Slovenia on Track to Adopt Euro Currency

Slovenian Prime Minister Janez Jansa, center, Slovenian Finance Minister Andrej Bajuk, right, and the Governor of the Bank of Slovenia Mitja Gaspari, left, address to media in the Governmental Press room in Ljubljana, Slovenia, Tuesday, May, 16, 2006. The European Commission announced today in its report that Slovenia is ready to adopt the Euro on Jan. 1, 2007. The thumbs up pave the way for Slovenia to become the first among the countries that joined the EU in May 2004 to adopt the Euro. (AP Photo/Denis Sarkic) (Denis Sarkic - AP)

Reinoldijus Sarkinas, chairman of Lithuania's central bank, said the nation had done everything it could to join the euro zone in 2007, "but Brussels' decision was motivated by both economic and political reasons."

Slovenia, however, is on track to become the first new member to join the common currency if EU finance ministers approve its bid _ as is likely _ on July 11.

The EU's decision is "very good news," Slovene Prime Minister Janez Jansa told reporters in Ljubljana. "Slovenia will get a chance to become even stronger and make further positive (economic) steps," he said.

The country of 2 million, one of the most prosperous in southeast Europe, has an inflation rate below 3 percent and economic growth at about 4 percent.

Almunia warned that Slovenia now had to speed up crucial practical preparations to ensure a smooth changeover, including efforts to prevent unjustified price hikes.

Hoping and expecting a positive decision from the EU, Slovenia earlier this year started marking prices of goods and services in both Slovene tolar and euro.

The Central Bank also plans to distribute handy calculators to all households in the fall, to make it easier to Slovenes to calculate a price in euro once it's fully introduced.

Instant euro membership seems far more important for the EU's smaller members. Malta, Cyprus, Estonia and Latvia have set a 2008 target although Latvia may choose to delay this deadline to tackle its inflation _ the highest in the EU. Estonia has already postponed its bid to join the euro from 2007 to next year.

The larger Eastern European economies are ready to wait a little longer. Slovakia wants to join in 2009, followed by Czech Republic and Hungary _ if it manages to lower its massive public debt. Poland has not set a target date at all.

Morici said adopting the euro has bigger benefits for smaller countries. "I think small countries gain a lot more. They have higher costs of borrowing and it is easier to attract them," he said.

EU finance ministers said last month they were worried about differences across the euro zone as some economies _ Spain and Ireland _ overheat and others, such as Germany and Italy, struggle to grow at all.

They blamed the slow pace of labor, product and capital market reforms for these imbalances.

European countries decide their own level of spending and are reluctant to take any steps toward a bigger shared EU budget or common tax.

A wider euro area may pressure euro-skeptic nations to think again. Britain, Sweden and Denmark have so far chosen stay out of the common currency for political reasons.

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Associated Press Writer Liudas Dapkus in Vilnius, Lithuania, contributed to this report.