Another euro in 2012?

Poland should be ready to start negotiations to enter the ERM-2 currency mechanism in 2010, said Deputy Finance Minister Katarzyna Zajdel-Kurowska at a conference in April. This would enable the country to adopt the euro in 2012 at the earliest. "We expect further fiscal tightening. [The] general government deficit will drop to 3.4 percent this year, 3.1 percent next year and will be below three percent in 2009," Zajdel-Kurowska said.

"This will allow us to start ERM-2 negotiations in 2010. For us, 2012 is the earliest date [for euro adoption]. It would be great if we could have

'a double euro,' but we still have lots of homework to do," Zajdel-Kurowska added, referring to the 2012 European soccer championship that Poland will co-host with Ukraine.

Some economists have raised concerns that hosting the soccer tournament may put back the adoption of the euro, because Poland will have to spend heavily on infrastructure and may fail to keep to its budget deficit targets. Finance Minister Zyta Gilowska said that it is hard to predict whether the adoption of the euro and the organization of Euro 2012 would strengthen or weaken the other. "I can honestly say that from the point of view of macroeconomic parameters, there should be no obstacles," said Gilowska.

There is some concern, however, that the government's current policy of increasing social expenditures is moving the country in the opposite direction from euro convergence. Gilowska warned that the government must avoid large increases in spending. "If we want to go on a spending spree ... we definitely won't meet technical criteria for joining the eurozone in 2009," Gilowska said. (Reuters)