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Last Updated: Friday, 16 June 2006, 10:22 GMT 11:22 UK
Slovenia clear to adopt the euro
Euro note
Slovenians are about to get their fourth currency in 15 years
European Union leaders have confirmed Slovenia's adoption of the euro, the first of the trade bloc's new members to take up the currency.

Slovenia is now clear to join the 12-member eurozone on 1 January 2007 and EU finance ministers are due to set the exchange rate next month.

Slovenia has met eurozone criteria for public debt, budget deficit, interest rates and inflation levels.

Slovenia was one of 10 new EU members that joined on 1 May, 2004.

Tough choices

At that time many of the new entrants set themselves ambitious timetables for the adoption of the single European currency.

However, since then many have had to abandon those plans as they have struggled to meet the tough entry criteria at the same time as they have been trying to boost the nation's standard of living and wage levels.

For many, including nations such as Hungary and Lithuania, the pressures of meeting the high expectations of voters who no longer wanted to scrape by on minimum wage-levels and wanted improved infrastructure proved too much.

Lithuania's application for euro membership was rejected because its inflation rate was too high, while Hungary has put back its date for entry after its budget deficit ballooned.

Economic boost

Slovenia has found it easier than some of its neighbours and the euro will be the country's fourth form of legal tender since splitting from Yugoslavia in 1991, when it dropped the dinar for a transitional currency before adopting the tolar.

If all goes to plan, EU finance ministers will fix the exchange rate between the euro and the tolar next month.

The Slovenian central bank would have to distribute 155 million euro coins and 42 million bank notes by 1 January, with just a two-week transition period during which the currency will circulate alongside the Slovene tolar.

The government hopes that euro membership will boost tourism and foreign investment in the small Alpine state of just under two million people.


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