WARSAW (AFP) - Poland, which joined the European Union in 2004, wants to adopt the eurozone single currency by 2011, Prime Minister Donald Tusk said Wednesday, setting a target entry date for the first time.

"For the first time, I will say with responsibility that my government will aim for entry into the eurozone in 2011," Tusk said. "It will be a difficult matter, but possible to realise."

The largest of the 2004 EU newcomers, Poland agreed to meet macroeconomic criteria for euro adoption as part of its EU accession agreement.

But until Wednesday it had stubbornly refused to set a target date to replace its currency, the zloty, with the euro.

In February Polish Finance Minister Jan Rostowski said Poland would meet the Maastricht Treaty macro-economic convergence criteria for euro adoption -- focused on limiting inflation -- by 2010-2012.

On Tuesday Tusk's liberal government approved the country's draft 2009 budget, with a GDP growth outlook of 4.8 percent and annual inflation at 2.9 percent.

Tusk said Wednesday the planned 2009 budget deficit would not exceed 1.3 percent of GDP.

The 2008 budget forecasts GDP growth to hit 5.5 percent, with annual inflation at 2.3 percent.

Curbing inflation is a key requirement for countries that want to join the eurozone, the 15 members of the EU that use the European single currency.

Poland and other EU members planning to adopt the euro are required to reduce inflation to reflect the lowest rates in the EU as part of their convergence programmes.

According to Dariusz Filar, a member of the Polish central bank's independent Monetary Policy Council (RPP) responsible for setting interest rates, Poland will have to pursue a hawkish rate policy in order to meet euro inflation criteria ahead of the 2011 target.

"If we really want to find ourselves in the eurozone by 2011, then over the next two years we must bring inflation down below the reference level and this will demand restrictive monetary policy," Filar said, quoted by Polish media.

In August the RPP held the Polish central bank's main interest rate at 6.00 percent for the second month in a row after a 25 basis point rise in June.

The discount rate also stayed at 6.25 percent while the Lombard rate remained at 7.50 percent. The central bank has made four rate increases so far this year amounting to 1.00 percentage points in a bid to curb rising inflation that climbed to 4.6 percent in June.

Analysts hailed Tusk's Wednesday announcement as a boon for businesses in Poland, allowing them to develop long-term strategies and investment plans taking into account the likely 2011 switch to the euro.

In December, the central bank also plans to release a detailed study on the costs and benefits Poles can expect to come with the euro.

The Polish currency, the zloty, strengthened slightly Wednesday against both the euro and the dollar on the heels of the prime minister's announcement.

  Add comment

Name:
E-Mail:
Comment:
Enter code: