Slovakia would have struggled to meet the criteria for joining the euro club in the crisis years and those that followed. “Our timing was excellent,” the then-Slovak central bank governor Ivan Sramko said several months after the adoption of the euro in 2009. “We didn’t know there’d be a huge crisis in 2008, and we had made the necessary arrangements to enter the eurozone well in advance.”

Oddly, Fico, who also called the euro Slovakia’s “unrepeatable historic success” one year after its introduction, taking pride in the moment being connected with his cabinet, had never been much of a euro-optimist before. Initially, he hesitated about the currency changeover. In addition, Fico has rather seen the EU as just one of several opportunities for providing the country with a better future, emphasising as early as two decades ago that there were four cardinal directions to look in: the EU, NATO, the euro and.

“When people wake up on May 1, nothing will change,” opposition MP and Smer party leader Fico said several days before Slovakia joined the EU in 2004. “The sky won’t be bluer, nothing will be cheaper and nothing will be better.”

To raise standards of living, he added, Slovakia would have to attract investment and start producing products with higher added value if it did not want to remain an assembly workshop for foreign firms.

Five years later, after Slovakia had become the 16th member of the eurozone, Sramko also stressed the importance of a well-steered economic policy, commenting that “the euro isn’t a cure-all”.

Fifteen years on, Fico, now the four-time premier and an even stronger Eurosceptic, still believes that it was the right decision to give up the independent monetary policy and adopt the euro.

“Look, we can speculate on this. The truth is, the euro guarantees us a certain degree of stability,” the premier said.

A good fit

Slovakia is a small and open economy. Around 80 per cent of its exports are headed to the EU, in particular to Germany, France and Italy, but also to Slovakia’s neighbouring countries. However, Czechia, Poland and Hungary belong to the minority of EU member states that continue to use their own national currencies.

Still, employers see benefits rather than negatives of adopting the common currency. “The euro eliminated exchange rate risks, reduced transaction costs, as well as the costs of maintaining multiple accounts in different currencies,” says Andrej Lasz, general secretary of the Association of Industrial Unions and Transport.

Klub 500, which brings together Slovak companies employing more than 500 workers, also highlights the price stability, which helps firms manage their financial flows better and do business with most EU countries without having to convert the currency. The Federation of Employers’ Associations underlines the increase in price transparency, enabling easier comparison of costs for goods and services between eurozone countries and a better strategy planning.

“The benefits definitely outweigh the disadvantages,” says Martin Hostak, secretary of the Republican Union of Employers.

The plan to adopt the euro, and becoming an EU member state, was one of the reasons why Kia Corporation, a South Korean car manufacturer, decided to build its plant in Slovakia in 2004. Of all the companies in Slovakia, Kia Slovakia reported the second-highest sales, 6.7 billion euros, in 2022. Most of its cars produced in Slovakia are sold across Europe. The German and French car producers Volkswagen Slovakia, the largest exporter in Slovakia, and Stellantis Slovakia have also seen the adoption of the euro by Slovakia positively for a long time.

“Slovakia’s entry into the eurozone primarily meant stability for our business in Slovakia,” Stellantis Slovakia said already a decade ago.

Moreover, a 2021 study published in the International Journal of Central Banking, shows that the euro encouraged more Slovak firms, in particular smaller ones, to export to the eurozone.

Nevertheless, some point to the German economy as a more important factor for the existence of firms in Slovakia, and Central Europe as a whole. Increased foreign trade with the eurozone, more foreign direct investments, and higher GDP were, in fact, listed as other benefits that the euro would provide Slovakia with. But the overall benefits of the euro were lower than expected in the end, in part due to the negative effects of the global economic crisis and the debt crisis in the eurozone.

If Poland, Czechia and Hungary had adopted the euro alongside Slovakia, the Slovak central bank writes in its 2006 study, the benefits could have been greater. However, Poland and Hungary didn’t meet the convergence criteria back then, whereas public opinion in Czechia was influenced by then Eurosceptic president and economist Vaclav Klaus.

Having served under Slovak prime minister Mikulas Dzurinda at a time when Slovakia made a political decision to adopt the euro in 2003, the former Slovak economy minister Ivan Miklos recently opined that the euro would, in fact, help Czechia because it is – like Slovakia – a small economy. “I think the Czech Republic would do better with the euro,” he said.

Nevertheless, the political consensus in Czechia is still lacking.

The ex-minister believes that Slovakia is better off with the euro because the common currency is more stable than small currencies, and it has a better reputation.

“It also creates a more stable economic environment, especially for exporters and importers,” he noted.

Slovaks love the euro, Czechs fear it

The Slovak public, who have long trusted the EU more than its governments, also strongly support the euro.

According to last year’s Eurobarometer survey, up to 84 per cent of Slovaks believe the euro is a good thing for Slovakia. In 2012, it was 59 per cent. They see its assets when they travel and pay abroad, want to do business in another EU country, or when they compare prices. By comparison, 54 per cent of Czechs are against the euro.

“Nothing is lost… We’ll join the eurozone one day,” the chair of the Czech Chamber of Deputies, Marketa Pekarova Adamova, told the TASR news agency earlier this week, noting that many myths about the euro have mushroomed in Czechia.

One of Slovak people’s major worries was that inflation, and thus prices, would skyrocket upon joining. Yet according to the Slovak central bank, the average inflation rate in the first 10 years since the introduction of the euro was 1.3 per cent. Ten years prior to the adoption, the average inflation stood at 6.1 per cent.

Due to the energy crisis and the war in Ukraine, inflation increased to 12.7 per cent in 2022 (15.1 per cent in Czechia) and remained high the following year. It was higher than in the eurozone. This shows that Slovakia would have needed higher interest rates than those set by the European Central Bank (ECB) to influence prices and inflation. Tatra Banka analyst Tibor Lorincz explained that the ECB’s rates reflect the needs of the eurozone as a whole.

J&T Banka analyst Stanislav Panis argues that an independent monetary policy, given the size and openness of the Slovak economy, would offer limited space to influence price and economic stability.

Noting that the eurozone needs to change to be able to thrive, Lorincz added: “The [2009-2010s] debt crisis has already shown that the insufficient fiscal and banking integration of the eurozone means that different countries can grow at different rates in the long term, have different high inflation and need different monetary policies.”

Speaking of low interest rates and the euro, some experts in Slovakia blame them for contributing to increased real estate prices and the state becoming indebted fast. Others praise the euro, as Slovakia’s borrowing costs are cheaper than those of its non-eurozone neighbours’.

More than just the currency

Slovenska Sporitelna analyst Matus Hornak underscores that the benefits of being a member of the EU and the eurozone are intertwined. Nonetheless, it is the government that defines the success of the country, including economic growth, in the end.

“What is decisive is the responsible policy of the government and whether the government makes the necessary reforms or not,” said Miklos.

Thanks to Miklos and Dzurinda’s reforms and EU membership, Slovakia became known as the “Tatra Tiger” in the 2000s. The situation changed after Robert Fico became prime minister in 2006. “Fico’s first government did not make any reforms and, in principle, did not have to. It inherited the fastest growing economy in Europe,” the ex-minister said.

Apart from two short breaks, 2010-2012 and 2020-2023, Fico has been in power since 2006.

For about a decade, the country’s GDP (1.6 per cent growth in 2023) has been hovering around 80 per cent of the EU average, but not growing. Slovakia – despite the euro and billions of euros flowing into the country from the EU – has become less competitive compared to its neighbours, the latest World Competitive Ranking shows. Like the ranking, credit rating agencies, the European Commission and other institutions point to problems in education, the unsustainability of the public finances, but also to the current problems with the rule of law. In the World Bank’s Doing Business ranking, Slovakia is worse off than Poland and Czechia. Despite the inflow of foreign investments, such as Volvo, the amount has been lower compared to other Visegrad Group countries.

“Slovakia is reaching a level of development in which, for long-term economic growth, it is necessary to support the knowledge economy, the development of innovation, research, development and especially education,” said Hornak.

The 6.4-billion-euros post-pandemic recovery plan, supported by the European Commission, is believed to help in this regard, which cannot be said about the euro. To date, experts are split on whether the common currency has helped Slovakia economically. However, the Slovak central bank governor Peter Kazimir believes that the euro means much more than just the common currency.

“The euro is another anchor that anchors us in European values, in the idea of ​​European integration and living together in Europe,” said Kazimir.