The tolar, the Slovenian national currency, will be celebrating its 15th and last anniversary on Sunday. On 1 January 2007, Slovenia will abandon a currency which has been enjoying a very high level of trust among the citizens, to adopt the euro and become the first EU newcomer to join the eurozone.
Embarked on the journey of fiscal independence on 8 October 1991, when the newly independent government adopted resolutions declaring the tolar, divided into 100 stotins (cents), the sole legal tender.
Until the new notes and coins were ready, special vouchers served as a temporary solution and as an immediate replacement for the Yugoslav dinar. The first vouchers were issued on 9 October and replaced the dinar within three days at an exchange rate of 1:1.
The initial exchange rate was set at 32 tolars for one German mark and while the majority of foreign experts advocated a fixed exchange rate system as more appropriate for countries in transition, the government - pressed by a shortage of foreign reserve - adopted a floating system.
At the end of September 1992 Banka Slovenije, Slovenia's central bank, started to circulate the first new 100, 500 and 1,000 tolar notes, which were designed by Miljenko Licul and his team.
In January 1993 the notes were joined by coins, with Banka Slovenije gradually withdrawing the transitional vouchers from circulation. The note with the highest denomination, 10,000 tolars, was issued in 1995.
Despite the initial political and economic uncertainties, the credibility of the tolar was established fairly quickly and the currency went on to become one of the most trustworthy institutions in the country, according to public opinion polls.
Less than two months after it entered the EU on 1 May 2004, Slovenia - also bound by the Maastricht Treaty, which stipulated that newcomers are obliged to adopt the euro after meeting the convergence criteria - entered the ERM II exchange rate mechanism, setting as a goal to carry out the changeover to the euro in 2007.
Slovenia is the first new EU member which has succeeded in the pursuit of this goal. After the European Commission and the European Central bank on 16 May, 2006 assessed that Slovenia was meeting all the criteria, EU finance ministers on 11 July delivered the final step which paved the way for Slovenia becoming the 13th member of the eurozone.
Preparations for the changeover are now running at full steam. Slovenia has opted for the big-bang scenario where both currencies will be in circulation for only 14 days.
Until 1 March all banks will change tolars into euros free of charge; after this date the service will be commission-free only at the central bank. The tolar notes will eventually be destroyed and the coins sold as metal.
According to the latest survey published by Banka Slovenije, public knowledge about the euro is satisfactory. The people's main concern are possible unjustified price hikes and unfair rounding-off of prices. The problem has been tackled with dual pricing, which has been mandatory since 1 March and will last until July 2007.
The "historic step" however also presents Slovenia with new tasks. As the country is giving up the management of its fiscal and exchange rate policies, the focus will shift to budgetary discipline and to the commitments defined under the eurozone's Stability and Growth Pact.
Slovenia so far has not been having problems observing the provisions of the pact, with its budget deficit standing at 1.4% of GDP and its public deficit at 28.9% of GDP at the end of 2005. Both figures are well under the respective 3% and 60% ceilings.
But as Slovenia faces the need to increase the flexibility and competitiveness of its economy - without undermining the long term sustainability of public finances - the adoption of the euro is also bound to introduce new approaches to structural policies and reforms aimed at bolstering the economy and employment.
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