RPT-Slovaks seek to cap price hikes after euro entry

                                
 (Repeats story published late on Wednesday)
                                
 BRATISLAVA, Jan 23 (Reuters) - The Slovak government signed
a pact with employers and unions on Wednesday designed to secure
smooth adoption of the euro next year and avoid hefty price
hikes after the currency conversion.
                                
 Slovakia is expected to meet the key euro entry criterion on
inflation with a big buffer in May, when the EU executive will
assess whether the country is ready to swap crowns for euros.
 But questions remain whether the country is judged able to
keep inflation low on a sustainable basis.
                                
 Opinion polls have shown that Slovaks increasingly fear that
the euro will bring higher prices, and Prime Minister Robert
Fico has said his government would take action to prevent any
unjustified mark-ups.
                                
 "The declaration's goal is ... to contribute to smooth and
successful euro adoption and protect Slovakia's citizens against
possible negative impacts of euro adoption before and mainly
after Jan. 1, 2009," the document said.
                                
 Both central bankers and the finance ministry have sounded
optimism over past weeks that the Slovaks will convince the
Brussels low price growth will be maintained in a longer term.
                                
 "We are meeting them (the Maastricht criteria) now, and we
will meet them in the decisive period," Fico told the signing
ceremony.
                                
 "We work efficiently in fighting inflation, where pressure
and control over privatised natural monopolies is mainly
reflected in a reasonable pricing policy," he said.
                                
 Since taking power in 2006, Fico's government has adopted
measures to tighten the state's grip over key utilities to limit
price pressures in the run-up to the euro and shield the poor
against rising energy bills.
                                
 Slovak EU-norm inflation climbed to a one-year high of 2.5
percent in December fed by jumps in food and fuel prices, but
the country remained firmly on track to meet the nominal euro
test with price rises also seen elsewhere in Europe.
                                
 The document binds employers and unions to respect labour
productivity as a key benchmark for wage bargaining, urging
businesses to publicly denounce practices of using euro adoption
as a vehicle to boost prices.
                                
 Unions pledged to inform the state's agencies about
unjustified price rises in retail and service sector after
adoption, while city halls were urged to handle funds with care
to ensure stability of public finances.
                                
 Slovakia meets other euro entry criteria including a fiscal
deficit below 3 percent of gross domestic product, a stable
exchange rate and sufficiently low long-term interest rates.
(Reporting by Martin Santa, writing by Martin Dokoupil, editing
by David Christian-Edwards)