Malta and Cyprus have fulfilled the criteria for entry into the Euro zone, with both candidate countries ready for inclusion on January 1th 2008, the European Central Bank and the European Commission said on Wednesday.
Inflation was low and currencies stable in Malta and Cypress, the two institutions noted in a report issued in Brussels and Frankfurt. The ECB said high levels of debt in the to countries needed to be reduced. Further job market reforms and a consolidation of public spending were also needed. European Union ministers of finance and the European leader were still to confirm the recommendations. Once included in the Eurozone, Malta and Cypress would become its 14th and 15th member countries. Meanwhile, the European Commission also said Wednesday that it had recommended the abrogation of excessive deficit procedure for Germany, Greece and Malta. All three countries have brought their budget deficits to below 3%. In the case of Germany, the commission said it had considered that the country's excessive deficit had been corrected in a credible and sustainable way. Germany's deficit fell from 3.2% of GDP in 2005 to 1.7% in 2006, with a further decline to 0.6% of GDP predicted for this year.
Euro adoption is dependent on the respect of the economic and legal criteria spelt out in the Treaty. The Commission does not endorse national target dates for euro adoption or pronounce itself on their credibility. That being said, Slovakia, whose currency joined ERM II in November 2005, aims at adopting the euro in 2009. The Baltic countries have had to revise their initial euro adoption targets in view of high inflation, in a context of strong growth and overheating pressures. Although new dates have been mentioned, none of them has yet formally announced a new target date. The Czech Republic, Poland and Hungary are giving themselves more time to move towards sustainable convergence. They are forecast to maintain budget deficits above 3% of GDP at least until 2008, according to the Commission's spring forecasts, and they are not yet participating in ERM II. Romania and Bulgaria joined the EU only in 2007. The first regular assessment of convergence in these two countries will be undertaken in 2008. (monstersandcritics.com abhaber.com)