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The Commission announced on Wednesday it would not institute proceedings for excessive economic imbalances against Slovenia for the time being. The country also received two additional years - until 2015 - to bring its budget deficit in line with EU rules.

The announcement was made as part of an assessment of commitments Slovenia submitted to the EU in the National Reform Programme and Stability Programme in early May.

But the positive assessment came with a call for quick action in fixing the ailing banking sector, helping the corporate sector reduce debt and taking additional measures for consolidation of public finances.

Along with the submitted commitments, decisive action in recent weeks was a prevailing factor in the Commission's decision to give Slovenia more time, European Economic and Monetary Affairs Commissioner Olli Rehn told the press in Brussels.

He added that recent constitutional changes introducing the fiscal rule and limiting referendums were also important.

The news from Brussels was welcomed by Slovenian officials, with Prime Minister Alenka Bratušek labelling it as proof that Slovenia can manage without international aid.

Echoing the sentiment in Brussels, Bratušek emphasised that the recent steps by the country were only the beginning, as Slovenia still must implement what it has pledged to the European Commission.

"It is time to roll up the sleeves and begin building our future," Bratušek said in assessing that the government's measures would help restart the economy and rebuild trust in a law-governed and equitable state.

In its assessment, the European Commission issued nine recommendations to the country for cleaning bank balance sheets, carrying out privatisation, promoting deleveraging of the corporate sector, boosting competitiveness and continuing consolidation of public finances.

While establishing that the country's request to have the deadline for reducing the budget deficit to below 3% of GDP extended for two years until 2015 is warranted, the commission also called for additional measures in fiscal consolidation.

To achieve these goals the Commission said that Slovenia would have to implement consolidation measures totalling 1% of GDP this year and 1.5% of GDP in each of the coming two years.

It also made a special mention of long-term sustainability and the related growth in age-related expenditure over the medium- and long-term, concluding that the country would have to make new adjustments to its pension and social security systems.

A new area targeted by the Commission in its assessment is the justice system, with Slovenia being called on to take measures for shortening court procedures and reducing backlog in civil and commercial matters, especially in enforcement proceedings.

But the focus in Brussels remains on Slovenia's ailing banking sector. As part of the recommendations, the Commission has called for an independent assessment of the situation at state-owned banks.

It emerged today that Slovenia had made additional commitments in this regard in a letter sent by Finance Minister Uroš Čufer to Rehn last week. The letter states readiness to work with the Commission in providing for bank asset quality reviews.

Rehn said that an important step was obtaining "firm and convincing" commitments on system-wide stress tests and asset quality reviews that will enable an effective transfer of impaired assets to the bad bank.

Čufer meanwhile assessed that the recommendations issued by the Commission were in line with Slovenia's expectations, reiterating that the government's immediate priority was to clean up bank balance sheets.

Other reactions in Slovenia to the assessment varied from business officials welcoming the recommendations on reforms to trade unions criticising what they see as pressure for Slovenia to continue on a strict path of austerity.

The parliamentary parties were concordant in agreeing that an extension from Brussels was good news while proceeding to bicker about which government - the current or the previous - deserved more credit for securing this.