Economists uncertain about ability to meet euro criteria

ECONOMISTS are lukewarm on the likelihood of Slovakia's adopting the euro as planned on January 1, 2009.

The Institute for Economic and Social Reforms (INEKO) and the Club of Economic Analysts (KEA) think-tanks interviewed 20 analysts and economists in September, 10 of whom thought Slovakia would meet the original deadline, while the remaining 10 thought the opposite.

The experts also differed on the percentage likelihood that Slovakia would stick to the euro schedule. They estimated the probability at 52 percent on average, with estimates ranging from 10 to 80 percent.

The analysts believe that Slovakia will not meet the public finances deficit criterion. They forecast the deficit at 3.1 percent of GDP on average in the decisive year 2007, which is 0.1 percentage point over the allowed limit.

Estimates of the state budget deficit criterion ranged from 2.9 percent of GDP to 3.8 percent. The analysts expected average inflation in 2007 to be 2.8 percent, meaning Slovakia would just make the inflation criterion.

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