Euro zone: Slovenia in, Lithuania on hold

On account of its 2.63% March 2006 inflation, Lithuania has for now failed to qualify for the euro zone, while Slovenia is all set to adopt the euro in January 2007.

Lithuania meets all the criteria for the adoption of the common European currency, except for the one on inflation. The Baltic state’s latest inflation figure is only marginally higher than the 2.60% benchmark applied by the Commission and the European Central Bank to decide whether a country is fit to adopt the common European currency. 

According to Monetary Affairs Commissioner Joaquin Almunia, the criteria, laid down in the EU’s Stability and Growth Pact, are there to be rigorously enforced. He and other experts argue that Lithuania’s inflation figure for the whole of 2006 could easily climb to 3.5%, conceding that at the same time this Baltic state remains one of Europe’s fastest-growing economies.

On this basis, the Commission said that for now “there should be no change in [Lithuania’s] status as a member state with a derogation.”

Throughout 2005, Slovenia managed to keep its inflation at 2.3%, and overall the country “fulfils the necessary conditions to adopt the euro,” the Commission said. Accordingly, Slovenia is on track to euro zone membership on 1 January 2007.

The verdict by the Commission and the ECB must be confirmed by the EU’s finance ministers on 11 July.

Most of the rest of the EU-10 states are still far from meeting the stringent euro zone rules. To qualify for membership, a country must keep its inflation below 2.4%, the annual deficit must not exceed 3% of GDP, and total public debt must be below 60% of GDP.

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