything it could to bring its funding costs down. "If that is not successful, then there is a possibility to ask for help within various programmes", he added.
Meanwhile, Slovenia's Prime Minister, Alenka Bratusek, has admitted to parliament the amount needed to rescue the banks is "completely unknown". But Ms Bratusek told STA, the state-owned news agency: "We are very intensely preparing measures that are needed, so as to avoid asking for help".
The results of the bank's stress-tests, out at the end of November, will indicate whether or not a bailout is needed.
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