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NBS: No cause for worry on euro introduction

NATIONAL Bank of Slovakia Governor Ivan Šramko expects that the new government that emerges from the June 17 general elections will continue preparations for introducing the euro in 2009 as scheduled, given the wide political consensus over the issue.

The governor said he has heard no significant reservations against euro adoption in parliament. Analysts fear, however, that if the left-wing Smer party comes to power, it may roll back some of the reforms implemented by the current right-wing Mikuláš Dzurinda government.

"Smer also highlights the importance of the Maastricht [economic criteria that countries have to meet before adopting the euro - ed. note]. Talk of delaying the adoption of the euro by one year also seems to be fading. I'm not worried that any substantial changes will occur after the elections," Šramko said.

It is important for the surging Slovak economy and the euro introduction that the new government declares continuity in consolidating public finances, reducing the deficit and achieving a balanced budget around the year 2010, the governor said.

"No problems will occur if the government follows the convergence programme and meets the Maastricht criteria. Problems will only arise if there are any divergences," Šramko said.

A public information campaign on the introduction of the euro should be ready by the end of this year. The conversion exchange rate of the Slovak crown and the euro might be known in mid-2008, when outlets might start setting dual prices in both currencies.

The governor stressed the need to maintain reasonable wage growth in line with labour productivity to prevent inflation from increasing. He said that citizens do not have to be concerned that the introduction of the euro will lead to economic stagnation or a growth in prices.

"Exchanging one currency for another is not a reason for a growth in prices. Price growth results from unhealthy wage growth that does not correspond with an increase in labour productivity," Šramko said.

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