Prague  - Slovak central bank governor Ivan Sramko said Tuesday the global financial crisis would reduce economic growth and may widen budget gaps in Slovakia, which is to become the 16th country to adopt the euro on January 1.

Speaking to reporters at a conference in Prague, Sramko said a slight increase up to 2 per cent would be permissible depending on how the funds would be used.

Slovak Prime Minister Robert Fico, who won the 2006 election on promises to expand welfare, recently said that the 2009 deficit could slightly exceed the planned 1.7 per cent owing to the global financial crisis.

Sramko was upbeat about Slovakia's switch to the euro amid the financial meltdown that plunged the eurozone into recession. "I see more benefits of the euro in terms of stability," he said.

The governor has downplayed worries that Slovakia would give up its own monetary policy at this time. He said that "the influence of the monetary policy is significantly reduced" during such turmoils.

The Slovak central bank has been matching European Central Bank rate cuts in the run-up to the switch, slashing the key two-week repo rate to 3.25 per cent on November
11.

The government expects the economy to slow down to 4.6 per cent in 2009, down from 7-per cent levels this year. The Slovak economy has boomed in recent years following an influx of foreign automakers. (dpa)