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Slovakia will meet euro criteria

Interview

Slovak Prime Minister Robert Fico told MEPs from the Economics Committee on Monday that his country would meet the criteria for adopting the euro with effect from January 2009.

He said this would not require his government to curtail its public spending plans. The meeting also heard from Slovakia’s Finance Minister and central bank Governor. Fico said, „We should meet all the Maastricht criteria. Our budget deficit will be 2.5% for 2007, inflation will be around 1.9” in March, and should stay low after euro accession. We have been in the ERM II [Exchange Rate Mechanism] for two years, our national debt is at half the reference value. Long term interest rates are fully converged with euro zone levels.”

He added: „I can guarantee that our policy measures for social cohesion will not collide with our commitments on economic stability (…) We want strong social programs, with investment in education, healthcare and infrastructure, but our commitment is that this will not collide with the consolidation of our public finances (…) Slovakia joining the euro will be the best signal to other countries in the region that responsible macro-economic policies pay off.” Fico also said he welcomed the proposal from Economics Committee Chair Pervenche Berès (PES, FR) to have a monitoring mechanism for the prices of a dozen basic consumer items, to avoid real or perceived inflation around the euro changeover.

Sustainability of economic plans
David Casa (EPP-ED, MT) and Zsolt László Becsey (EPP-ED, HU) both asked about the sustainability of the inflation rate, especially, added Becsey, given Fico’s desire for high growth and a major social programme. Fico said „It is a devil’s plan to combine all of these. We will not sacrifice the citizens of Slovakia for the euro. But our plan is realistic.” Finance Minister Ján Počiatek described plans to reduce the government deficit to 0.8” of GDP by 2010 as „quite tough, but achievable.”

Monetary policy before and after euro accession
Both Robert Goebbels (PES, LU) and Elisa Ferreira (PES, PT) asked about monetary policy. Ivan Šramko, Governor of the National Bank of Slovakia, confirmed to Goebbels that for an open economy like Slovakia trying to set interest rates substantially different from those of the ECB would not have much effect, as businesses and consumers could simply arrange their financing in euro. Answering Ms Ferreira, he noted that Slovakia’s key interest rate was only 25 basis points about the ECB’s - and they would be the same before adopting the euro, so „there will be no sudden boom and then bust effect”.

Flat taxes and information for citizens
Wolf Klinz (ALDE, DE) raised a different point, the „flat tax” adopted in Slovakia. Fico said his government had agreed to continue this policy until 2008-9 before assessing it, despite some changes to increase tax deductible items for people on lower incomes. „We have yet to draw our conclusions, but my view is that this is not a fair system. There are three parties in my government, if there were only one this policy might have changed, but I must respect the views of my partners.” Finally, Fico stressed to Zita Pleštinská (EPP-ED, SK) the efforts that would be made to communicate on the euro changeover, especially for vulnerable groups. Fico and his delegation were taking part in an informal meeting of MEPs from the Economic and Monetary Affairs Committee, arranged at his request. (EP Press)

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