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FULFILLMENT OF THE CONVERGENCE CRITERIA BEFORE ENTERING THE MONETARY UNION AND DEVELOPMENT TRENDS IN TERMS OF THE STABILITY AND GROWTH PACT

J. Lisy, M. Novak, P. Skalak

Abstract

EU countries applying for membership in the monetary union have to fulfill so-called convergence criteria known as well as the Maastricht criteria. One of the prerequisites for its completion is also achieving macroeconomic balance, which contributes to the performance of the economy and increase the growth of competitiveness. Slovakia recorded significant real GDP growth for the period of years 2005 - 2008, which contributed to the fulfillment of the convergence criteria and Slovakia's entry into the monetary union on 1.1.2009. Following the adoption of the Euro, EMU member countries have to adhere to the principles of the Stability and Growth Pact. It includes the main principles of the conduction of fiscal policy to stabilize the public finances. This is an important criterion especially for new member states. Fulfillment of the criteria of the Stability and Growth Pact as well as macroeconomic fundamentals in the Euro area countries were affected by the global economic and financial crisis. It is confirmed that the performance of the Slovak economy, small and highly open economy, is largely dependent on foreign demand.

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DOI resolver: doi.org/10.5593/sgemsocial2014/b23/s7.031

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