Key developments and challenges

For many of the enterprises in which the state retains a controlling stake, the global economic crisis has underlined the need for better governance, far-reaching restructuring and eventual privatisation to make them viable given the strong competition from within and outside the European Union.

The banking sector has withstood the global crisis well with the support of the government, but guarantees will eventually need to be withdrawn. As a result the banking sector will need increased capital injections to build buffers for growing non-performing loans, strengthen bank balance sheets and ease lending conditions.

The economic crisis has led to a sharp rise in the public deficit and has highlighted the need for expenditure cuts in the health, social and pension sectors. It is crucial that the government implements its ambitious fiscal consolidation plan to put in place the conditions for a return to sustainable growth.