Poland should seek to adopt the euro in 2016, said Dariusz Rosati, the head of the parliamentary public finance committee, showing confidence that European leaders can solve the currency union’s debt crisis.
The European Union’s largest eastern economy next year should join the exchange-rate mechanism, a condition for the switchover, when the euro area’s “situation has stabilized,” Rosati, of Prime Minister Donald Tusk’s ruling party, said in a Feb. 27 interview in Warsaw. While in the euro’s waiting room, the country will have time to meet the other criteria, he said.
“Poland can adopt the euro in 2016 at the earliest and that’s what we should aim for,” Rosati said. “In four years’ time, we’ll know whether the euro region is going to collapse or strengthen. I think it will exit the crisis more robust for its experience.”
Poland, where the majority of the public doesn’t support the switchover, will adopt the euro only after the currency bloc undergoes a “convincing” overhaul, Finance Minister Jacek Rostowski said in December. The euro has gained 0.4 percent this week after German deputies backed a Greek aid package that will grant the indebted nation 130 billion euros ($175 billion) before a March 20 debt interest payment deadline.
The zloty strengthened to 4.1151 against the euro as of 5:07 p.m. in Warsaw from 4.1303 yesterday. The yield on the five-year bond maturing in October 2016 dropped to 4.906 percent, the lowest since Sept. 8.
The Polish currency has strengthened 8.2 percent against the euro this year, more than any currency in the world except the Hungarian forint. The zloty slumped 11 percent to the euro last year, after the budget shortfall soared to 7.8 percent of gross domestic product in 2010.
The aid package for Greece and the European Central Bank’s emergency lending program boosting investor confidence may help the Polish economy grow be between 3 percent and 3.5 percent this year, Rosati said. The government’s forecast is 2.5 percent.
The budget deficit will narrow to within the EU limit of 3 percent of GDP “if not this year, then next year,” while inflation will slow as the zloty strengthens, according to Rosati.
EU Entry Requirement
Poland, required by the terms of its 2004 EU entry to adopt the trading bloc’s common currency, doesn’t have a deadline for the switchover. To qualify, countries must meet requirements including narrowing their budget deficits and curbing inflation, as well as spending a minimum of two years in the exchange-rate mechanism that tests currency stability.
Of the EU’s 10 former communist members, Slovenia, Slovakia and Estonia have adopted the euro. Moody’s Investors Service on Feb. 13 downgraded Slovak and Slovenian debt one step to A2, the same level as Poland.
Securing a two-thirds majority in parliament to amend the constitution for euro adoption may be more difficult than meeting the adoption criteria, Rosati said.
Adopting the euro would be a “catastrophe,” Jaroslaw Kaczynski, a former prime minister who heads Poland’s biggest opposition party, said last year, pledging to vote against any measures that brought the switchover closer.
“Euro entry is going to be the main topic of the next election campaigns in Poland, both in the European and domestic parliamentary elections,” Rosati said. The European Parliament vote is scheduled for 2014, with the local balloting due a year later.
Persuading the public of the advantages of euro adoption probably won’t be as difficult, as the currency switch would boost the Polish economy, Rosati said. A one-time effect may be as much as 2 percent if output and longer-term benefits such as higher investment may add 0.7 percent to GDP, he said.
Sixty percent of Poles oppose euro adoption with 32 percent in favor, according to a Jan. 5-11 survey of 1,058 adults by the Warsaw-based Center for Public Research, PAP news service reported on Feb. 14. The poll didn’t provide the margin of error.
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