performance they have achieved. as a result, slovenia has made significant progress in nominal and real convergence over recent years, owing to a successful policy - mix, in particular well - managed monetary and exchange rate policies, sound fiscal policy and a range of structural reforms. inflation came down from 8. 9 % in 2001 to 2. 5 % in 2006. accordingly, both short - term and long - term interest rates fell considerably and are now in line with the euro area average. while the short - term interest rate differential vis - a - vis the euro area persisted until recently, reflecting the monetary policy strategy pursued by banka slovenije, long - term interest rates approached levels close to the euro area already in 2004, reflecting market confidence in general economic and fiscal developments in slovenia and the credibility of the monetary and exchange rate policy. the process of nominal convergence has been accompanied by robust economic growth. real gdp growth in slovenia has been well above the euro area in the recent years. growth has been underpinned by domestic demand as well as strong exports, which reflects the increased integration of slovenia with the eu and the euro area. in this respect, foreign direct investment ( fdi ) has also been an important factor. nevertheless, we should bear in mind that slovenia has a good opportunity to catch up further with the euro area average income. slovenia ’ s gdp per capita ( in ppp terms ) progressed from 60 % of the euro area average in 1995 to 76 % in 2005 : this is a significant improvement, which also still gives room for catching up towards the eu average. high economic growth and advances in income per capita levels clearly indicate the progress made in real convergence. indeed, nominal and real convergence are interdependent processes and nominal convergence provides the necessary environment for lasting real convergence. at the same time, real convergence also requires continued efforts to remove rigidities in the labour and goods markets, as well as continued efforts to reform the financial system. it is remarkable that slovenia has achieved its progress in nominal and real convergence without experiencing major imbalances ; in particular the slovenian current account balance has remained contained over quite a long period of time. the fiscal balance ( the deficit - to - gdp ratio ) has been on a broadly improving trend since 2000 ( even though further consolidation is required for slovenia to comply with the medium - term objective quantified in the convergence programme ). looking at the financial side, slovenia is experiencing a substantial process of financial deepening, which has been reflected

certain parts of the economy, especially in the services sector. this was dealt with by the slovene authorities and consumer associations, by means of the long dual pricing period and price monitoring teams, to name a few. let me stress that the citizens of slovenia play a very important role here : the consumers in a market economy have a major influence on price formation. consumers will be a major force in preventing any unjustified price increases. ladies and gentlemen, let me again congratulate to all the achievements of the process of euro adoption in slovenia and give my warm welcome to the new member in the family of the eurosystem. bravo, slovenija!