In the past, Slovenia fulfilled all European stability criteria and was the first state from former communist Eastern Europe to adopt the euro. But now Slovenia is facing the prospect of default.
In recent weeks, Slovenia has been under discussion as the next candidate for the European bailout scheme. The country’s government, which is headed by a five-party coalition, has been unable to agree on austerity measures. As the crisis has demonstrated, Slovenia is particularly vulnerable because much of the economy - including major financial institutions - remains in state hands. Slovenia is now struggling with the after-effects of a collapsed real estate boom and the massive debt accumulated by its largest banks.