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Slovakia meets euro criterion

ACCORDING to Slovakia's central bank (NBS), the country is the first among new EU member countries to fulfil one of the Maastricht criteria for adopting the euro: the long-term interest rate. Slovakia's June 2005 long-term interest figure was 4.3 percent, while its reference value is 5.9 percent.

Analysis released on August 15 indicates that Slovakia's 2004 state budget deficit was 3.3 percent of the gross domestic product (GDP), which is above the 3-percent requirement in the fiscal criteria. Slovakia's 2004 public debt showed 43 percent of GDP, which was below its reference value (60 percent). In order to meet the fiscal criterion for the euro, both the height of the public debt and the state budget deficit must be fulfilled.

Inflation rate belongs among another necessary criterion for adopting the euro. Its annual average should not exceed 2.3 percent. Slovakia's inflation rate reached 4.5 percent in June 2005. However, according to the NBS analysts, the inflation rate in June itself was 2.5 percent year-on-year. Therefore, NBS experts predict a fall of its annual average in the near future.

The nominal exchange rate of the Slovak currency is among the last Maastricht criteria that Slovakia must fulfil.

NBS analysts predict Slovakia will fulfil all of the Maastricht criteria in 2007. "Slovakia will able to adopt the euro starting on January 1, 2009, in line with the Actualization of the Strategy on Adopting the Euro," NBS experts said.

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