Estonia and Lithuania must rein in soaring inflation if they hope join the euro next year as scheduled, the EU's monetary affairs commissioner said Thursday. "If the evaluation were made today with the figures published by Eurostat this morning, neither Estonia nor Lithuania would satisfy the criteria," Monetary Affairs Commissioner Joaquin Almunia told the Belgian Royal Society of Political Economy.
The EU statistical agency said Estonia reported 3.6 percent inflation in December with Lithuania coming in at 3 percent. The euro-zone year-on-year average for December was 2.2 percent, with underlying inflation excluding energy and tobacco running at a stable 1.4 percent.
Both plan to adopt the euro on Jan. 1, 2007 but will need to keep inflation under 2.4 percent to do so. Only Slovenia would be on target to join the euro next year, with December inflation running at 2.4 percent. The strict economic guidelines for euro membership often ignored by the 12 nations that now use the euro are proving a headache for several new EU members. Poland's Finance Ministry said Thursday the country would not be able to meet the fiscal requirements for adopting the euro before 2010.
In an update of its euro convergence program, the ministry said the high cost of pension reforms would prevent Warsaw from meeting a 2008 target to bring its budget deficit under the 3 percent of gross domestic product set by EU rules.
Hungary's runaway budget deficit may yet derail its goal of adopting the euro by 2010 unless it takes tough action over the next three years. The budget deficit for 2005 was predicted to be 6.1 percent, but the country's central bank has warned that the final figure may be even higher. Cyprus and Malta aim to adopt the euro in 2008, with Slovakia following a year later, joined by the Czech Republic in 2010, reports the AP. N.U.