By František Mučka
Slovakia will not introduce the euro in 2009 largely because of the country's insatiable energy monopolies. Given the government's current rhetoric, this will likely be its explanation when it is forced to delay the date of entry to the eurozone. It will be an argument that the average voter can understand - if energy prices had not grown so quickly, the euro goal would have been a sure thing.
The tendency of producers and distributors of energy to maximize profits should not surprise anyone. That is, after all, why they paid billions to get access to Slovak consumers. Pragmatism should also reign on the other side.
However, if Slovakia does not adopt the euro in 2009 because inflation is too high, it will not be the fault of the energy companies. Helping the country adopt the euro is not in their business profiles. Instead, it is in the profiles of politicians who form the government, and they may not even succeed in keeping the deficit under three percent of GDP. They have left the fight against inflation to the central bank, which can only try and keep a rein on those consumer items over which it has some influence. In its regular reports we can read the bank's frustration and sense of powerless between the lines.
The most effective tool the bank has to control inflation is not interest rates, but continuous warnings to the government to practice sensible fiscal policy. So far, it looks like no one is listening.
2. Oct 2006 at 0:00