Brussels - Slovakia will become the first country from the former Soviet bloc to join the European single currency, the euro, as from January 1, according to a European Commission report seen Wednesday by Deutsche Presse-Agentur dpa.

The report, which is to be submitted to European finance ministers on May 7, states that "Slovakia fulfils the necessary conditions for the adoption of the single currency."

"The euro adoption date and the cash changeover date shall be 1 January, 2009. No 'phasing-out' period should apply," the report adds.

Slovakia officially applied to enter the eurozone on April 5 and needed to fulfil a series of criteria before it was allowed to join.

The country's budget deficit this year is estimated at 2.0 per cent of gross domestic product, well within the 3 per cent upper limit imposed on eurozone members.

And in the report, the commission recommends that procedures it had brought against it for exceeding the limit in 2006 should now be abrogated.

But its high rate of inflation, forecast at 3.8 per cent and well above the euro average, had prompted some analysts to predict that it might not be allowed into the club.

The report however states that "the analysis of underlying fundamentals and the fact that the reference value is met by a wide margin support a positive assessment on the fulfilment of the price stability criterion."

The report also urges Slovakia to adopt "a more ambitious fiscal policy stance" to help mitigate the risks of inflation.

Once its entry is approved, it will become the 16th member of the European single currency zone.

Approval by ministers is seen as a formality. (dpa)