Poland delayed setting a date for euro adoption until after a general election in 2015, when Prime Minister Donald Tusk said all requirements to switch currencies will have been met.
Setting a date now would be “pointless and illogical” and the government should focus on preparing the economy, President Bronislaw Komorowski told reporters in Warsaw today before meeting the Cabinet to discuss the nation’s euro-adoption plans. The country is moving toward that goal in “a calm and determined way,” Tusk said after the meeting.
The European Union’s largest eastern economy revived a debate about euro membership, shelved three years ago, amid signs the currency union’s crisis is waning. Making a decision so close to a parliamentary election risks turning into a political flashpoint, said Marcin Mrowiec, an economist at Bank Pekao SA (PEO), a unit of UniCredit SpA. (UCG)
“It’s good that the government and the president are not over-enthusiastic about setting the date,” Mrowiec said by phone from Warsaw today. “At the same time, connecting the euro discussion with the general election could end up being a trap if it becomes a divisive focus of the campaign.”
The zloty weakened 0.6 percent to 4.1732 per euro by 2:38 p.m. in Warsaw, its biggest drop in more than a week. It has declined 2.1 percent this year, the second most among more than 20 emerging-market currencies tracked by Bloomberg, behind the South African rand.
To adopt the euro, countries must meet conditions on deficit, debt, inflation and interest rates.
Poland, with government debt already below the limit of 60 percent of gross domestic product, will meet the “key criterion” of reducing its deficit to less than 3 percent of economic output before 2015, Tusk said. The shortfall narrowed to 3.5 percent last year from 5 percent in 2011, according to the European Commission.
After presidential and parliamentary elections in 2015, it should be clear whether the country meets all the requirements and if there is enough parliamentary support to push through the necessary constitutional amendments, Komorowski said.
That means Poland probably won’t adopt the euro before 2019, Piotr Bujak, chief economist at Nordea Bank AB (NDA)’s Polish unit, said by phone today.
“It isn’t good that this issue becomes a hostage of politics,” Bujak said. “There is a risk that political powers will polarize around the issue and it might become difficult to find the majority needed to change the law.”
Fifty-eight percent of Poles are against euro adoption, including 39 percent who said the country should never join the currency union, according to a Nov. 8-13 survey by the polling company TNS OBOP, which asked 1,000 people, the PAP news service reported. It didn’t give the margin of error.
Unlike the U.K. and Denmark, Poland and other former communist nations that have joined the EU since 2004, agreed to eventually adopt the euro. Slovenia, Slovakia have switched currencies. Latvia plans to join next year, becoming the euro’s 18th member. Lithuania’s new government on Jan. 25 pledged to seek entry in 2015.
The debate comes at the time when financial markets are gripped by fresh concern that the region’s debt crisis may worsen. Early results suggested an election in Italy, the euro area’s third-largest economy, may lead to a hung parliament and another vote.
The euro didn’t cause the debt crisis and adopting the currency is a “sine qua non,” or an indispensable condition, for Poland’s competitiveness in the longer term, Tusk said at the conference today.
“We favor Poland taking part in European integration,” Tusk said. “The euro is the axis of this integration.”
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