It may be an eye-opener for Malta in its early euro days but just 12 months after the introduction of the euro, Slovenia is experiencing record inflation levels.
Although this is not solely attributed to the currency changeover itself, as international food and oil prices have left their toll, Slovenia's Prime Minister Janez Jansa acknowledged on Monday that the changeover has contributed to inflation problems being encountered by his country.
"Let me be clear. I am not saying that our high level of inflation is due to the euro but it is a fact that the changeover has aggravated our position," he told The Times in Ljubljana following a briefing EU correspondents on Slovenia's EU presidency.
"We estimate the impact of the changeover on our inflation levels is twice the estimate of the European Commission. Although we tried to control the situation, unfortunately businesses have increased their prices," he admitted.
According to official statistics, Slovenia last month registered a 5.7 per cent annual inflation rate compared to December 2006 - the highest level in the eurozone. This situation has even prompted the European Commissioner for Economic and Monetary Policy, Joaquin Almunia, to issue a public warning to the country, considered as a model economy. He warned that an inflation rate higher than three per cent sends a bad signal to the countries joining the eurozone.
Although according to the Commission, only 0.3 per cent of inflation is to be attributed to the change from the tollar to the euro, the government's conservative estimates put euro-related inflation at 0.6 per cent at least.
"Our estimates are based on a full year while the Commission's assessment was made in April. We tried to control for some months but, as dual pricing stopped in July, many businesses increased their prices and rounded up the prices of many of their products and services. At that stage we were unable to control the situation and, basically, it is impossible to do so. This has led to boost our inflation levels substantially,' the Slovenian Prime Minister said.
"Unfortunately this is the price we had to pay for the benefits the euro is having on our country's economy," Mr Jansa said.
The Slovenian economy is, in fact, booming and this is also attributed to the euro.
In 2007, Slovenia registered the biggest economic growth in the EU - six per cent of GDP. Exports have increased by a staggering 17 per cent while investment, both foreign and domestic, is flowing.
The Minister of Finance, Andrej Bajuk, who will be visiting Malta this week to take part in the euro festivities on Saturday, said that in the long run the introduction of the euro in Slovenia will result in a very positive step forward for the country's economy.
"Through the euro we have adopted new rules in the economic game and we are already seeing many positive developments.
We are seeing our country prosper at a faster pace than before. In fact, we are very optimistic about our economic future." Asked whether he had any suggestions to make to Malta, Mr Bajuk said the authorities need to make sure that all economic operators abide by the rules. Malta had to make sure that the domestic market and real competition worked, he said.
Slovenia will be devoting much of its six-month stint at the helm of the EU to the ratification of the Lisbon Treaty and on giving a better European identity to the Western Balkans.
The Slovenian Prime Minister said that about 20 EU member states have already declared they intend to ratify the new treaty by the middle of the year, including Malta. In order to set an example, Slovenia will ratify the treaty by the end of this month.
Mr Jansa said his country will work towards achieving a better economic performance by the EU and has made the Lisbon Strategy one of its top priorities. Climate and energy issues will also be given a lot of importance over the next six months.
The first EU meeting under the Slovenian presidency took place in Ljubljana yesterday with an official discussion on the next six-month agenda between the Commission and the EU presidency. Commission President José Manuel Barroso could not attend as he is suffering from flu.