Slovakia has officially applied to join the eurozone in January 2009. If this application is successful, the central European state will become the 16th of the European Union's 27 countries to adopt the euro.
The former Communist state, which formed part of Czechoslovakia, would mark three great achievements in the last two decades if manages to pull through this latest bid. Following the division of the country, Slovakia joined the European Union and is now bidding to join the eurozone.
Slovakia's economy, since achieving independence in 1993, has made a rapid switch from a centralised to a market-oriented one. All this was mainly achieved by attracting high levels of foreign investment. The Slovak economy has moved from arms making during the Communist era to one that attracts the car and electronics industries. The economic growth of over 10 per cent last year and inflation within the rate stipulated by the EU have boosted the country's chances of approval for euro adoption.
However, Slovakia must first reach the Maastricht criteria before qualifying to join the eurozone. To qualify, Slovakia needs to have its debt and budget deficit within EU limits, a stable currency, low interest rates and low inflation. Undoubtedly, this is a difficult task given the soaring prices of oil and food.
Slovakia fulfils all the main fiscal and economic criteria to join the currency union and almost all bank economists expect it will be admitted. The only question is whether inflation, which is currently low enough despite nearly double-digit economic growth, is sustainably low. The fact that Slovenia, which joined the euro area last year, now has an inflation of 6.6 per cent, hence more than three times the European Central Bank's ceiling, is surely a matter of concern.
Jan Pociatek, Slovakia's Finance Minister, confirmed this week that his country had learnt a lesson from other eurozone countries and are following the good practices of successful candidates.
In my capacity as the European Parliament's rapporteur for Slovakia's eurozone bid, I had several meetings with Slovak institutions, including the Prime Minister and government officials. On several occasions during these meetings, I was told that Slovakia is following Malta's example in its information campaign in regard of the euro adoption.
This is another proof that Malta is not only making a success of European Union membership but also becoming a role model for other countries. However, our job is not complete yet. We must continue to guarantee that what we were able to achieve is not lost and, definitely, the re-election of the Nationalist Party to government is an assurance in itself.
One may ask: Why is the euro becoming such a hype? With the US dollar reaching record lows in the last months the euro is becoming a major global reserve currency. Since its introduction, the euro has been the second most widely held international reserve currency after the US dollar.
The IMF''s foreign exchange reserves (COFER) database breaks down official holdings by currency. In the two years to the end of last year, the dollar's share of industrialised countries reserves fell slightly whereas the share held in euros rose.
Economists are accepting the possibility of the euro becoming the first international reserve currency. Alan Greenspan, former Federal Reserve chairman, in September last year said that it is "absolutely conceivable that the euro will replace the dollar as reserve currency or will be traded as an equally important reserve currency".
The comments made by Mr Greenspan continue to affirm the importance of the euro in the global market. The importance of the European currency is also perceived by EU states that had opted out of joining the eurozone in the past.
In a poll published by the Danish financial daily Bourses, 55 per cent of Danes said they would vote to eliminate the European Union opt-out that has allowed Denmark to remain outside the eurozone. This is quite a u-turn when one considers that 53.2 per cent of the Danes rejected the euro back in 2000.
The diverse produce the European market offers is contributing to the euro global success. The strong demand from emerging economies for European exports is assisting the European currency to ride out the global economic storm that is being faced by the US dollar and the yen, the euro major international competitors.
This proves that Malta's entry into the eurozone was a wise decision that guarantees economic stability. Once again, we have another tool in hand to continue with our economic development for the benefit of every one of us. Moreover, this achievement will continue to attract high-quality investors that are seeking stability to carry out their business.
Mr Casa is a Nationalist member of the European Parliament.
david.casa@europarl.europa.eu
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