NEW YORK – In its annual report on Slovenia, Moody’s Investors Service says the country’s Aa3 rating and stable outlook reflect low debt levels, a record of prudent debt management, and advanced economic and financial integration with the European Union. «Continuing fiscal and monetary prudence combined with an acceleration of structural reform driven by European Union ascension merit a stable outlook,» said Moody’s Vice President Jonathan Schiffer. Integration into the European Union has significantly reduced the foreign-currency risk for Slovenia’s debt, but this risk will not be totally eliminated until 2007, when Slovenia plans to adopt the euro, according to Moody’s. Slovenia’s immediate fiscal challenges include absorption of additional financial commitments stemming from EU and NATO memberships, said Schiffer, as well as a necessary restructuring of mandatory budgetary expenditures and managing the government’s desire to raise expenditures in training and infrastructure. Slovenia’s recently instated rolling two-year budgeting procedure will help by preventing fiscal loosening at particular times during the political cycle, the analyst added. Additionally, Slovenia has implemented a stricter approach to healthcare costs and is taking measures to streamline the civil service and to lower payroll taxes in an effort to reduce its shadow economy.