(Repeats story published late on Thursday)
By Peter Laca
BRATISLAVA, April 24 (Reuters) - The ECB is facing pressure
from some EU central banks to tone down a report in which it
notes "serious concern" about Slovakia's readiness to adopt the
euro, sources familiar with the process said.
The country of 5.4 million hopes to join the euro zone next
year as the first of central Europe's four biggest ex-communist
countries, and has met the required numerical conditions --
including an inflation rate well below the entry threshold.
Bratislava must now quell doubt among economists and EU
policymakers that it can maintain that over time, but analysts
say fears among EU politicians that rejecting Slovakia's bid
could discourage reforms there and in other euro aspirants will
likely result a green light.
The sources, both senior Slovak officials, said an initial
European Central Bank draft report sent to the 27 EU central
banks expressed "serious concerns" from the euro zone's monetary
authority about how Slovak inflation will develop after the
impact of a firming crown disappears.
But the two sources said several EU central banks had
objected to the wording and that a final draft should temper the
ECB's worry about inflation.
"There was a reaction from other central banks against the
language, against the 'serious' concerns in the report," one
source, who asked not to be named because of sensitivity of the
matter, told Reuters.
"That's why we think the overall tone of the actual
convergence report will be more favourable (towards Slovakia)."
During preparation of the convergence reports, several
drafts are circulated to EU 27 central banks for comments.
The final version of the report is expected to be released
on May 7, the day when the European Commission will say whether
Slovakia is ready to swap its crowns for the single currency.
Neither the Slovak Finance Ministry, nor the National Bank
of Slovakia would comment. The ECB also declined to comment on
the matter.
SUSTAINABILITY CHALLENGE
Slovak inflation, the country's biggest hurdle to joining
the euro zone, was 2.2 percent on the 12-month average rate, the
yardstick for assessing its euro adoption readiness. That was a
full percentage point lower than the reference rate for entry.
But although it meets that part of the criteria nominally,
the EU's executive Commission said it would now be examining
whether the country can keep inflation sustainably low.
Slovakia, which saw record 10.4 percent growth last year,
has repeatedly said its prices are driven by the same factors as
elsewhere in Europe.
And on Tuesday its central bank governor, Ivan Sramko, said
the inflation figure would remain under the adoption threshold
through 2009.
Analysts do not think so. A Reuters poll this week showed
24 of 26 analysts saw Slovakia adopting the euro next year. But
of 19 keeping a close watch on inflation, 13 said it would not
be able to hold price growth sustainably low.
(Reporting by Peter Laca; Editing by Michael Winfrey)
