BRUSSELS, Belgium: The European Union on Tuesday gave Cyprus and Malta final approval to start using the euro next year, taking to 15 the number of nations sharing the currency.
Finance ministers voted to allow the two Mediterranean nations to join the currency zone on Jan. 1.
They also set an exchange rate of one euro to 0.585274 Cypriot pounds and 0.4293 Maltese lira when the two countries swap their existing coins and banknotes for the euro.
Cyprus and Malta will bring just over 1 million people to the 318 million who now use the euro. Their economies account for only 0.2 percent of euro-zone gross domestic product.
Both joined the EU in May 2004. Only one other country that joined the EU at the same time — Slovenia — has so far adopted the euro.
The largest of the EU newcomers — Poland, Hungary, the Czech Republic, Romania and Bulgaria — have yet to set a date for euro entry. Estonia had originally planned to join next year but will delay membership as its growing economy sees inflation surge, a problem that has also slowed Latvian and Lithuanian plans. Slovakia is scheduled to join in 2009.
Cyprus and Malta worked hard to meet the strict EU economic standards for euro nations, with Cypriot workers agreeing to lower wage demands that could boost inflation while Malta paid off debt to cut its budget deficit below the EU maximum of 3 percent of gross domestic product.
EU Economic and Monetary Affairs Commissioner Joaquin Almunia said he recognized the effort they had made to fulfil the entrance criteria.
To keep their shared currency stable, euro nations are also supposed to keep overall public debt below 60 percent of gross domestic product.
However, even the largest euro economies have had trouble with these rules and euro candidates can be accepted if they can show that they are on track to meet these limits.
Cyprus became part of the EU a month after Greek Cypriots voted against a United Nations plan that would have led to reunification with the breakaway Turkish Cypriot state in the north of the island. EU officials have warned Turkish Cypriots against starting to use the euro as their currency without approval.
Source: International Herald Tribune
