Budget deficits at a record low and controlled inflation mean that Slovakia is likely to be ready to adopt the euro by 2009, Prime Minister Robert Fico told members of the European Parliament.
Slovakia should meet all the criteria necessary for joining the eurozone in 2009, including a tame budget deficit, low inflation levels, stable exchange rates and low interest rates, Prime Minister Robert Fico told MEPs on 3 December, after presenting Slovakia’s convergence plan to EU Economic and Monetary Affairs Commissioner Joaquín Almunia.
He said he expected Slovakia’s budget deficit to stand at around 2.5% of GDP for 2007 – far lower than the 3% cap set by the EU – and that the plan is to leverage the country’s high economic growth levels in order to further cut the fiscal deficit to just 0.8% of GDP in 2010.
“We’re taking all necessary measures to be ready on 1st January 2009,” he said, although he added that inflation could be a sticking point for winning approval from the Commission, the European Central Bank and other eurozone governments.
“It is the main issue for the European Commission – whether we are able to keep inflation under control […] There are some not very good examples with Slovenia,” he said.
When Slovenia – the only eastern European country to have joined the euro so far – switched over to the single currency in 2007, it saw consumer prices jump much higher than expected.
While Slovakia has kept its inflation lower than the EU requirement of 2% for the past three months, it will have to prove that it can keep this going when its application to the euro is assessed in March. “What we are discussing is the issue of sustainability of inflation, whether Slovakia can guarantee that after it introduces the euro, fiscal discipline will be maintained,” Fico said.
According to the prime minister, Slovakia’s determination to attain the so-called Maastricht criteria for economic stability will not “collide” with policy measures for social cohesion.
“We will not sacrifice the citizens of Slovakia for the euro […] We want strong social programmes, with investment in education, healthcare and infrastructure, but our commitment is that this will not collide with the consolidation of our public finances,” he said, although he admitted that: “It is a devil’s plan to combine all of these.”
Despite economic growth levels of over 9%, Slovakia continues to suffer from the highest unemployment rate in the bloc (11.2% compared to an average of 7.0% for the 27 EU member states), according to figures published by the EU’s statistical body on 3 December.