The European Council yesterday formally approved Malta and Cyprus for adoption of the euro as their currency at the ECOFIN meeting in Brussels, enlarging the euro area to 15 member states, as from 1 January 2008.
Cyprus and Malta will issue euro notes and coins at the same time as adopting the euro. The conversion rates are set at 0.4293 Maltese lira to the euro, which correspond to the current central rates of both currencies within the EU’s ERM II exchange rate mechanism.
Parliamentary Secretary Tonio Fenech said this decision was of great satisfaction after the hard work put in to reach this important stage. “Apart from the positive decision to adopt the Euro, another important point was the fact that the Council accepted the convergence rate of 0.4293 currently in force which also means that we can go ahead with transactions in a stable manner. We now have to do our utmost to ensure that the changeover will bring positive benefits to the consumer as much as possible”.
Fenech explained that the next step is the publishing of the fourth stage of the Euro changeover master plan which will take place today whilst a Maltese delegation will be visiting France next week to witness the minting of the first Maltese Euro coins. He said the information campaign for the changeover will be intensified in the coming months and will be targeted mostly to vulnerable groups.
In the coming five months, both Malta and Cyprus will have to complete and finalise their crucial practical preparations to ensure that the changeover to the euro takes place smoothly, as was the case in Slovenia this year.
“I am happy that Cyprus and Malta will adopt the euro bringing to 15 countries and nearly 320 million the number of people who share the currency that has the vocation to be, one day, the sole currency of the European Union,” said Joaquín Almunia, European Commissioner for Economic and Monetary Affairs.
“Thanks to the economic and monetary union, the euro area has now enjoyed an unprecedented period of price stability and low interest rates. But being part of a monetary union also implies an added responsibility vis-à-vis the other members; a responsibility to run sound public finances and to coordinate economic policies for the benefit of more growth and better jobs for all.”
The Council encouraged Cyprus and Malta to continue with appropriate policies to ensure that they can make the most of the benefits of joining the euro, in particular as regards budgetary rigour, structural reform and maintaining the competitiveness of their economies.
After peaking at around 10 per cent of gross domestic product in 2003, Malta’s budget deficit decreased significantly under its fiscal consolidation programme, reaching 2.6 per cent in 2006.
Although Malta’s general government debt to GDP ratio is above the EU’s 60 per cent reference value, this is on a declining path and is expected to reach a figure of 66 per cent in 2007. The average HCIP inflation rate in Malta in the year ending March 2007 stood at 2.2 per cent, which is below the reference value for the price stability criterion.
Thirteen out of the EU’s 27 member states currently use the euro as their currency: Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Austria, Slovenia and Finland. Euro notes and coins were introduced in 12 of those countries on 1 January 2002 and in Slovenia on 1 January 2007.
Production of the coins will start shortly after today’s ECOFIN decision at the Mint of Finland, for the Cyprus coins, and the French Mint (Maltese coins) as a result of public tenders. Euro coins bear a common and national side.