SLOVAKIA IS to become the 16th member of the eurozone on January 1st next after EU finance ministers gave the final go-ahead to the former communist country at a meeting in Brussels yesterday.
Welcoming the move, French finance minister Christine Lagarde, chairing the talks, noted that it is the “first time that an old Iron Curtain country has joined the euro” while EU monetary affairs commissioner Joaquin Almunia said it proved the “great success” of monetary union.
The move by EU finance ministers – who set the exchange rate at 30.1260 Slovak korunas to €1 – was the last formal step in a long process. The small country’s euro bid was previously approved by the European Commission and the European Central Bank which look at the rate of inflation, annual budget deficit and overall debt.
Slovakia is the second of the eight eastern European member states that joined the EU in 2004 to enter the eurozone. Slovenia joined in January 2007.
Finance minister Jan Pociatek said the move would be “beneficial” for his country’s economy and that it would “attract direct investment”.
The ministers also had “lengthy exchanges” on what to do about the soaring oil prices which have contributed to record inflation in the eurozone as consumers feel the pinch both at the petrol pump and in supermarkets.
In an attempt to make the market more predictable and curb speculation, member states agreed to publish reports on their oil reserves on a weekly basis.
At the moment, most countries publish this information every month.
Ms Lagarde said the move to be more transparent would mean that it would be easier to get a more “coherent picture” of what is happening in the oil market.
After the meeting, it emerged that France is still using its weight as the EU presidency country to try and push ahead with its idea of capping Vat levels on oil prices in order to ease the burden on consumers – a step strongly opposed by Germany and the European Commission which fears it sends out the wrong signal at a time when citizens ought to be cutting down on their oil consumption for environmental reasons.
In a reference to the Vat cap, the French finance minister urged her counterparts to look at “all measures” and to think “outside of the box” when it comes to possible steps on oil prices with the issue set to be discussed once more in autumn. Other suggestions include a Tobin Tax – a tax on currency transactions aimed at limiting speculation – and a Robin Hood tax – an extra levy on oil companies profiting from rising fuel prices.
EU finance ministers also agreed to regulate credit rating agencies in the wake of the US subprime mortgage crisis. Critics said the agencies had been too slow to warn investors of the unfolding crisis leaving them with almost worthless investments.
Speaking after the meeting, internal market commissioner Charlie McCreevy said he would come forward with a legislative proposal in October and would concentrate on areas such as registration of agencies, disclosure and conflict of interest.
