Setback for Poland

Poland and the Euro

Setback for Poland

Postby blackev on 12 May 2009, 13:58

EUobserver - ANDREW WILLIS

Speaking to the Financial Times, Polish finance minister Jacek Rostowski admitted his country's entry to the euro area – seen as a major pillar of its recovery plan – may be set back by as much as one year.

The country had hoped to join the two-year waiting chamber, known as ERM-II, to the euro area this year, with a full shift to the common currency scheduled for 2012.

"The first of January 2012 is still realistic, but it may require some delay," said Mr Rostowski. "The world crisis has come along and it would be naive to pretend it has had no effect ... If we move it by one year, that's not the end of the world."

Until recently, the main impediment to Polish accession to the euro area was the country's fluctuating currency, the zloty.

The currency plummeted at the start of this year as the economic crisis worsened but then regained strength and has maintained stability in recent weeks, partly due to a €15 billion credit line from the International Monetary Fund.

However, it now appears that the country's greatly reduced growth rate, causing a corresponding fall in tax receipts and an increase in the budget deficit, is the chief cause for the likely delay.

Mr Rostowski says he will not increase spending and says the country's deficit will be no more than 4.6 per cent of GDP this year. A recent economic forecast by the European commission puts the figure at 6.6 per cent for this year, rising to 7.3 per cent in 2010.
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Re: Setback for Poland

Postby Miguel.mateo on 12 May 2009, 16:02

Sort of expected :|
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