Letland, Malta en Cyprus dicht bij invoering euro (en)

Three new EU member states have joined the European Exchange Rate Mechanism (ERM II) and hope to join the eurozone as early as 2007.

Latvia, Malta and Cyprus announced the move on Friday (29 April) on the eve of the anniversary of last year's EU enlargement on 1 May.

The ERM II is considered as the waiting room for the euro as it requires the candidates to meet set economic criteria as well as keep their respective currencies within a 15% band around a central parity rate against the euro for at least two years.

For the Cypriot pound, the pivot rate will be 0.585274 per euro, for the Maltese liri 0.429300 and for the Latvian lat 0.702804, according to the European Commission.

Measures to strengthen economic performance

All three countries announced concrete measures to strengthen their economic performance and reach the eurozone targets of a budget deficit under 3%, a debt-to-GDP ratio of 60% and inflation and interest rates close to those of the best performing economies within the EU - known as the Maastricht criteria.

Latvia is set to work on reducing its inflation, which is still more than 6 percent, as opposed to the eurozone's 2.1 percent. The country's leaders are also prepared to cut its trade deficit and restrain domestic demand.

Malta's authorities intend to raise taxes and boost the country's privatisation programme, while Cypriot leaders want to raise the retirement age to improve public finances.

Rushing towards the euro

All acceeding countries are obliged to enter the single currency according to the rules set for their EU membership.

Estonia, Slovenia and Lithuania joined the ERM II last June, and they are set to join the euro in 2007.

Malta and Cyprus plan to follow between 2007 and 2008, and Latvia in 2008.

Slovakia is likely to join the club in 2009, while the rest of the Visegrad four group - the Czech republic, Poland and Hungary could make it for 2010, at the earliest.

Analysts expect that the last three countries are the most vulnerable to possible attacks on their currencies in the run up to their entry to the eurozone.