It will try to sell state-owned Nova KBM this year. "The sale of Nova KBM is on the table," a government source told Reuters on Monday.

According an unconfirmed local media report, the government is also considering selling telecoms firm Telekom.

The country is racing to convince investors it has a credible strategy for raising the funds it needs to stay solvent, and is due to adopt an economic reform programme on Thursday before presenting it to the European Commission.

The Bank of Slovenia on Monday urged the government to speed up privatisations in sectors where "the market is more effective than state ownership" but gave no details.

Its banks, mostly state-owned, are nursing some 7 billion euros of bad loans, which would probably have to be separated off into a standalone entity before the sector could be privatised.

On Friday, EU Economic and Monetary Affairs Commissioner Olli Rehn said Slovenia would not need a bailout if it reacted quickly to bring down its budget deficit.

It raised $3.5 billion via a bond sale on Thursday, probably averting a bailout at least until April next year, when it will have to repay a 5-year, 1.5 billion euro bond.

It pressed ahead with the issue despite credit agency Moody's having cut its sovereign rating to 'junk' level days earlier.

The government would be likely to raise hundreds of millions by selling Telekom, which is 74 percent state-owned and has a market capitalisation of 624 million euros.

The loss-making NKBM, 80-percent owned by the state, has market capitalisation of 90 million euros. The government plans to transfer most bad loans from it and other banks to a newly established bad bank from June, helping to ease a credit crunch.

"Privatisation of several companies could this year bring up to 1 billion euros, which would significantly increase Slovenia's chances to avoid a bailout," said Borut Hocevar, an analyst at daily newspaper Finance.

The Bank of Slovenia also urged the government to help financially troubled companies that have good business prospects, adding that would in turn help the banks.

(Reporting by Marja Novak; editing by John Stonestreet)

By Marja Novak