(Repeats story from late Tuesday)
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.
"Twenty years after the fall of Berlin Wall, Slovakia is becoming the first
country from behind the former Iron Curtain to adopt the euro," said French
Economy Minister Christine Lagarde, whose country holds the EU's rotating
presidency.
EU Monetary Affairs Commissioner Joaquin Almunia said adopting the euro
would bring greater price stability, more jobs and foreign investment as long as
Bratislava continued to pursue sound fiscal policies.
Slovak Prime Minister Robert Fico said he was happy with the rate, although
a round figure of 30.0 or 30.1 would have been more practical.
"On one hand, it boosts the value of peoples' savings, on the other hand it
does not endanger strong growth of the economy," Fico told a news conference in
Bratislava.
The exchange rate is the same as the central parity level in the Exchange
Rate Mechanism (ERM-2), the currency stability test for joining the euro.
"It (the exchange rate) will support low inflation development," Slovak
central bank governor Ivan Sramko told a news conference.
The crown has been trading near the parity, which was widely expected to
become the new conversion rate. It stood at 30.287 to the euro at 1600 GMT, from
30.223 late on Monday.
Credit rating agency Fitch upgraded its rating for Slovakia by one notch to
'A+' after the ministers' decision.
Finance Minister Jan Pociatek said adopting the euro would increase economic
growth by one percentage point. Slovakia, which exports cars and electronics,
saw its economy expand by 10.4 percent last year, the highest rate in the EU.
The euro adoption is to a large extent the result of liberal economic reform
carried by Fico's predecessor Mikulas Dzurinda.
The country's path toward the euro shows the way for other central European
ex-communist states, which are expected to take at least another four or five
years to join.
The Slovak crown will disappear after just 16 years since its birth in the
peaceful break-up of Czechoslovakia in 1993.
BENEFICIAL
EU leaders last month approved Slovakia's bid to become the euro zone's 16th
member, despite European Central Bank concern over sustainability of its
inflation rate.
In late May, Slovakia strengthened the crown's central parity rate in ERM-2
by 15 percent in local terms partly to fight inflation.
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.
Pociatek said an intensive information campaign about the euro would be his
priority as well as measures to prevent retailers rounding up prices when the
euro replaces the crown.
Euro adoption is seen as the biggest international achievement of Fico's
government, but Pociatek has faced opposition allegations that information about
the May currency revaluation leaked and that local private equity groups booked
profits of tens of millions of dollars in 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 and
Victoria Main)
