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Euro progress report

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  • Martin Votruba
    If things go according to the Slovak euro enthusiasts, the crown/koruna has less than two years to live -- to be replaced by the euro on Jan. 1, 2009. The
    Message 1 of 1 , Feb 7, 2007
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      If things go according to the Slovak euro enthusiasts, the
      crown/koruna has less than two years to live -- to be replaced by the
      euro on Jan. 1, 2009.

      The latest report says that Bratislava is meeting three of the five
      requirements: the government debt is about 33%, well under the 60%
      limit, and interest rates on long-term bonds are about 4.4%, well
      under the ca. 6.2% limit. The exchange-rate requirement is being met,
      but must be maintained longer in order to qualify.

      On the other hand, the government deficit is about 3.7% as opposed to
      the required 3% limit. Bratislava says the higher rate is due to the
      current social security/pension plan reforms.

      What may be hard to handle is inflation, currently at 4.3%. It is
      partly fueled by Slovakia's rapidly growing economy and purchasing
      power. Steps to reduce inflation might also interfere with the
      growth. The inflation ceiling, currently at 2.9%, is quite harsh --
      it is continually recalculated as only 1.5 points above the average
      inflation in the 3 euro zone countries (there are 13 of them) with the
      lowest inflation.

      Inflation was a reason why Estonia and Lithuania were turned down when
      they were planning to join the euro zone. Poland, the Czech R., and
      Hungary have put their euro aspirations on hold.


      Martin

      votruba "at" pitt "dot" edu
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