This paper focuses on three elements of the transition from a (semi) comand system to a market system: initial microeconomic conditions, marketization and transformation process, macroeconomic stabilization. Substantial differences among the reforming countries and interwindness reforms with political factors, leads us to the opinion, that there is no unique economic theory, on how to construct the institutions that are central to the success of market economies. The author sets out some general considerations that provide a framework for reform in transition period.

The aggregate level of retail prices in Slovenia is much lower than in Austria. For the average of the sample in February 1992, it was 25% lower (calculated on basis of the official exchange rate) and 35% (resp.) lower (calculated on the basis of the market exchange rate). Also the purchasing power of the Slovene average net wage is much lower than the purchasing power of the average net wage in Austria. After 1987 it was constantly diminishing and in February 1992 reached only a good fifth of the Austrian one (21,2%). Disparities in retail prices in Slovenia have several reasons. The basic reasons are disparities in producer prices (which are due to the undervalued primary factors of production and to insufficient activation of factors of production of higher ranks), the system of turnover taxation and administrative price regulation.

The paper surveys Slovenian adjustment to the EU comparing its recent economic performance with key elements which are incorporated in Maastricht parameters: the focus is on price, monetary and exchange rate criterion. The reduction and control of inflation has been a key policy challenge facing Slovenia since indipendence. Unlike some transition countries, where price stabilization was supported with financial credits by IMF, the reduction of inflation (and inflation expectations) in Slovenia was achieved without shock programmes, anchors, Stand-by programmes, etc. Economic policy of disinflation was mainly the result of tight monetary policy accompained by price control of monopolies and public services. The transition from modest inflation to the level of inflation in EU requires however more sophisticated approach. To continue the desinflation process the policy makers have to change the strategy: besides monetary policy, income and fiscal policy must come into the play. The transformation of monetary sector represents the necessary condition for successful macroeconomic stabilization. In the light of EMU however, the purpose of monetary criteria is to prevent the premature membership of countries that are not yet fit for participation and, hence, might destabilize the EMU. The autor surveys here on two issues: compatibility of Slovene monetary sector with EMS demands, Slovene monetary policy in comparison with EMS standards. EMS poses several demands for member countries. The comparison discusses following: independence of central bank, exchange rate system, foreign exchange market, foreign exchange restrictions, intermediate target of monetary policy.