Slovenia is “facing a very demanding task” as it struggles to avoid becoming the fifth eurozone country to need a bail-out, José Manuel Barroso, the president of the European Commission, said this afternoon (9 April).

He was speaking after holding talks in Brussels with Alenka Bratušek, Slovenia’s prime minister, hours after the Organisation for Economic Co-operation and Development (OECD) warned that Slovenia was about to experience a “severe banking crisis” and a very deep recession.

Barroso said that Slovenia was not suffering from the same problems as seen in Cyprus’s banking sector and that there was “no indication” it needed a bail-out.

But he said the country needed “immediate, urgent measures to prevent a future crisis”. He added:  “We also need a rapid consolidation of public finances that will not create difficulties for sustainable economic growth.”

Earlier today the OECD warned that the situation in Slovenia’s banks was probably worse than previously thought, caused by “excessive risk taking, weak corporate governance of state-owned banks and insufficiently effective supervision tools”. Most of Slovenia’s banks are owned by the state.

Yves Leterme, the OECD’s deputy secretary, said that there was “no reason to anticipate an immediate need for a bail-out”, but that the country’s financial sector needed urgent repair.

The organisation said that, although the government was implementing economic reforms, the country’s fiscal position was “not yet sustainable”. It said that although an assessment last year estimated that bad loans in Slovenia’s banks totalled about €7 billion “capital needs are uncertain and could in fact be significantly higher.”