(Updates with finance minister, central banker comments)
By Marcin Grajewski
BRUSSELS, July 8 (Reuters) - Slovakia cleared the final
hurdle on Tuesday towards joining the euro zone on Jan. 1, 2009,
when European Union finance ministers set the rate at which the
single currency will replace its crown <EURSKK=>.
The EU's 27 ministers fixed the final rate for the Slovak
crown at 30.1260 to the euro, which Slovak officials said would
help tame inflation while supporting the country's already
impressive growth rates.
The rate is the same as the central parity level in the
Exchange Rate Mechanism, the currency stability test for joining
the euro. In the ERM-2, currencies are allowed to fluctuate
within a narrow margin around a parity rate.
"It (the exchange rate) will support low inflation
development," Slovak central bank governor Ivan Sramko told a
news conference.
Finance Minister Jan Pociatek said adopting the euro would
increase Slovakia's economic growth by one percentage point.
Slovakia, a major car producer, saw its economy expand by 10.4
percent in real terms last year, the highest rate in the EU.
"Euro entry will be beneficial for our economy. It will
attract foreign direct investment and ... increase gross
domestic product growth by one percentage point," Pociatek said.
EU leaders approved Slovakia's bid to become the euro zone's
16th member last month, despite European Central Bank concern
over the country's inflation.
In late May, Slovakia strengthened the crown's central
parity rate in ERM-2 by 15 percent in local terms partly to
fight inflation.
The country's inflation is now 4.0 percent, the same as in
the euro zone, but some economists say it may grow as it did in
Slovenia after it adopted the euro in 2007.
Slovakia will be the fourth of the bloc's new members that
joined the EU in 2004 and 2007 to adopt the euro. Much smaller
Slovenia entered the single currency zone in 2007, followed by
Cyprus and Malta this year.
Bigger EU newcomers Poland, the Czech Republic and Hungary
are expected to adopt the euro well after 2010.
Pociatek said an intensive information campaign about the
euro would be his priority as well as implementing measures to
prevent retailers rounding up prices when the euro replaces the
crown.
Euro adoption is seen as the biggest international
achievement of the leftist Prime Minister Robert Fico's
government.
However, he has faced opposition allegations that
information about the May currency revaluation leaked and that
local private equity groups booked profits of tens of billions
of dollars in subsequent insider trading.
The government has rejected the allegations as groundless,
although the central bank has begun an inquiry into unusually
large volumes of trade on the small local currency market
shortly before the revaluation.
(Additional reporting by Peter Laca in Bratislava; Editing
by Gerrard Raven)
