Slovakia Will Adopt the Euro in 2009, Premier Says

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Slovak Prime Minister Robert Fico said the country expects to meet all the rules to adopt the euro in 2009 and warned the European Union to make the decision on economic and not political grounds, reported Bloomberg.

EU officials last year rejected Lithuania's bid to adopt the euro because inflation exceeded the ceiling by 0.1 percentage point and said they will be steadfast about holding to the limits. That raised eastern complaints that rules were bent for political reasons to let Belgium and Italy into the euro in 1999 with debts that exceeded the limit.

``Double standards are typical for Europe and it has always been hard for small countries,'' Fico, 43, said in an interview for foreign newswires in Bratislava, Slovakia, yesterday. ``We want to meet the criteria and we expect fair play.''

The eastern European country, which joined the EU in 2004, still needs to slow inflation to become the second post-communist country to adopt the common currency after Slovenia, which did so in January. The government abandoned some of its campaign pledges to meet the euro-adoption rules and expects the switch to take place as planned.

The Slovak koruna was trading at 33.755 to the euro at 10:08 a.m. in Bratislava, compared with 33.760 at yesterday's close.

To adopt the euro, candidates need to keep fiscal deficits below 3 percent of gross domestic product and debts to within 60 percent of GDP. They also need to hold inflation to within 1.5 percentage points of the average 12-month inflation rate of the three EU nations with the slowest price growth.

In July, that limit was 2.63 percent, while Slovakia's 12- month rate was 2.7 percent. The draft budget for next year calls for a deficit of 2.3 percent of GDP, down from this year's expected shortfall of 2.7 percent of GDP. The gap will further narrow by 0.5 percentage point of GDP each year, Fico said. Debts will total 31 percent of GDP at the end of the year.

At the same time, the government will continue increasing social spending and take other measures to help poorer citizens, Fico said. The minimum wage may be raised again while the government is considering a one-time increase in pensions for citizens with the lowest benefits, he said.

``Slovakia can't aim for capitalism `Made in the USA,' '' Fico said. The nations should seek to introduce a ``European welfare state.''

Still, the administration will continue reducing budget deficit and the proposed steps ``won't jeopardize financial discipline,'' Fico said.

The economy is set to expand at a record pace of 8.8 percent this year, up from 8.3 percent in 2006, according to statistics office forecast released yesterday.

Though the prime minister stopped short of plans to raise taxes, the government has boosted employee rights and took other measures that investors and economists said may harm competitiveness. The government seeks to adopt legislation that will increase the state influence over the economy.

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