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Reader feedback: Good or bad for Slovakia?

Re: Reader feedback: Just a media stunt, March 27 - April 02, 2006, Volume 12, Number 12

I don't know whether it is good for Slovakia or not, but since it is a forgone conclusion that the euro will be adopted, Slovaks in general should start being vigilant about their purchasing power. Be it Lidl, Tesco, or a government office, they all have a strategy for when the euro arrives. At the Dutch postal services, for example, the cost of a standard local letter was 65 guilder cents about half a year before euro introduction, which then increased to 85 guilder cents. After the euro, though, this 85 cents was converted perfectly in line with government and European Union policy to 39 euro cents. Rounding up to 40 euro cents would've been more logical, but the real conversion price was 38.57138 euro cents, which meant an immediate "conversion inflation" of more than 1 percent. In reality, over 6 years, this postal fee increased 3.3 percent p.a., but only 1.1 percent over the entire period between euro introduction and now (the stamp is still €0.39 today). Also, after euro introduction in Holland, various local taxes were scrapped and replaced with others that further impair comparison.

One could argue, like you do, that biting into this sour apple is necessary to attain such a 'strong' currency, but I doubt if the avarge Slovak is financially prepared to go through what the citizens of the first twelve countries have experienced.

Slovak municipalities have not as of yet introduced all sorts of fees that are common in the old EU countries, such as road taxes, an environment tax, etc. These taxes can be introduced after the euro, which means they won't go up when it's introduced.

But a good example of what could happen to prices can already be seen with canned catfood, which makes an interesting example because its contents are always the same and the product is generally too new to the average Slovak to be able to figure out how much it actually should cost. A home brand in the old EU 15 goes for around €0.25, but in Slovakia it yoyos between Sk11.3 (€0.30) and Sk17 (€0.455). Part of it comes from the old 15 and part from Czechia. Whether retail outlets agreed on a minimum price for this product or not, the fact remains that the Slovak consumer pays at least 20 percent more than his EU 15 counterparts (and his Czech neighbour for that matter).

What I mean to convey is that I foresee a lot of [financial] pain arriving along with the euro in Slovakia, with the government of the day denying any negatives and cheering the feat.

Oscar,
Radošovce

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