The European Commission has said in its report that Slovenia is ready to adopt the euro on 1 January 2007
The European Commission has said in its report that Slovenia is ready to adopt the euro on 1 January 2007. The thumbs up paves the way for Slovenia to become the first among the countries that joined the EU in May 2004 to adopt the euro.
According to the Commission's convergence report for Slovenia, released in Strasbourg on Tuesday, 16 May, the country is in compliance with all the membership criteria, which is why it should be allowed to join the eurozone on 1 January 2007.
The positive assessment was upheld by the European Central Bank in a separate report on Slovenia's readiness for eurozone membership that it released in Frankfurt on Tuesday, 16 May.
The reports are the first in a series of steps leading to the confirmation of Slovenia's bid to join the eurozone.
EU leaders are now expected to vote on admitting Slovenia to the eurozone at their summit on 15 and 16 June. Moreover, EU finance ministers are expected to take a final vote on the legal basis for Slovenia's membership on 11 July.
"Slovenia meets all the convergence criteria - a result of stable policies and reforms," European Commissioner for Economic and Monetary Affairs Joaquin Almunia said.
"However, it is important to stress that Slovenia will not have completed all the work by introducing the euro. The euro has its benefits and responsibilities, foremost to retain stability of public finance," Almunia added.
Moreover, the commissioner stressed that Slovenia must now speed up "practical preparations to make the switch to the new currency smooth." In his opinion, this includes measures to prevent unwarranted price hikes.
In its report, the Commission concludes that Slovenia meets all Maastricht criteria for eurozone membership: its inflation is 2.3% (0.3 pp below requirements), while the general and total government deficits are well below what is prescribed.
Despite the overall positive assessment, Slovenia has been urged by the Commission to keep working on public finance sustainability - the pension system is seen as the biggest problem in this respect.
The Commission also concluded that Slovenia has not faced any great instability with currency, the tolar, which has fluctuated only slightly around the parity rate of SIT 239.64 for one euro. since Slovenia entered the ERM II mechanism in June 2004.
Moreover, it says that long-term interests rates, which stood at 3.8% in March, are well below the reference value of 5.9%, while it also finds that Slovenia has adopted all relevant legislation for the euro.
Meanwhile, the Commission included a number of recommendations in the report. Among others, it says that Slovenia should take steps to privatise its financial sector and calls on Slovenia to keep implementing regulations of the common market.
Source: Slovene Press Agency STA