Malta and Cyprus to get green light for 2008 switch to euro
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The eurozone is to enlarge further - two mini-states Malta and Cyprus are joining (Photo: EUobserver)
Two Mediterranean islands - Malta and Cyprus - are expected to get a green light for joining the 13-strong eurozone next January, with both the European Commission and European Central Bank likely to give a positive evaluation this Wednesday (16 May).
"Malta has sufficiently converged towards EU levels according to the criteria set in the EU treaty to adopt the euro on January 1, 2008," writes a draft commission report seen by the Times of Malta, suggesting the same applies for Cyprus.
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The positive verdict on the candidates readying to enter the currency union is foreseen following last week's report by the EU executive, which stated that the economic criteria in both countries are within the eurozone's limits.
According to the commission's spring forecast, Cyprus (777,000 inhabitants) will record inflation of 1.3 percent and Malta (400,000 inhabitants) of 1.4 percent which is below the required threshold. Both countries' budgetary deficits are also below the 3 percent limit.
The 2006 public debt figure of 63.5 percent of GDP in Cyprus is higher than the EU's 60 percent limit but it is on a downward path and set to pose no problem. Similarly, Malta had a debt of 66.5 percent of GDP last year with a clear tendency to fall further.
Malta's large public debt figure has resulted from its government's efforts to cut public deficit, with only Hungary recording similar debt levels while other countries from central and eastern Europe average around 25 percent.
But according to analysts, the public debt rule has not been previously strictly applied in the cases of Italy, Belgium and Greece and is not expected to become an obstacle for the Mediterranean duo.
Malta and Cyprus will follow Slovenia, which in January became the first new EU state to join the currency club. Slovakia and some of the Baltic states could be next in 2009, with the Czech Republic, Poland and Hungary likely to follow only after 2010.
