Slovenia to adopt Euro

From 1 January 2007

Brussels, 16 May 2006

Commission proposes Slovenia to adopt the euro in January 2007

The European Commission today concluded that Slovenia has achieved a high degree of sustainable economic convergence with the other Member States and that it fulfils the necessary conditions to adopt the euro. On the basis of its Convergence Report, the Commission is proposing to the Council that Slovenia adopts the euro on 1 January 2007. The final decision will be taken by EU finance ministers in July, after consultation of the European Parliament, and following a discussion by the Heads of State or Government at their summit in June.

“Slovenia meets all the convergence criteria, an achievement which results from a track record of stability-oriented policies and reforms and leads the Commission to propose that it adopts the euro in January 2007. As Slovenia is about to join the euro area, it is important to remember that the effort does not end with the adoption of the euro. The euro brings huge benefits but also important responsibilities in terms of preserving both the macroeconomic stability and a country’s competitiveness in a single monetary environment,” said Economic and Monetary Affairs Commissioner Joaquín Almunia. He added: Slovenia must also now speed up and finalise the crucial practical preparations to ensure a smooth changeover, including measures to avoid unjustified price increases.

Article 122(2) of the Treaty requires the Commission to assess the fulfilment of the conditions for full participation in the Economic and Monetary Union by Member States with a derogation1 at least every two years or at the request of a Member State. The report adopted today responds to a request for an assessment submitted by the Slovene authorities on 2 March to the Commission and the ECB. Lithuania made a similar request on 16 March (see press release IP/06/622 published today).

In its so-called Convergence Report, the Commission assesses whether Slovenia has achieved a high degree of sustainable convergence, measured against the criteria set out in Article 121(1) regarding the government budgetary position, price stability, exchange rate stability and convergence of long-term interest rates.

Compatibility of the legal framework with the Treaty is also examined. The ECB also issued a Convergence Report today as envisaged by the Treaty.

Results of the convergence examination

The Commission concludes that Slovenia has achieved a high degree of sustainable economic convergence as set out in the Treaty. The Commission is, therefore, proposing to the Council to abrogate the derogation of Slovenia as from 1 January 2007.

Notes:

(1) The ten countries that became members of the EU in May 2004 were given a de

rogation from adopting the euro as they were not yet meeting the necessary conditions.