Slovenia to adopt Euro in 2007
This summer, Slovenia drew closer to adopting the Euro. At midnight on June 27, Slovenia, along with Estonia and Lithuania, entered the exchange rate mechanism II, also known as the ERM II or "waiting room" for the Euro. After a two-year wait, countries in ERM II can adopt the euro - as long as nothing goes wrong in the meantime.
But while the circumstances allowed for an earlier entry, potential problems remain. As Samo Nucic, deputy governor of the Bank of Slovenia, explains:
"Of course, the most important, or number one issue, is inflation and the problems which are related also with the increase of oil prices. Of course this is going to affect the Slovene rate of inflation and we are aware of the fact that only with the foreign exchange rate policy can Slovenia fight against inflation."
The Slovenian tolar, now tied 239.64 against the Euro, has to remain in close range with the euro for the next two years. The Bank of Slovenia has warned that for this to happen, there cannot be "excessive demands" for wage increases. Slovenia and the Baltic states also had the advantage of already meeting the allowed limits for budget deficits. It's this requirement - i.e. keeping the budget deficit below 3 percent of gross domestic product - that is dogging the larger Central European economies and preventing other new EU states from adopting the Euro.
A recent Reuters poll of economists showed that they expected Lithuania, Estonia and Slovenia to join the Euro in 2007, followed by Latvia, Malta and Cyrpus in 2008. Slovakia is expected to join in 2009, and then in 2010 the large countries, Poland, Hungary and the Czech Republic, would join.
This still leaves plenty of time for surprises.
