* Government to present reform package Thursday
* Slovenia racing to avoid becoming latest bailout country
* Sees budget shortfall at 7.8 pct of GDP in 2013 (Adds quotes, analyst, details of package)
By Marja Novak
LJUBLJANA, May 8 (Reuters) - Slovenia's budget deficit will almost double to 7.8 percent of national output this year under a plan to help the euro zone country fend off a bailout, a government official said.
The official, who spoke on condition of anonymity, said the government package to be presented on Thursday would outline higher taxes and a privatisation drive to slash the shortfall in 2014.
But financial markets remain nervous that the coalition government will lean more on taxes than on the sell-off of state assets, which account for around 50 percent of the economy.
"In the working document, it says the deficit this year will be 7.8 percent, while it is expected to decline significantly over the following years," the source told Reuters.
The figure is higher than an earlier estimate by the European Commission of 5.3 percent of GDP.
The European Union is watching closely for signs of soft-pedalling on reforms after Slovenia, the most developed of the ex-Yugoslav economies, bought itself breathing space last week by issuing two bonds totalling $3.5 billion.
The government is trying to raise enough funds to stay solvent and heal three state-owned banks shackled with the lion's share of the sector's 7 billion euros ($9 billion) in bad loans, or one fifth of the Slovenian economy.
The jump in the budget deficit will come from an injection of some 900 million euros in fresh capital to the state-owned banks by the end of July. The government plans to transfer the bad loans to a newly established 'bad bank' to ease the credit crunch and open the door to privatise the banks.
Government sources and local media say Thursday's package will also call for the sale this year of Slovenia's second largest bank, Nova KBM, leading telecoms operator Telekom Slovenia and possibly three other companies that have yet to be named.
POPULAR ANGER OVER TAX HIKES
The government source said it would include a new progressive tax on wages for 18 months from in July, rising to 5 percent.
Also under consideration is a hike in value added tax next year from 20 percent to 22 percent, and a rise in real estate taxes. Small pension cuts and a 5-percent reduction in the public sector wage bill are also planned.
Analysts fear the government may rely more on tax revenues than on tackling state banks and companies that successive governments have shied away from selling.
The crisis in Slovenia's export-dependent economy has exposed rampant cronyism and corruption.
"Normally the International Monetary Fund and European Union do not like revenue-sided adjustments," said Timothy Ash, head of emerging markets research at Standard Bank.
"More important will be the ambition in terms of state asset sales, not just for the cash but in terms of changing ... a statist (economic) model that has largely failed," he said.
New taxes will also deepen resentment among workers and businesses wrestling with fresh recession since last year.
"These government plans are destroying ... the Slovenian workers, craftsmen, businessmen, farmers, those who have shouldered most of the cost of this crisis so far," opposition People's Party leader Franc Bogovic told reporters. ($1 = 0.7642 euros) (Editing by Matt Robinson and; Ruth Pitchford)
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