EU and Euro Zone Expansion Continues

On 01 January 2007 Slovenia became the first former communist country in Europe to adopt the euro as its currency. It is the first of the 10 new EU members that joined in 2004 to have met the economic requirements needed to adopt the single currency and becomes the 13th country in the euro zone.

On the same day, Bulgaria and Romania celebrated their first day as European Union citizens, 17 years after the fall of communism.

The Romanian president said EU entry was an "enormous chance for future generations", while Bulgaria's leader said it was a "heavenly moment".

The accession of Bulgaria and Romania means the EU now has 27 members and half a billion people - more than the USA with a population of around 300,000 but way less that India at 1.1 billion and China at 1.3 billion.

 

Country Comparisons

Country	Bulgaria	Romania	Slovenia	United Kingdom
Population*	7,385,367	22,303,552	2,010,347	60,609,153
GDP in USD*	71.67 billion	181.8 billion	43.27 billion	1.818 trillion

Country Profiles

Bulgaria, a former communist country, has experienced macroeconomic stability and strong growth since a major economic downturn in 1996 led to the fall of the then socialist government. As a result, the government became committed to economic reform and responsible fiscal planning. Minerals, including coal, copper, and zinc, play an important role in industry. In 1997, macroeconomic stability was reinforced by the imposition of a fixed exchange rate of the lev against the German D-mark - the currency is now fixed against the euro - and the negotiation of an IMF standby agreement.

Low inflation and steady progress on structural reforms improved the business environment; Bulgaria has averaged 4% growth since 2000 and has begun to attract significant amounts of foreign direct investment. Corruption in the public administration, a weak judiciary, and the presence of organized crime remain the largest challenges for Bulgaria.

Romania began the transition from Communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. The country emerged in 2000 from a punishing three-year recession thanks to strong demand in EU export markets. Despite the global slowdown in 2001-02, strong domestic activity in construction, agriculture, and consumption have kept GDP growth above 4%. An IMF standby agreement, signed in 2001, has been accompanied by slow but palpable gains in privatization, deficit reduction, and the curbing of inflation. The IMF Board approved Romania's completion of the standby agreement in October 2003, the first time Romania has successfully concluded an IMF agreement since the 1989 revolution.

In July 2004, the executive board of the IMF approved a 24-month standby agreement for $367 million. IMF concerns about Romania's tax policy and budget deficit led to a breakdown of this agreement in 2005. In the past, the IMF has criticized the government's fiscal, wage, and monetary policies. Meanwhile, macroeconomic gains have only recently started to spur creation of a middle class and address Romania's widespread poverty, while corruption and red tape continue to handicap the business environment. Romanian government confidence in continuing disinflation was underscored by its currency revaluation in 2005, making 10,000 "old" lei equal 1 "new".

Slovenia, with its small transition economy and population of approximately two million, is a model of economic success and stability for its neighbors in the former Yugoslavia. The country, which joined the EU in 2004, has excellent infrastructure, a well-educated work force, and an excellent central location. It enjoys a GDP per capita substantially higher than any of the other transitioning economies of Central Europe. In March 2004, Slovenia became the first transition country to graduate from borrower status to donor partner at the World Bank.

Despite its economic success, Slovenia faces growing challenges. Much of the economy remains in state hands and foreign direct investment (FDI) in Slovenia is one of the lowest in the EU on a per capita basis. Taxes are relatively high, the labor market is often seen as inflexible, and legacy industries are losing sales to more competitive firms in China, India, and elsewhere. The current center-right government, elected in October 2004, has pledged to accelerate privatization of a number of large state holdings and is interested in increasing FDI in Slovenia. In late 2005, the government's new Committee for Economic Reforms was elevated to cabinet-level status. The Committee's program includes plans for lowering the tax burden, privatizing state-controlled firms, improving the flexibility of the labor market, and increasing the government's efficiency.

* Population figures 2005 estimate. GDP (purchasing power parity) 2005 estimate.

Country profiles coutest of The World Factbook.