(Updates with Slovak finance minister, Almunia quotes)
By Marcin Grajewski
LUXEMBOURG, June 3 (Reuters) - European Union finance
ministers gave Slovakia the green light on Tuesday to join the
euro zone next year, urging the country to be ready to fight
inflation with tight fiscal policies.
"We are happy to see Slovakia join the euro zone on January
1, 2009," Jean-Claude Juncker, who chairs the Eurogroup of euro
zone finance ministers, told reporters.
Asked about the ministers' advice for Slovakia, he said:
"Keep a strong eye on inflation and be as coherent as possible
when it comes to fiscal policies, but the last remark is for all
member states."
Slovak Finance Minister Jan Pociatek welcomed the decision.
"There is hard work ahead of us in terms of practical
preparations and information campaign," he told reporters.
Slovakia's mint has been tasked to produce some 500 million
euro and cent coins, which will carry Slovak symbols on their
national side: the Slovak double cross, the Bratislava castle
and the Kryvan peak in the Tatra mountains.
The ministers said Slovakia met all criteria to become the
euro zone's 16th member, despite European Central Bank concern
over the country's inflation.
"The ministers ... underline the need for Slovakia to be
vigilant and to implement budgetary and structural policies
supportive of price stability," the ministers wrote in a letter
to their leaders ahead of their summit this month.
The leaders are certain to give Slovakia the political green
light at the June 19-20 summit to adopt the euro.
Slovakia will become the fourth of the bloc's new members
that have joined the EU since 2004 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.
FINAL EXCHANGE RATE
EU finance ministers will in early July give the final
blessing for the ex-communist country's euro adoption by setting
the final exchange rate between the Slovak crown <SKK=><EURSKK=>
and the single currency.
Slovakia revalued the crown's central parity rate last week
in the ERM 2, an exchange rate system that is a proving ground
for the euro, by 15 percent in local terms and 17.6472 percent
in international terms to 30.1260 to the euro.
Many analysts expect the new central parity rate to become
the final conversion rate for the crown. Pociatek declined to
comment on the issue.
The executive European Commission and the ministers brushed
aside ECB concerns about the country's ability to keep inflation
low in a sustainable way, a vague euro entry criterion.
"There have been a lot of opinions around this analysis on
sustainability. It has not been easy to assess the real
situation. Finally we considered that Slovakia can fulfil in a
sustainable way these criteria," EU Monetary Affairs
Commissioner Joaquin Almunia told a news conference.
Other criteria involve having a budget deficit, if any,
below 3 percent of gross domestic product, public debt below 60
percent of GDP, sufficiently low long-term interest rates and a
stable currency in the ERM 2 system.
In the ERM 2, a currency is allowed to fluctuate by +/-15
percent around the central parity rate.
(Editing by Malcolm Whittaker)
