The European Commission and the European Central Bank gave Slovenia the green light today to become the 13th member of the euro zone in 2007 but said Lithuania's inflation was too high to join.
"Slovenia has achieved a high degree of sustainable economic convergence with the other member states and ... it fulfils the necessary conditions to adopt the euro," the Commission said.
Lithuania, on the other hand, is the first EU country to have its application turned down after its inflation rate was just too high to qualify and was expected to rise further.
The ECB also said Slovenia was well placed to adopt the currency but Lithuania was not.
Economic and Monetary Affairs Commissioner Joaquin Almunia hoped EU finance ministers would back Slovenia's entry on July 11th after talks among EU leaders and in the European Parliamnet.
He also said he had offered Lithuania advice on bringing its inflation down without damaging its strong economic growth in order to be able to join as soon as possible.
Vilnius should focus on tighter fiscal and wage policy and a better functioning market. "If nothing is done in the future, inflation will increase in Lithuania," Mr Almunia said.
EU officials say the criterion may be outdated but is still part of existing law and candidates must meet it. EU officials also fear leniency towards Lithuania could make it harder for them to make bigger Eastern Europe member states like Poland, Hungary and the Czech Republic abide by the rules.