Slovakia would meet the Maastricht criteria for euro adoption by 2008, according to the newly nominated for vice governor of the NBS Vladimir Tvaroska. He explained that the country would realize benefits from its early entry in the eurozone since it would have a competitive advantage in terms of business environment to neighboring countries. According to Tyaroska, the inflation criteria would be crucial as its particular target was not known in advance, but depended on the economic developments in the EU member states.
Tvaroska stressed that the central bank would have the difficult task to pursue a monetary policy to bring down the inflation rate but at the same time it would have to avoid being too restrictive in order not to suppress excessive economic development. The Maastricht criteria on inflation stipulates that it should not be greater than 1.5 percentage points than the average rate in the three EU countries with the lowest inflation, which is expected to translate into an inflation ceiling of around 2.3%-2.5% year-on-year.
Tyaroska stated that current NBS policy was appropriate and the surprisingly high 7.6% y/y GDP growth in Q4 of last year was sustainable and not a risk for further development. Tvaroska noted that political risks were also present for the objective of adopting the euro in 2009 since the future government after the early June 17 elections might not support the particular date and might not bind itself with the required policies to meet the Maastricht criteria.
Tvaroska stressed that the central bank would have the difficult task to pursue a monetary policy to bring down the inflation rate but at the same time it would have to avoid being too restrictive in order not to suppress excessive economic development. The Maastricht criteria on inflation stipulates that it should not be greater than 1.5 percentage points than the average rate in the three EU countries with the lowest inflation, which is expected to translate into an inflation ceiling of around 2.3%-2.5% year-on-year.
Tyaroska stated that current NBS policy was appropriate and the surprisingly high 7.6% y/y GDP growth in Q4 of last year was sustainable and not a risk for further development. Tvaroska noted that political risks were also present for the objective of adopting the euro in 2009 since the future government after the early June 17 elections might not support the particular date and might not bind itself with the required policies to meet the Maastricht criteria.
