Slovakia getting ready for New Year's Eve euro party

Slovakia getting ready for New Year's Eve euro party

30th December 2008, Comments 0 comments

After joining the EU in 2004, the country of 5.4 million went through bold economic reforms.

Slovakia will celebrate its switch to the euro on New Year's Eve as the last step in its full integration in the European Union, almost 20 years after the fall of communism and the Soviet bloc.

At midnight, blue and yellow fireworks in Slovakia's capital Bratislava will mark the entry of the first Eastern European country into the euroclub, which will then be made up of 16 members and 323 million people.

On January 1, 2007, central European state Slovenia became the first former communist state to adopt the euro and the Mediterranean islands of Malta and Cyprus followed at the beginning of 2008.

Slovak Social Democrat Prime Minister Robert Fico (Smer) is confident the changeover "will be very good for the country mainly at this time of a deep economic and financial crisis."

"Being in the eurozone will be very helpful for Slovakia," Fico told AFP in a recent interview, adding the country's neighbors, the Czech Republic, Hungary and Poland, "would be very happy to be in the same position."

After joining the EU in 2004, the country of 5.4 million went through bold economic reforms carried out by the former pro-market government, which attracted foreign investment and fuelled the economic boom.

The "Tatras tiger" then caught up with its neighbors in transition and became the first to gain a go-ahead from Brussels to join the eurozone after it had comfortably met the so-called Maastricht criteria to adopt the currency.

The European Commission said last week in Brussels it expected the switch to be "smooth."

"The country has made a considerable effort in the past months to accelerate the preparations, inform the public and assure people that their concerns about rising prices are taken seriously," EU Commissioner Joaquín Almunia said in a statement.


The inflation performance is under the spotlight as the European Central Bank said Slovakia's ability to control prices had been its main concern when the euro switch was approved earlier this year.

But the increase in consumer prices has slowed over the past two months, reaching a year-to year 4.9 percent in November after 5.1 percent in October, according to government figures.

Fico's left-leaning government has taken measures to curb excessive price increases and has prevented hikes in energy prices in 2009.

The country has so far resisted the global crisis, although the automotive industry, the driving force of the national economy, slowed sharply in October.

After posting a record economic growth of 10.4 percent in 2007, the Slovak economy is still among the fastest growing in Europe, with a solid 7.0 percent growth in the third quarter of 2008 and an enviable estimate topping 4 percent for 2009.

The government believes euro adoption is an economic bonus on top of cheap workforce, fiscal incentives and pro-business legislation, which has already attracted foreign investors mainly in the car and electronics industries.

The German carmaker Volkswagen, which became Slovakia's top exporter after launching production near Bratislava in 1991, expects the euro switch to have "a positive impact" with lower bank fees, "higher stability in planning and simplification of internal transactions," said Daniela Rutsch, its local spokeswoman.

The company is planning to use its Slovak plant to launch the production of two new family car models, with an investment of about 300 million euros (410 million dollars) and the opening of over 2,000 new jobs.

At first, the Slovaks were not so enthusiastic about the switch but recent polls show that public opinion has improved with 58 percent of people positive and 35 percent of people negative.

In November 2007, the figures stood at 43 percent in favor and 52 percent against the euro.

The latest European Commission poll also showed eight in 10 people consider themselves well informed about the euro after the six-month education campaign focused on remote regions and so-called sensitive groups such as old people and the Roma community.

In December, the first euro coins with Slovak emblems received a warm welcome -- out of 1.2 million starter kits containing 45 coins, about 90 percent sold out in five days.

Like Cyprus, Malta and Slovenia, Slovakia chose the big-bang scenario with simultaneous introduction in both cash and non-cash circulation as of January 1 at the exchange rate of 30.126 korunas per euro.

For two weeks, it will be possible to pay cash in both euros and korunas but change will given back only in euros.

After January 16, Slovak coins and banknotes, which have been valid since the Czech Republic and Slovakia split amicably in 1993, will be withdrawn from circulation.

Sophie Pons/AFP/Expatica

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