Disclaimer

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Disclaimer

• The following materials have been prepared to
  provide preliminary information about the
  potential Euro denominated government bond issue
  involving the issuance and offering of securities
  (Transaction) by THE REPUBLIC OF SLOVENIA (the
  Issuer).
• These materials have been prepared and issued by
  THE REPUBLIC OF SLOVENIA to provide preliminary
  information about the Transaction to a limited
  number of sophisticated prospective investors, to
  assist them in determining whether they have an
  interest in the type of securities described
  herein. These materials are not intended as an
  offer to sell, or a solicitation with respect to
  any securities that may be issued by the Issuer.
  Any offer or solicitation with respect to any
  securities that may be issued by the Issuer, will
  be made only by means of an offering circular,
  which will be provided to prospective investors
  and will contain material information that is not
  set forth herein. In making a decision to invest
  in any securities of the Issuer, prospective
  investors should rely only on the offering
  circular for such securities and not on these
  materials, which contain preliminary information
  that is subject to change and that is not
  intended to be complete or to constitute all the
  information necessary to adequately evaluate the
  consequences of investing in such securities.
• These materials contain forward-looking
  information that is not purely historical in
  nature. Such information may include, among other
  things, projections, forecasts or estimates of
  cash flows, yield or returns, scenario analyses
  and proposed or expected portfolio composition.
  The forward-looking information contained herein
  is based upon certain assumptions about future
  events or conditions and is intended only to
  illustrate hypothetical results under those
  assumptions (not all of which will be specified
  herein). Actual events or conditions may not be
  consistent with, and may differ materially from,
  those assumed. In addition, not all relevant
  events or conditions may have been considered in
  developing such assumptions. Accordingly, actual
  results may vary and the variations may be
  material. Prospective investors should understand
  such assumptions and evaluate whether they are
  appropriate for their purposes.
• These materials and the information herein
  relating to THE REPUBLIC OF SLOVENIA is believed
  to be reliable. In particular the materials are
  based on information provided by THE REPUBLIC OF
  SLOVENIA or other public sources believed to be
  reliable and contains tables and other
  statistical analyses (the Statistical
  Information) prepared in reliance upon such
  information. The Statistical Information may be
  subject to rounding. Numerous assumptions were
  used in preparing the Statistical Information,
  which may or may not be reflected herein. No
  assurance can be given as to the Statistical
  Informations accuracy, appropriateness or
  completeness nor as to whether the Statistical
  Information and/or the assumptions upon which
  they are based reflect present market conditions
  or future market performance. Past performance is
  not indicative of future results. Any weighted
  average lives, yields and principal payment
  periods shown in the Statistical Information are
  based on prepayment assumptions, and changes in
  such prepayment assumptions may dramatically
  affect such weighted average lives, yields, and
  principal payment periods. Prepayments on the
  underlying assets may occur at rates slower or
  faster than the rates shown in the attached
  Statistical Information. The characteristics of
  the Securities may differ from those shown in the
  Statistical Information due to differences
  between the actual underlying assets and the
  hypothetical underlying assets used in preparing
  the Statistical Information.

2
Disclaimer

• These materials may not be reproduced or
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  are not intended for distribution to, or use by
  any person or entity in any jurisdiction where
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  Securities Act of 1933, as amended. In the United
  Kingdom, these materials have not been approved
  by an authorised person, as defined in the
  Financial Services and Markets Act 2000 for
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  available only to persons of a kind described in
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• A rating is not a recommendation to buy, sell or
  hold securities and may be subject to revision,
  suspension or withdrawal at any time by the
  assigning rating organisation. Similar ratings on
  different types of notes do not necessarily mean
  the same thing. The significance of each rating
  should be analysed independently from any other
  rating.

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Slovenia Solid fundamentals protect from the
international crisis

• August 2009

Ministry of Finance Republic of Slovenia
4
Table of Contents

• Country Overview
• Key Strengths
• Strong Economic Performance over the Past Years
• Policy response to global financial crisis and
  collapse of international trade
• Financing Program

5
Key Considerations

• Euro area member for over two years (joined
  January 1st, 2007)
• Stable macroeconomic environment with prudent
  fiscal policy track record and steady
  competitiveness position
• Low government debt
• Sound and well capitalized banking system with
  negligible exposure to toxic assets
• Lowest external liabilities in euro area
• Solid economic fundamentals and adequate policy
  response to crisis to mitigate the impact of
  crisis
• New government committed to stability and
  sustained reform

6
Country Overview
7
Slovenia two years member of the euro area

• Population of 2 million
• GDP per capita on a par with Greece, and much
  higher than most new EU members
• Track record of strong macroeconomic performance
• Average annual growth of 4.3 in past 10 years
  3.5 in 2008
• Stable multi-party democracy. New government
  since November 21st, 2008
• Joined the euro area in January 2007
• Held the EU presidency (first half 2008)
• Undergoing accession process to OECD

Austria
Hungary
Italy
Slovenia
Croatia
8
A strong sovereign credit in the euro zone
Peer credit ratings

• Double A credit rating (Aa2 / AA /AA) with stable
  outlook
• Well diversified and open economy
• Sustained real convergence
• Low public debt burden (22.8 of GDP in 2008)
• ECB eligibility for government paper
• Well recognised economic and political stability

Source Moody/ Fitch/ Standar Poors (August
18, 2009)
9
Also a strong credit in European Union
Source Standard Poors (August 18, 2009)
10
Strong Economic Performance over Past Years
11
High and sustained degree of real convergence
Source Eurostat
12
Growth lead by exports and investment
GDP growth () and Contribution to Growth
(percentage points)
Real GDP
Source Eurostat (1999-2007) IMF (2008-2009)
IMAD (2008-2009)
Source SORS
13
Slovenia has a highly diversified economy
Industry, agriculture and services value added,
2008

• Comparable to EUmember states
• Growth is driven by manufacturing and services
• Successful and growing tourism industry
• Small agricultural sector

Source SORS
14
Export driven economy

• High value-added exports More than two thirds of
  exports destined for EU
• 25.4 bn exports of goods and services in 2008
  68.5 of GDP

Geographic distribution, 2008
Exports of goods (2007)
Source SORS
Source SORS
15
Relatively good labour market performance
Source Eurostat
16
Competitiveness preserved and sustained
convergence
Productivity
Real effective exchange rate index (1999 100)

Source Institute of Macroeconomic Analysis
Source Eurostat
to EU levels
17
Maintaining market share in EU-15

• EU-15 total import share from Slovenia

Source SORS Eurostat external trade,
December 2007, Countries in Transition (WIIW),
2007 The Vienna Institute Monthly Reports,
2007 Foreign Trade Statistics (U.S. Census
Bureau), December 2007.Eurostat
18
Strong investment over the past years
Slovenia current account balance GDP
Current account balance GDP (2008)

Source Eurostat
Source Eurostat and IMAD
19
Good financial position and sound banking system

• Low external indebtedness of the economy
• Lowest household indebtedness in EMU (less than
  half of average) 20.3 of GDP in 2007
• Banking sector assets in GDP only one third of
  EMU average
• Banking systems cross-border indebtedness of
  about 43 of GDP
• Comfortable banking system capital adequacy of
  11.7 and Tier 1 of 10 (Dec. 2008)
• Short-term net creditor position of domestic
  banking system vis-a-vis euro area
• Banking systems external debt maturity profile
  is spread out (bulk 56 more than 2 years)
• Insignificant banks exposure to toxic assets

Source Statistical Office RS, Bank of Slovenia
World Bank National Central Banks, elaboration
by Institue of Macroeconomic Analysis
20
Banking system still to catch up
Source Bank of Slovenia Annual Report 2008 EU
banking structures Statistical Office RS,
Eurostat, elaboration by Institue of
Macroeconomic Analysis
21
Housing market High owner occupation rate and
low indebtedness
Source ECB
22
Policy response to global financial crisisand
collapse of international trade
23
Global financial crisis and collapse of trade
Source Eurostat
Source ECB
24
External openess strongly affecting growth and
investment
Source Eurostat
25
Strong economic correlation
and gradual stabilization
Source Eurostat
26
The downturn also reflected in inflation trends
Source Eurostat
27
Policy effort to reduce impact on labor market
Source Eurostat
28
Coordinated EU policy response to crisis
Source European Commission. Spring Economic
Forecast 2009, Ministry of Finance Slovenia
29
according to fiscal space
Source European Commission. Spring Economic
Forecast 2009, Ministry of Finance Slovenia
30
Fiscal Consolidation and policy response

• Gradual fiscal consolidation over the past years
• 2009 deficit reflects strong economic downturn on
  tax revenue (automatic stabilizers) and
  discretionary policy to offset the impact of the
  crisis
• Fiscal policy to reduce deficit below 3 of GDP
  over the next two years

-1,2
Source Eurostat, Ministry of Finance
31
Policy to safeguard jobs and economic potential

• Budgetary stimulus aims at limiting the impact of
  decline in external demand on productive capacity
  and jobs
• Three types of policy measures
• slowing down the impact of the crisis on
  enterprises
• enhancing enterprise financial liquidity and
  safeguarding existing jobs
• increasing expenditure in research and education
  to improve the growth potential of the economy
• Budgetary policy economic support package in 2009
  equivalent to 1.6 of GDP. Most of the measures
  of temporary nature
• Additional support to small and medium size
  enterprises in the form of borrowing guarantees
  up to 1.2 Bn.

32
Preventive measures to ensure functioning of
banking system until end 2010

• Full retail deposit guarantee
• Guarantees for banking borrowing (12 billion) up
  to 5 years, pricing according to EU/ECB
  guidelines.
• On-lending to banks, insurance, reinsurances,
  pension companies
• Capital injections
• Purchase of claims (Banks)
• 2-5 subject to relevant supervisory institutions
  endorsement

33
Recovery seems to be on the making
Source European Commission
the questions is its strength
34
Financing Program
35
Further government debt market integration

• Established issuer in the Euro debt market
• International structure of primary dealers with
  strong domestic institutions
• Abanka BNP Paribas Calyon Commerzbank
  Deutsche Bank Goldman Sachs HSBC JP Morgan
  Nova Ljubljanska Banka RBS Société Générale
  CIB UniCredit Banka Slovenija
• Newly issued bonds trading on major international
  trading platforms
• MTS Slovenia (www.mtsslovenia.com), Bloomberg
  (SLOREP Govt ltGOgt), TradeWeb, Bondvision
• Benchmark size issues to ensure liquidity
• minimum 1 bn
• MTS Slovenia established since March 2007
  (www.mtsslovenia.com)
• Currently 16 system participants (13
  international and 3 from Slovenia)
• 5 bonds on the system (http//www.mtsdata.com/cont
  ent/data/public/rsl/bulletin/, http//www.mtsdata.
  com/content/data/public/rsl/fixing/)
• Broaden investor base to increase integration of
  Slovenias signature in the Euro area

36
Strong Performance and Support
35
37
Strong relative performance in turbulent times
Source MTS.
38
The 2009 Borrowing Requirement

• The max. gross borrowing 6.0 Bn. EUR
• Purpose of borrowing
• Gross borrowing for 2009 central governmentas
  per June supplement of the budget 3.3 Bn. EUR
• Pre-financing of debt due for redemption in 2010
  and 2011 2.7 Bn. EUR
• Already executed borrowing
• Gross borrowing for 2009 central government 2.5
  Bn. EUR
• Pre-financing of debt 0.7 Bn. EUR
• Expected structure of borrowing at the end of
  2009
• Short term (end of the year) 0.8
  Bn. EUR
• Long term (3 bonds) up to 4.0 Bn. EUR
• Possibility of flexible execution of the program

39
Active debt management operations

• Reverse auctions
• 3rd Thursday in each month provided there is
  expression of interest from primary dealers
  (currently on hold)
• Mode
• Bond buy-back auctions
• Volumes of buy-backs
• 2007 710 mio EUR
• 2008 107 mio EUR
• 2009 program currently on hold

40
Favourable state budget debt portfolio
Stable debt service profile
Most debt denominated in local currency
Outstanding debt by type of currency (31.05.09)

• EUR 99.6
• USD 0.0
• Other 0.4

Source Ministry of Finance
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Contact details

• Republic of SloveniaMinistry of Finance
• Gonzalo CapriroloChief Economistgonzalo.caprirol
  o_at_mf-rs.siTel 386 1 369 6672
• Public Debt Management DepartmentBotjan
  PleecHead of Departmentbostjan.plesec_at_mf-rs.si
  Tel [phone]