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Jan-01-2009Slovaks adopt euro(topic overview)
CONTENTS:
- Ten years after the original 11 countries in western Europe set up a common currency, the monetary union is due to enlarge to Slovakia, as its 16th member state and the first in central Europe to switch to the euro. (More...)
- As other countries in the region struggle, the Slovak administration is negotiating with six investors to spend at least 5 billion koruna ($237 million) each to build factories in Slovakia, Economy Minister Lubomir Jahnatek, 54, said on Dec. 16. (More...)
- Euro "starter packs" have already been distributed in Slovakia and a big campaign has been under way to familiarise the nation of 5.4 million with the new currency. (More...)
- Just hours before the switch, two robbers in capital Bratislava stole 2 million koruny (66,388 euros), police said. (More...)
- BRATISLAVA, Dec. 29 (Xinhua) -- Joining the eurozone is of political and economic significance for Slovakia, Finance Ministry spokesman Igor Barat told Xinhua on Sunday. (More...)
- While Poland currently meets all necessary euro entry criteria, albeit with slightly high inflation, Hungary would have a problem with a public debt, currently at the level of 66 percent of GDP, above the eurozone's threshold of 60 percent. (More...)
- Some bank branches and the post office sold out within hours after sales began on Dec. 1, said Igor Barat, the government'''s euro coordinator. (More...)
- Slovakia introduced a flat tax of 19 percent in 2004 and kept labor costs low, enticing western European and Asian car and electronics manufacturers to set up factories. (More...)
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Ten years after the original 11 countries in western Europe set up a common currency, the monetary union is due to enlarge to Slovakia, as its 16th member state and the first in central Europe to switch to the euro. "I'm sure this event will trigger a lot of positive expectations and positive results for the Slovak economy and citizens," EU economy and monetary affairs Joaquin Almunia told journalists ahead of 1 January. "The Slovak economy was able to fulfil al the conditions required to join the euro less than five years after the country entered the EU and this had required a political will and a very dynamic economy. Now it's the time to reap the benefits of sharing the same currency," with 325 million Europeans in the 15-strong eurozone. Some diplomats and officials described Bratislava's path to the euro as quite "bumpy," with the country's ambassador to the EU Maros Sefcovic claiming Slovakia had to convince colleagues about its readiness "at least twice as hard" as previous euro newcomers. After Slovenia entered the eurozone in 2007 and Malta and Cyprus followed suit at the beginning of this year, Slovakia will be the first central European state to join the euro club. It will be the poorest country, with some 67 percent of the eurozone's average GDP. During the evaluation process, the long-term prospect of the Slovakia's price stability caused the biggest doubts over its readiness to adopt the euro, but despite recording the highest economic growth rates across the EU, Slovakia managed to keep inflation below the required threshold. [1] Slovakia's ambassador to the European Union, Maros Sefcovic, said the country -- which will be the poorest member of the Eurozone -- had to work "at least twice as hard" as other Eurozone states to convince member states it was ready to join. Once a concern, Slovakia has managed to keep its inflation rate under the mandated threshold in spite of its high economic growth rate compared to other EU countries. Slovakia, third largest automaker in central Europe, will now be challenged to manage its manufacturing sector, its banking system and its economy, said Daniel Gros, director of the Center for European Policy Studies. "The Slovak economy should be flexible and dynamic, its budgetary policy sustainable and its labor market adjustments should take place smoothly -- if these conditions are met, all the benefits of the euro will be higher," said EU Commissioner Joaquin Almunia.[2]
"According to the euro entry rules, government debt as a proportion of GDP should not surpass 60 percent. Our level is merely 29 percent," he added. The prime minister said his government had also achieved other goals like rapid economic growth and low inflation. Slovakia's economy, which depends on its car and electronics industries, ranks among the European Union (EU)'s fastest growing economies with 7 percent growth in the third quarter and an estimated 4 percent growth rate for 2009.[3]
Joining the zone will benefit commercial trade and the country's future economic growth, said Barat, Slovakia's "Mr. Euro." To use the euro, the symbol of Europe, means the country has taken a key step toward full fusion with the European Union, a move which will have a profound impact upon Slovak politics, economy, society, culture and popular life, he added.[4]
Fico was expected to be among the first to get euros at an automated teller machine in the parliament after midnight. The new currency "could help the Slovak economy to cope with the economic downturn, and when it's over start new growth," said Marek Gabris, an analyst at the CSOB bank in Bratislava. Neighboring EU member Hungary, once the beacon of economic success in the post-communist Eastern Europe, was forced earlier this year to accept a bailout from the International Monetary Fund to avert economic collapse, as has non-EU member Ukraine. Slovakia is adopting as some people in EU members Denmark and Sweden are rethinking their countries' refusal to sign up, while Poland is speeding up efforts to join.[5] Following are five facts about Ivan Sramko: -- Sramko was born on Sept. 3, 1957 in Bratislava and graduated from the Bratislava-based Economic University in 1980. He is married and has three children. -- He became NBS governor on Jan. 1, 2005, after having served as the bank's deputy governor since Jan. 11, 2002. -- Sramko joined the central bank from his post as a board member of Tatra Banka, Slovakia's third largest bank and a unit of Austria's Raiffeisen Bank. He was the CEO of small local bank Istrobanka before. -- Under Sramko's leadership, the NBS repeatedly intervened to slow the appreciation of the Slovak crown. It also propped up the crown in 2006 when it weakened due to investors fearing the new leftist government would dismantle market-friendly reforms and abandon the 2009 euro adoption target. -- Sramko oversaw Slovakia's entry to the exchange rate mechanism ERM-2 in 2005 and two revaluations of the crown's parity rate within the pre-euro currency grid. Before the unit was irrevocably fixed to the euro in July 2009, Sramko said the exchange rate had a minor impact on inflation and cautioned about the negative effect of too strong a currency on the economy, which the market viewed as a sign he was against an overly strong conversion rate for the euro switchover. Prime Minister Robert Fico had advocated as strong a conversion rate as possible, and the fixing rate of 30.1260 crowns per euro was the unit's strongest level ever.[6]
The former communist country, which launched the euro adoption process after joining the EU 2004, was lucky enough to complete the euro talks before the crisis struck in September, and to obtain a favourable exchange rate of 30.126 korunas per euro. Slovakia has opted for a "Big-Bang scenario" with a dual circulation period shortened to two weeks, which means shops will accept korunas until January 16 but they will return only the new euro notes and coins featuring the Slovak cross, Bratislava castle and Mount Krivan.[7]
The Alpine country of 5.4 million will be the poorest euro member, behind Portugal with 71 percent of the EU's average gross domestic product per capita. It is already seeing benefits. Its crown is the only currency in the region that has not weakened since its exchange rate was locked at 30.126 per euro in July, a boon for Slovaks who can travel abroad or buy imported goods at stable prices.[8]
"Slovakia will be the key example in the future when decisions on future entrants are made because if the country functions smoothly, it will be a good argument for the countries in the same region," Zsolt Darvas, from the Brussels-based Bruegel think-tank told EUobserver. He pointed out that Poland and Hungary are the most likely to join after their Visegrad neighbour, as the governments of both countries have indicated they would like to enter the so-called European Exchange Rate Mechanism (ERM II), a fixed exchange rate waiting room for the euro. As the candidates to join the European currency need to remain in the system for a minimum of two years, Mr Darvas argues that both Poland and Hungary could join the euro in three years from now.[1] BRATISLAVA, Slovakia (AP) — Slovakia's church bells will ring out at midnight as the country joins the euro, putting it under the shared currency's protective umbrella amid a world financial downpour — and underscoring the former Soviet bloc nation's rapid economic progress. Slovakia on Thursday will be the 16th country to join the euro, a European Union project which also celebrates its 10th birthday this New Year's Day.[5] BRATISLAVA (Reuters) - Slovakia joined the euro on Thursday, hoping that membership of the single currency will soften the blow of the global financial crisis and bring about greater economic convergence with richer European Union states.[9]
Slovakia's imminent membership in the eurozone not only illustrates Bratislava's rapid advancement, it also highlights eurozone membership benefits. When the clock strikes midnight Jan. 1, 2009, it will mark the end of the short-lived Slovak koruna and usher Slovakia in as the 16th member of the eurozone, the bloc of European Union countries using the euro as their national currency.[10] BRATISLAVA, Dec 31 (Reuters) - Ivan Sramko, governor of the National Bank of Slovakia (NBS), will take a seat on the policy-making Governing Council of the European Central Bank (ECB) after Slovakia becomes the 16th member of the euro zone on Jan. 1.[6] BRATISLAVA, Slovakia, Dec. 30 (UPI) -- The first Central European state to adopt the euro, Slovakia, is poised to officially join the Eurozone on Jan. 1, officials said.[11]
Katinka Barysch, an analyst at the London-based Centre for European Reform think tank, said the currency swings of recent months have underlined the benefits of the euro to east European states. "The very stark experience of being in the middle of a global economic storm means they have felt very cold and uncomfortable," she said. Slovakia is also the first nation that used to be in the Soviet orbit to join — while Slovenia also was communist ruled, it was part of Yugoslavia, which kept its distance from the Soviet Union.[5]
The euro switch seals a considerable image change for Slovakia, which isolated and led by an authoritarian leader in the early 1990s lagged behind the rest of central Europe after it peacefully split from then-Czechoslovakia in 1993. The country caught up with its neighbours and joined NATO and the European Union in 2004. The economy boomed in recent years as investors poured in after Slovakia introduced pro-market public- finance reforms such as flat tax.[12] Joining the euro has capped a decade of transformation for Slovakia from central European laggard to an EU growth leader. Its economy expanded 10.4 percent last year. Next year, the government sees growth exceeding 4 percent despite recession in big euro zone states such as Germany and Britain.[9] Many Slovaks hope the single currency will bring economic growth by attracting new foreign businesses and help the country catch up with the older EU states. "The euro is pushing us into the position of full-fledged Europeans, even though we will be worse off than those from the West for a few more years," Peter Turcik, a columnist at economic daily Hospodarske Noviny, wrote Wednesday.[9] 'Slovakia's banking sector is very well prepared for the euro. People should be patient if they have to wait in queues to swap their money these days,' she said, adding the NBS was ready to help with any technical problems. Slovaks who decided to deposit korunas on their bank accounts and let banks do the changeover did not avoid queues, although banks have reinforced their staff and will be open on January 1, which is normally a bank holiday, as well as next weekend. Those who did not buy the starter packs containing euros in advance will be able to withdraw the first euros from cash mashines on Thursday morning at 1am. They can also start using credit cards immediately after midnight. The Slovak government is hoping the single currency will shield the country from the current financial crisis and help it maintain its rapid economic growth.[13] The crowd danced to music played by a gipsy band called Ciganski diabli (Gypsy Devils), which framed Aram Khachaturian's Sabre Dance and Johann Strauss's The Blue Danube with Beethoven's Ode to Joy, the EU anthem. Fico's left-leaning government is hoping the single European currency will shield the country from the current financial crisis and help it maintain its rapid economic growth.[7]
"We Slovak people are pleased to see the marked development in our country. We are in the European Union. we are still facing the task of catching up with the developed countries in Western Europe," he said. On the global financial crisis, Fico said it might deepen in 2009, but his government has worked out countermeasures, including building huge infrastructure projects like expressways, airports and nuclear power plants.[3] According to Eurostat, the European Union (EU)'s statistics office, the country's GDP was 54.9 billion euros (77.4 billion U.S. dollars) at market prices in 2007, with an estimated growth rate of 7.0 percent in 2008.[14] Joaquin Almunia, the European Union Economic and Monetary Affairs Commissioner, stated that the conversion will be "a proud moment for the euro area the euro has become the symbol of EU identity and is protecting us against the tremendous external shocks that we have had to cope with since the summer of 2007."[15]
On New Year's Day, Slovakia becomes the 16th European Union member state to adopt the euro.[16] While governments across the region cut growth forecasts and investors dump assets -- wiping out years of gains in other eastern European Union currencies like Poland's zloty and Hungary's forint -- Slovakia is surviving relatively unscathed. "It's excellent," said Matej Sobol, a 27-year-old sports instructor from the northern ski resort town Liptovsky Mikulas.[8] Slovakia has enjoyed rapid economic growth since joining the European Union in 2004.[17]
'''The ECB does not only require a nominal convergence but it wants a sustainable convergence,''' said Laurent Bilke, an economist at Nomura International Plc in London. Slovakia was successful in keeping inflation below the euro- adoption limits because of the record strength of its currency, the koruna, which capped import prices. Its budget deficit was kept under control because of increased revenue from economic growth. Gross domestic product expanded a record 14.3 percent in the fourth quarter of last year and grew an annual 7 percent in this year'''s third quarter.[18] Bratislava - Slovakia abandoned its currency of 15 years, the Slovak koruna, and adopted the euro on Thursday, in a move that crowned the ex-Soviet satellite's economic success.[12] OLD CURRENCY: The Slovak koruna, or crown, was introduced in 1993 when former Czechoslovakia split into the Czech Republic and Slovakia. It will be in circulation alongside the euro until Jan 16.[19] The currencies of Slovakia's post-communist neighbours Hungary, Poland and the Czech Republic, which have to or want to join the euro more slowly, have sunk in the past weeks, hurt by the recession. Slovakia has opted for a 'Big Bang scenario' with a dual circulation period shortened to two weeks, which means shops will accept korunas until January 16 but they will return only the new euro notes and coins featuring the Slovak cross, Bratislava castle and Mount Krivan.[13]
The coins feature images of Bratislava Castle, Mount Krivan in the High Tatras, and the Slovak double cross, the country's national symbol. Slovak euro coins do not become legal tender until 1 January 2009, however, and using them in the eurozone before then could earn you a hefty fine. Heavy sanctions also await those businesses who attempt to raise prices under the guise of euro adoption. Slovakia's leftist Prime Minister Robert Fico has promised to crack down hard on any such offenders.[20] In a symbolic act, Slovak Prime Minister Robert Fico drew euro cash from a cash machine close to the well-known Bratislava Castleat around 1:20 a.m. (0020GMT), symbolizing the official circulation of euro cash in the central European country.[21]
Slovaks are dropping the national currency, the koruna, 16 years after the former Czechoslovak federation split amicably in 1993. "A farewell can also be beautiful, as a Slovak song says, and this is what we are experiencing today," Slovak Prime Minister Robert Fico said before withdrawing 100 euros in 20-euro notes from a cash machine in the parliament building.[7]
The old currency, the Slovak koruna, will be in circulation alongside the euro until Jan. 16 and banks are expected to open Thursday to exchange koruna for euros.[5] The exchange rate is set at 30.126 Slovak koruna to the euro. Commercial banks received the banknotes and coins from September and have supplied them to shops and other businesses so that they handle payments and return change in euro from the 1st of January. Until January 16, 2009, Slovakians can use koruna alongside the euro and they can exchange them for euro thereafter.[22] The Slovak Republic satisfied the Maastricht criteria, which relate to the inflation rate as measured by the harmonized index of consumer prices, the interest rates, the ratio of the government deficit to gross domestic product, the level of government debt, as well as the stability of the Slovak koruna to euro exchange rate.[22]
As of zero hour of Jan. 1, cash machines in Slovakia started to dispense euro notes instead of korunas, and all the koruna accounts were automatically transformed into euro accounts at a fixed exchange rate of 30.126 korunas against one euro.[21] Jan. 1, 1999: The euro is introduced on financial markets as exchange rates with the 11 national currencies are irrevocably fixed.[16]
Joaqu''n Almunia, European Commissioner for Economic and Monetary Affairs had stated, "The euro has become the symbol of EU identity and is protecting us against the tremendous external shocks that we have had to cope with since the summer of 2007." The euro was created in 1999 when 11 countries irrevocably locked the bilateral exchange rates of their currencies and equipped themselves with a single monetary and exchange rate policy.[22] '''The political case for euro entry may have strengthened in the context of the current crisis, but the economic obstacles to joining have not gone away,''' said Audrey Childe-Freeman, a senior currency analyst with Brown Brothers Harriman & Co. in London. The application by Lithuania to adopt the euro at the end of 2006 was vetoed because of concern its inflation rate would soar once in. The rate jumped from 3.6 percent in May 2006, when its bid was rejected, to 12.5 percent in June. Hungary was forced to drop its 2010 target date after the deficit ballooned to the widest in the EU.[18]
Euro adoption had for months fuelled fear among Slovaks that the switch will bring higher prices, as seen in other newcomers to a club that will now have 16 members. Months of financial turmoil across the globe and international rescue packages for countries such as fellow EU members Latvia and Hungary have changed many people's minds.[8] Thanks largely to the efforts of the previous centre-right government (which also carried out most of the painful and unpopular fiscal surgery necessary for euro adoption), the country now boasts a huge amount of foreign investment. Those investors are starting to feel the pinch, as demand for exports falls. Euro adoption, however, could mean Slovaks are far better placed to weather the current financial storm than their cousins in Poland, Hungary and the Czech Republic.[20] Slovakia left behind other, bigger east European nations -- Poland, Hungary and the Czech Republic -- and will likely be the region's last euro entrant for some time given the present financial turmoil.[9] The path to the euro has not been smooth, but Slovakia - unlike neighbouring Poland, Hungary and the Czech Republic - could be about to reap the rewards at a time of great financial turmoil, the BBC's Rob Cameron says.[20]
The Czech Republic would also make it to the euro club without major problems according to several analysts. Just as in the UK, where some insiders say the government is considering such a possibility, the euro remains a matter of political division. The Baltic states of Estonia, Lithuania and Latvia have all joined ERMII but are currently facing problems due to the global financial crisis, so their original plans to adopt the euro in 2009 or 2010 have been postponed until an unknown date.[1] In the context of the global financial crisis and in particular the effects of the crisis on Europe Bratislava's adoption of the euro puts the benefits associated with eurozone membership into sharp focus for some of Slovakia's neighbors.[10] Joining the eurozone will also enable Slovakia to better cooperate with other EU countries in combating the global financial crisis, Barat said.[4]
With Slovakia, the currency will be used by 330 million people with an annual gross domestic product of more than 4 trillion euros ($5.6 trillion). Joining up is a milestone for the country of 5.4 million people in a region where others have seen their currencies buffeted by the financial crisis stemming from bank losses on securities backed by shaky U.S. mortgages.[5] SLOVAKIA becomes the 16th country to adopt the euro today. With Slovakia adding its population of 5.4 million, the currency will be used by 330 million people with an annual gross domestic product of more than 4 trillion euros.[23]
Slovakia's 5.4 million people will be the poorest in the euro club, with gross domestic product per capita of 71 percent of the EU's average.[9]
Slovakia will become the first country formerly behind the Iron Curtain and officially within the Soviet sphere of influence to adopt the euro. Bratislava's move onto the EU superhighway is a testament to how far Slovakia has come from its mid-1990s image as the Central European crackpot to its current image of a paragon of responsibility.[10] BRATISLAVA (AFP) — Slovakia adopted the euro as of Thursday to become the 16th member of the eurozone, exactly ten years after the single European currency was introduced.[7] Slovakia will become the 16th member of the euro area when it adopts the euro at midnight on January 1, making it the currency used by 329 million Europeans.[24]
Slovakia becomes the 16th member of the eurozone on 1 January, when it trades in the national currency, the koruna (crown), for the euro.[20] The UK and Denmark secured a derogation to stay outside the euro area, while Sweden had legally committed to adopt the common currency but had so far not fulfilled the obligation as the country's voters rejected the move in a referendum. After Slovenia, Malta, Cyprus and Slovakia, all other countries in central and eastern Europe as well as Bulgaria and Romania are also due to become the members of the eurozone when they are ready.[1] "Over half of the country's exports go to countries using the single European currency. For Slovakia, euro adoption will be an additional, natural step in these difficult times," he explains.[20] The European country of Slovakia will have the euro replace the koruna as its official currency, starting Janary 1, 2009.[15]
BRUSSELS, Dec. 12 (Xinhua) -- With less than three weeks to go before the introduction of the euro in Slovakia, the country is well prepared to become the 16th member of the euro zone, the European Commission said in a report on Friday.[3] "I am looking forward to welcoming Slovakia in the euro area next January. BRUSSELS, Dec. 30 (Xinhua) -- Slovakia will join the eurozone on Jan. 1, when the euro celebrates its 10th anniversary, increasing the euro zone to 16 members.[3] BRUSSELS, Dec. 30 (Xinhua) -- Slovakia is due to join the euro zone on Jan. 1, becoming the 16th country to use the euro.[14]
Jan. 1, 2009: Slovakia becomes the 16th country — and the first former Soviet bloc nation — to join the eurozone.[16]
Slovakia will become the 16th member of the eurozone when it adopts the euro on Jan. 1, 2009.[3] Dec. 31 (Bloomberg) -- Slovakia, which becomes the 16th member of the euro region tonight, is counting on the currency to help shield it from the brunt of the global crisis that'''s pummeling emerging markets.[18] Jana Kovacova, a spokeswoman for the National Bank of Slovakia, said that everything is ready for the currency switch, which will make Slovakia the 16th member of the euro zone.[13]
With the addition of Slovakia's 5.4 million inhabitants, the euro zone will now cover about 327 million people. Since its launch on January 1, 1999, the euro's position as a reserve currency in the world has grown from 18% to 27%, and the value of euros in circulation now surpasses the dollar.[13]
Slovakia's central bank (NBS) has reaffirmed January 1, 2009 as the date of introducing the euro coins and banknotes for the country's legal tender and that private individuals and corporations will be obliged to accept the euro as a means of payment.[25] The central bank of Slovakia estimated that 188 million euro notes and 500 million coins would be needed to replace koruna cashin circulation and reserves.[21]
After that point, crowns can only be exchanged at the Slovak National Bank in Bratislava. "Starter packs" of Slovakia's newly-minted euro coins sold out in days, with many people snapping them up as Christmas presents.[20] According to the calculations of the National Bank of Slovakia, around 188 million euro banknotes and 500 million euro coins are needed to for the changeover.[22] In Slovakia, citizens snapped up 1.2 million packages, which contained a basic set of euro coins, before the switch.[18]
According to the Slovakian National Bank, some 188 million euro banknotes and 500 million euro coins are needed for the changeover.[24] You see it everywhere: on billboards and posters, on supermarket shelves and shop windows, in banks, post offices, pubs and restaurants, from Stary Smokovec in the High Tatras to Komarno on the banks of the Danube. It is 30.126. It's not an easy number to remember, but it's important. It's the official conversion rate for the euro, and virtually every Slovak knows it by heart. "I'm kind of like Santa Claus," says Martin Hudec, as he tosses fistfuls of chocolate euro coins to the children gathering around his converted blue van.[20]
The January 1-16 period will be used to serve for the replacement of cash crowns with euros. During this period entrepreneurs and state authorities shall accept payments in both crowns and euros but return extra cash in euros, except in cases of mutual agreement on an alternative method of payment. To safeguard shops from becoming receptacles for small change, payments in Slovak korunas during this dual-currency phase may be rejected if more than 30 coins of different face value, or more than 20 coins of the same face value, are proffered.[25] The Slovak koruna (crown) will remain in circulation alongside the euro until 16 January.[17]
While the Slovak koruna remained locked to the euro in preparation for the Jan. 1 changeover, the Polish zloty lost 24 percent, the Czech koruna dropped 11 percent and the Hungarian forint fell 13 percent in the second half.[18] As of Jan. 1, Slovak cash machines will start dispensing euros and local bank accounts in korunas will switch to euros.[3]
As other countries in the region struggle, the Slovak administration is negotiating with six investors to spend at least 5 billion koruna ($237 million) each to build factories in Slovakia, Economy Minister Lubomir Jahnatek, 54, said on Dec. 16. Volkswagen AG, Europe'''s largest carmaker, cited the switch as a key reason for choosing to upgrade its Slovak factory and prepare it for a new car model, Jahnatek said. [18] Slovak leaders believe that the euro will protect the country's export-driven economy from currency volatility during the economic downturn, which is expected to fully hit eastern Europe in 2009.[26] Iceland, which is not an EU or a euro member, suffered badly as an outsider, being hit with a combination of a plunging currency and the popularity of high-interest foreign currency loans. That means monthly loan repayments for cars and homes have doubled this year, hitting Icelanders hard as the economy teeters and jobs are slashed.[5] As a significantly poorer country having transformed itself from a centrally-planned economy to a market economy, Slovakia's accession to the EU's monetary union has been watched closely as a test case for other states hoping to join.[1] Slovakia, which joined the European Union in 2004, will be the second former communist country to make the switch after it held down inflation, debt and its budget deficit. The former Yugoslav republic of Slovenia was admitted two years ago.[18] About 100,000 people, including a number of tourists, gathered in Bratislava's main square for a euro ceremony crowned with midnight fireworks dominated by blue and yellow, the colours of the European Union.[7] "Eighty-six percent of Slovak exports go to the countries of the European Union," says Vladimir Vano, chief analyst at the Bratislava branch of Austria's Volksbank.[20] Slovak Prime Minister Robert Fico said joining was "the continuation of a success story that began with the entry into the European Union" in 2004.[5]
BRATISLAVA, Dec. 30 (Xinhua) -- Slovak Prime Minister Robert Fico said on Tuesday that his country's entry into the eurozone is of vital importance both economically and politically.[3]
The former head of Malta's NECC, Alan Camilleri, was asked to take on the role of a consultant to the Slovak Government on euro related matters when Slovak Prime Minister Roberto Fico was in Malta for the euro celebrations last January. He visited Slovakia a number of times to review the work being done, advising on issues related to the practical preparations as well as the communications campaign, particularly issues related to price stability. He was also involved in discussions on helping vulnerable groups prepare themselves adequately from the euro.[24] Commissioner Almunia argues that it will be crucial that Slovakia continues to catch up in terms of GDP per capita levels, as well as productivity and competitiveness levels. "The Slovak economy should be flexible and dynamic, its budgetary policy sustainable and its labour market adjustments should take place smoothly--if these conditions are met, all the benefits of the euro will be higher," said the commissioner.[1] Slovaks are now able to obtain euros from cash machines. Slovakia sees its adoption of the euro as a shield from the turbulence that has hit currencies in neighbouring ex-Soviet bloc countries.[17] Almost 6,500 businesses in Slovakia, which joined the EU with Malta in 2004, received cash by December 15 and 1.2 million euro starter kits were distributed to the public and small businesses.[24] Slovakia contrasts with the Czech Republic, a former federal partner in the defunct Czechoslovakia and the only EU nation without a euro target date.[18] The koruna, which has been in use since the Czech Republic and Slovakia split in 1993, will remain in use alongside with the euro for two weeks, but it will be withdrawn from circulation from Jan.16.[21]
The koruna has been pegged at a rate of 30.126 to the euro since July, while Poland's zloty has lost 24% against the euro, the Czech koruna 11% and the Hungarian forint 13%, Bloomberg news reports.[17]
The global crisis will slow growth to 4 percent next year, the Paris-based Organization for Economic Cooperation and Development said on Nov. 25. That contrasts with 2.5 percent for the Czechs, 3 percent in Poland and Hungary'''s economy may slip into recession, the OECD said.[18] For a small country like Slovakia, adoption of the euro will better shield it from the global economic crisis, Fico said, adding that it will also attract more outside investment.[3] Slovakia is the 16th member of the eurozone, which faces a sharp economic downturn prompted by the turmoil on global financial markets.[12]
Though the Frankfurt-based ECB is willing to provide aid to non-members, it will probably be more wary about widening the euro region during the next several years. Executive board members, including Juergen Stark, say the current monetary union is being tested by the financial meltdown and are concerned that many new members, who founded free-market systems starting in 1989, have yet to prove they have stable- enough economic development, economists say.[18] The euro was introduced on financial markets on Jan. 1, 1999 and notes and coins first came into circulation in 2002. The zone widened to 15 nations this past January when Cyprus and Malta joined; the other members are: Belgium, Germany, Ireland, Greece, Spain, France, Italy, Luxembourg, the Netherlands, Austria, Portugal, Slovenia and Finland.[5] EURO ZONE: The nation becomes the first post-Soviet bloc country to join 15 current members: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia and Spain.[19] The small Alpine nation of Slovenia, formerly part of Yugoslavia, was the first ex-communist country to join the euro, two years ago.[17]
The Slovak currency will be converted at a rate of 30.126 against the euro, an 11 percent appreciation from a year ago.[18] The spread between Polish and Slovak five-year credit-default swap rates increased to 85 basis points on Dec. 26 from 9.5 points on Sept. 22, meaning it would cost 85,000 euros ($120,900) more to protect 10 million euros of Polish debt from default, compared with Slovak debt.[18]
BRATISLAVA, Dec 31 (Reuters) - Slovakia adopts the euro at midnight on Wednesday and its people are hopeful that membership will insulate them from the worst of the storms battering Europe's emerging economies.[8] Slovakia's neighbors the Hungarians and Czechs in particular see the country as a backward mountain cousin who belongs tucked away somewhere in the Balkans and not in the center of Europe. For much of the 1990s, Bratislava largely fit that stereotype, as the nationalist government of Vladimir Meciar nearly derailed its EU membership and in fact delayed its entrance into NATO.[10] Located in the heart of central Europe, Slovakia is a landlocked country bounded by Poland to the north, Hungary to the south, Ukraine to the east and Czech and Austria to the west.[14] Poland will probably be the next country to make the switch, in 2012, said Juraj Kotian, the chief central European economist at Erste Bank AG in Vienna. It may be followed by Hungary, helped by a bailout package from the International Monetary Fund earlier this year.[18]
The European Central Bank may balk at further expansion of the euro bloc for now, foiling other countries''' efforts to gain financial support and fend off deeper recessions.[18] BRATISLAVA, Dec 30 (Reuters) - The Slovak central bank (NBS) accepted all bids in a regular two-week repo tender on Tuesday, draining 69.5 billion crowns ($3.22 billion) from the market, NBS data showed.[27] The central bank, which uses two-week repo auctions as a monetary policy tool, drained 147 billion crowns at a previous tender on Dec. 23.[27]
Old coins in Slovakia can be exchanged at the central bank until the end of 2013.[19]
Euro "starter packs" have already been distributed in Slovakia and a big campaign has been under way to familiarise the nation of 5.4 million with the new currency. [17] Slovakia drops koruna, adopts euro - Breaking News - Business - Breaking News Welcome to The Age.[26] Kia Motors Corp., South Korea's second-largest automaker, said the euro was one of the key reasons to invest 1 billion euros ($1.4 billion) into a new plant that opened in 2006 in western Slovakia.[5]
All of us." Another, older town resident is more philosophical. "It's going to be difficult for us old people to get used to the new money, but I've already bought one of the starter packs - 500 crowns' worth of Euro coins. "I know what they look like. Now I just have to get used to them."[20] The older people less so. "It was easier to get used to the old crowns," says one middle-aged woman outside the post office. "As for these new ones - these euros or whatever they're called - we're all afraid how we're going to get used to them.[20]
Just hours before the switch, two robbers in capital Bratislava stole 2 million koruny (66,388 euros), police said. As they must exchange the cash into euros, police believe the odds of catching them are high. [12] The changeover plan will see euro banknotes appear in Slovakia's cash machines shortly after midnight on 31 December.[20] The euro's strength may make life harder for Slovakia's exporters - particularly its big car industry - in the current economic downturn, correspondents say.[17] The region'''s economic and market slump is prompting most of the EU'''s eastern states, including Poland, Hungary and the Baltic states of Latvia and Estonia to follow Slovakia'''s lead and push for faster euro-region membership.[18] Slovakia was among the 10 eastern European countries to become EU members in 2004.[4] Some officials called Slovakia's road to compliance with Eurozone directives as "bumpy," the EU Observer reported Tuesday.[2]
Slovakia has become the 16th member of the eurozone - the second former communist country to do so.[17] Slovakia joined the eurozone on Thursday, becoming the 16th member of the single-currency bloc with a population of over 320 million.[21]
In 2007, Slovakia reached the highest growth of gross domestic product (GDP), which was 10.4 percent, among OECD members.[14] Slovakia's cabinet is counting on 4.6% economic growth, down from a peak of 10.4% in 2007, Reuters reports.[17] Thanks to the past decade of reforms, Slovakia is characterized by sustained high economic growth.[14]
BRATISLAVA, Dec. 29 (Xinhua) -- Joining the eurozone is of political and economic significance for Slovakia, Finance Ministry spokesman Igor Barat told Xinhua on Sunday. [4] Slovakia completes a difficult transition after shaking off decades of communist rule in 1989. It endured several years of isolation under autocratic Prime Minister Vladimir Meciar in the 1990s, then made rapid economic progress with free-market reforms under former Prime Minister Mikulas Dzurinda.[5] A recent poll in Slovakia's Hospodarske Noviny daily showed 58% of respondents in favour of the euro, compared with 43% positive a year ago.[17] The neighbouring Czechs once sneered at Slovakia's push to join the euro quickly.[23] In an exclusive interview with Xinhua, Fico said joining the euro club will help Slovakia better integrate with Europe.[3] Virtually all 2,172 ATMs in Slovakia are expected to be dispensing only euro banknotes by 0200h on January 1.[24] January 1 also marks the tenth anniversary of the euro being introduced as globally exchangeable currency.[15] Adoption of the euro will act as '''as a shield against the global turmoil,''' said Elizabeth Gruie, a currency strategist at BNP Paribas SA in London.[18]
Slovakia is, of course, beginning to experience the effects of the global financial crisis.[20] Concerning the switch-over in January, concerns over inflation have become "secondary," according to Daniel Gros, director of the Brussels-based Centre for European Policy Studies. He argues that due to the financial crisis, the main challenges for Bratislava will instead be to maintain domestic financial stability with a well-functioning inter-banking market and to have industry not too much affected by the slow-down in Europe, particularly in the automobile sector.[1]
The central European country of 5.4 million is the second formerly communist country, after Slovenia, to qualify for the switch to Europe's common currency.[26] Slovenia, an Alpine nation of 2 million, was the first former Eastern Bloc country to adopt the euro in 2007.[12] Slovaks offloaded the last korunas in post-Christmas sales before big blue and yellow fireworks mark their country's entry into the euro club on the euro's 10th anniversary at midnight on Wednesday.[13] Slovakia's currency is called the Slovak koruna and its official language is Slovak.[14] Slovakia is a much bigger country than Malta and has specific challenges. "The Roma Community in Slovakia is quite large and poses a significant challenge since the Romas as quite insulated from mainstream society, talking their own language and having their own 'educational' process. One of the elements which seems to have worked in Slovakia, and for which they are quite grateful, is our advice to engage the religious authorities of the country to talk positively and to become multipliers in the provision of information at the parochial level. "This seems to have worked and the Slovaks attribute it directly to our advice. They adapted the Malta version of the 'FAIR' initiative in their local context and it also seems to have had the desired effects," he told www.di-ve.com.[24] MINT CONDITION: Slovak one-euro and two-euro coins bear a double cross on three hills as featured in the national emblem of Slovakia.[19] Slovak crowns will cease to be legal tender on 17 January 2009, although banks will continue to exchange notes and coins until the end of 2009.[20]
'''We are watching our neighboring countries, whose situation is getting more and more complicated because of the crisis,''' Finance Minister Jan Pociatek said in a Dec. 23 phone interview from Bratislava, the Slovak capital.[18] Slovakia, slated to join the eurozone on Jan. 1, relies on the import of raw materials and export of manufactured goods.[4] Jan. 1, 2008: Malta and Cyprus adopt the euro, bringing membership in the monetary union to 15.[16]
While Poland currently meets all necessary euro entry criteria, albeit with slightly high inflation, Hungary would have a problem with a public debt, currently at the level of 66 percent of GDP, above the eurozone's threshold of 60 percent. [1] In comparison, Poland's zloty lost 30 percent per euro and Hungary's forint 15 percent.[8]
Poland would probably adopt euro by 2012, which is likely to be followed by Hungary.[22]
Some bank branches and the post office sold out within hours after sales began on Dec. 1, said Igor Barat, the government'''s euro coordinator. [18] Back in Bratislava, the government's euro co-ordinator Igor Barat is frantic with last-minute meetings and phone calls, but brimming with confidence.[20]
Slovakia introduced a flat tax of 19 percent in 2004 and kept labor costs low, enticing western European and Asian car and electronics manufacturers to set up factories. [5] The car industry has been severely hit by the global recession followed by the credit crunch however, with industrial production flat on the year in October--the worst performance since March 2005--and below market forecast of a 4.7 percent increase, according to the Slovak Statistics Office.[1]
SOURCES
1. Slovakia Joins Decade-Old Euro Zone - BusinessWeek
2. Slovakia poised to join Eurozone - UPI.com
3. Interview: PM says eurozone entry vital to Slovakia_English_Xinhua
4. Slovak official: Joining eurozone significant step_English_Xinhua
5. The Associated Press: Slovakia 16th country to adopt euro
6. Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
7. AFP: Slovakia becomes 16th eurozone member
8. Slovaks latch on to euro anchor in economic storm | Markets | US Markets | Reuters
9. Slovaks adopt euro | Reuters
10. Free Preview of Members-Only Content | Stratfor
11. UPI NewsTrack Business - UPI.com
12. Slovakia abandons koruna, adopts euro (Roundup)
13. RT' Business: Slovaks say bye to koruna before euro switch
14. Backgrounder: Basic facts about Slovakia_English_Xinhua
15. Wikinews Shorts: January 1, 2009 - Wikinews, the free news source
16. The Associated Press: Slovakia is 16th nation to join EU's euro currency
17. BBC NEWS | World | Europe | Slovakia becomes eurozone member
18. Bloomberg.com: Exclusive
19. The Associated Press: Slovakia trades koruna for euro
20. BBC NEWS | Business | Slovakia embraces the euro
21. Slovakia joins eurozone - People's Daily Online
22. RTTNews - Latest Earnings,Upcoming Earnings, Pos Pre Announcements, Pos Pre Announcements , Positive Surprises, Negative Surprises, Hot Stocks, Stock Split Calendar, Stock Buybacks, Dividends, Negative, Positive PreAnnouncements,Surprises .
23. Currency push pays off as Slovakia joins the euro - Scotsman.com News
24. DI-VE - News Details
25. Finetuning of preparations for euro adoption continues at National Bank - The Slovak Spectator
26. Slovakia drops koruna, adopts euro - Breaking News - Business - Breaking News
27. Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
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