LJUBLJANA, Slovenia--Financially troubled Slovenia said Thursday it would raise taxes and sell state enterprises, including the country's main telecommunications company, its second-largest bank and an airline, as it scrambles to avoid an international bailout.

The former Yugoslav republic, once seen as one of Europe's greatest post-communist success stories, is struggling to turn around a contracting economy and shore up a banking system teetering under an enormous pile of bad loans.

A successful $3.5 billion government bond issue last week has helped relieve some of the immediate pressure on authorities in Ljubljana in the wake of the messy rescue of Cyprus, another country with problem banks, earlier this year.

But the costs of Slovenia's cleanup are expected to be far larger. And the European Union, worried about the country's trajectory, had insisted Ljubljana come up with the plan to improve government finances that was announced Thursday.

"In our deliberation about this plan, we were looking for a solution that will be good for everyone," Prime Minister Alenka Bratusek told reporters after a cabinet meeting Thursday.

The government said it would raise the upper value-added tax rate to 22% from 20%, and aim to sell about 15 state-owned companies, including Telekom Slovenije and Adria Airways. It didn't say how much money it expected to raise.

The EU said it would study the plans and issue recommendations by late May.

Slovenia, which largely shunned the privatization path followed by other former socialist states as they moved towards EU membership, has long resisted auctioning off what many here view as the nation's "family silver" to foreign investors.

But Finance Minister Uros Cufer said that would have to change. "If we want to remain a sovereign debt issuer, we need to take these actions," he said. He called for "a broader political consensus" among lawmakers in support of privatization.

If the country cannot raise money on financial markets, it would have little choice but to seek help from the EU and International Monetary Fund.

The officials said the new revenue would be used to strengthen the country's ailing banking sector, which is dominated by three state-owned lenders. Together they have about 7 billion euros in bad loans, equivalent to about 20% of Slovenia's annual economic output.

For now, the government said it had set aside plans for a special crisis tax on incomes, but said it could revive that idea if current steps fail to raise the needed revenue. Officials said they are still negotiating with public-sector employee unions about wage cuts for civil servants.

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