(Repeats story published on Saturday)
By Jan Lopatka
ST. JULIAN'S, Malta, Jan 12 (Reuters) - Slovakia will likely not need
another revaluation of the central parity of its crown currency against the euro
before joining the euro zone, Prime Minister Robert Fico said on Saturday.
The leftist leader Fico reiterated his country would meet all nominal
criteria to join the single curency area next year and should be judged ready by
the EU if it was treated equally with past applicants.
The crown has been trading on the strong side of its central rate set in the
ERM-2 band against the euro even after the parity's revaluation last year.
"There is a lot of discussion about what happens further with the Slovak
crown, with respect to its strengthening, in expert circles but it is not
expected that such a thing (another revaluation) could come," Fico told Reuters
in an interview on the sidelines of euro adoption celebrations in Malta.
Under euro adoption rules, each euro applicant country must tie its currency
within the ERM-2 band for at least two years prior to euro entry to demonstrate
currency stability.
Slovakia revalued the central parity within the ERM-2 by 8.5 percent last
March after months of steady appreciation. Revaluations are not considered a
violation of the euro entry test.
The crown traded at 33.175 per euro late on Friday, 6.4 percent above the
central parity of 35.4424 per euro and 4.0 percent up from a year ago.
Fico said the government was not concerned about the crown's levels, as
exporters could deal with the currency's rise.
INFLATION CONCERN
Slovakia has been on course to meet the nominal euro entry criteria on
inflation, budget deficit, currency stability, debt and interest rates, but the
key issue in the accession negotiations is expected to be whether it could keep
inflation in check after giving up the floating exchange rate.
New euro zone member, Slovenia, has experienced an acceleration of
inflation, and analysts say a similar trend can also be expected in Slovakia as
the country converges towards west European price levels.
"It makes us nervous," Fico said when asked about the Slovenian case.
He noted Slovakia's income and price level was lower than Slovenia's, which
could lead to even bigger pressures for alignment.
"Quite justifiably, there is a debate whether the progress towards the
European standard in the area of prices will not be even higher than in
Slovenia," Fico said. "But we still have a year ahead of us and a lot can be
done in a year."
Fico said many in the country of 5.4 million had grave concerns about the
impact of the euro entry on their well-being and the goverment had to make sure
they can feel the euro's benefits.
"The Slovak public has a fear, it has a big fear, it has a great fear," he
said.
He said the government would try to ensure that various institutions in the
country publicly back the euro entry, and would make sure that retailers display
prices in both the crown and the euro, and will not round up prices unfairly.
(Reporting by Jan Lopatka; Editing by Peter Blackburn)
