Slovenia sacks its PM as bailout fears grow

The 90-seat parliament voted 55-33 to dismiss Janša's ruling coalition after just a year of trying to navigate through the ex-Yugoslav republic's worst economic and political crisis in 22 years of independence.

The baton passed to opposition Positive Slovenia leader Alenka Bratušek, who will become the country's first female prime minister if she manages to build a coalition around a platform to stabilise its finances and avoid going cap-in-hand to the European Union.

"Today marks a watershed moment for Slovenia," 42-year-old Bratušek told reporters after the vote.

The country of 2 million people joined the EU in 2004 and the eurozone in 2007.

With unemployment at a 14-year high and the banking sector strangled by bad loans, speculation is rife that without urgent reform Slovenia may soon be unable to find affordable financing and repay about €2 billion of outstanding debt due in mid-2013.

Parliament will probably vote on Bratušek's proposed cabinet in late March.

She has struck a deal with the Social Democrats and two of Janša's former allies to hand her the reins for 12 months, with an option to keep herself at the helm until an election due in 2015.

Spending cuts and allegations of government corruption have fuelled street protests of a kind not seen since Slovenia split from federal Yugoslavia in 1991 and escaped the bloodshed that would tear apart the rest of the region over the next decade.

The downturn in Europe ravaged its vital export market, while €7 billion in bad loans exposed a toxic mixing of politics and finance of the kind that has bedevilled banks across the continent.

Slovenia's €35 billion economy is estimated to have shrunk 2% last year and unemployment is more than 12%.

Growth and jobs

Addressing parliament before the vote, Bratušek came out strongly against more austerity, quoting Nobel economics laureate Joseph Stiglitz in likening it to "medieval medicine".

"You draw blood and, if the patient does not get better, you draw some more. Our priority is growth and employment, which creates wealth for everyone," she said.

"I state clearly – there will be no Greek scenario in Slovenia."

Janša, embroiled in a property scandal, had been gradually abandoned by his coalition partners since the turn of the year, further shaking market confidence that Slovenia can do what it takes to steady the ship. He denies any wrongdoing.