ANALYSIS: Poles face hurdles before slated 2011 euro switch

ANALYSIS: Poles face hurdles before slated 2011 euro switchWarsaw - Prime Minister Donald Tusk's bold plan for Poland to adopt the euro by 2011 has strong support among the business community and ordinary Poles, but others doubt that Warsaw can meet - or maintain - the strict economic criteria for joining the club.

Post-communist Eastern Europe's largest economy has in effect chosen high growth over low inflation and fiscal restraint. Poland's gross domestic product expanded 1.5 per cent in the second quarter compared to the previous three months, while the eurozone's GDP shrank by 0.2 per cent.

Tusk's 2011 target date is his most concrete promise on joining the eurozone since he took office in November. Announcing the plan last week, he called it "difficult but possible."

Poland's next budget will add "credibility" to the goal, Tusk said - an important point because the EU has criticized Poland's budget deficit in recent years. Finance Minister Jacek Rostowski promised to start work soon on a detailed timetable.

A poll Monday in the Dziennik daily found that 55 per cent of Poles support the goal of switching to the euro by 2011. Business also greeted the news with enthusiasm, media reports said.

Having the euro in place would also make it easier for Poland to co-host the Euro 2012 football championship, the sports minister said.

As the economy slows worldwide, Polish consumer prices declined a larger-than-expected 0.4 per cent in August from July, official data showed Monday. Rostowski says that Poland's 2009 budget, which is slated to reduce the deficit, will be a milestone toward the euro.

But critics questioned whether Poland could move toward and maintain EU benchmarks on inflation, the budget deficit and national debt in time to reach the 2011 target.

Stanislaw Gomulka, an economics professor and former deputy finance minister, called the goal "unrealistic."

Poland, he told Dziennik, must maintain a stable course for two years before it can enter the euro zone and meet other fiscal and inflation criteria for at least one year before entry.

It missed a good opportunity in the last three years, he added, but the previous government was hesitant, and now inflation is too high, he said.

Poland agreed to adopt the euro as part of its deal to enter the EU in 2004 along with eight other ex-communist nations, but Warsaw has been reluctant to set a deadline to join the 15-nation euro zone.

Meanwhile, Slovakia plans on January 1 to become the former Soviet-bloc country to adopt the euro, beating Poland but also others like Hungary and Czech Republic.

Criticism came from Law and Justice - the party of President Lech Kaczynski, a Tusk rival - who wanted to see a concrete schedule for Poland's switch from the zloty.

A top presidential aide, Piotr Kownacki, called Tusk's announcement "propaganda," saying the government had yet to launch a "serious dialogue" with Poland's central bank about adopting the euro.

Many pointed out that the Polish constitution would have to be amended, because the Polish National Bank currently has sole power to print and distribute money. Rewriting the constitution would require support from the opposition Law and Justice, which is eurosceptic. (dpa)

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