Euro by 2011?
Piotr Kalisz: In order to enter the EMU [European Economic and Monetary Union] in January 2011, Poland would have to fulfill all Maastricht criteria - including a two-year presence in the ERM-2 - by the end of the first half of 2010. However, this implies Poland would already need to be in the ERM-2, since it would require entry in the first half of 2008 to get the green light for euro adoption in mid-2010.
Since H1 2008 belongs to the past, I think it is too late to talk about euro adoption in January 2011. Alternatively, Poland could opt to join the ERM-2 in the coming months, which would enable euro entry in late 2011, but this scenario is also unlikely because of "logistical" reasons. In my opinion, the most convenient date for a change of currency is January 1, which is also the first day of the fiscal year for Polish companies.
Is Poland on the right track to lower inflation in preparation for euro adoption?
In the past few months we have seen higher inflation due to higher food and fuel prices, which isn't connected to just the Polish situation, but rather to a global trend. But I think the inflation level is not a problem for Poland. When we talk about the euro adoption process, I think inflation will probably start falling in the last quarter of this year and next year, following its August peak. Probably in one year, CPI will move back towards 2.5 percent, which is more or less in line with what Poland needs in order to adopt the euro.
Poland meeting economic criteria to adopt the euro is one thing, but do you see a political side to the conflict?
When you talk about euro adoption in Poland, we've focused on the economics of Poland - meaning the macroeconomic issues, Maastricht criteria, inflation and public debt. Now, we realize that the macroeconomic situation is not a problem. In fact, the biggest problem is that before Poland adopts the euro, it needs to amend the Constitution. And to amend the Constitution, the government would need to convince not only the [pro-european] parties but also the euroskeptic parties. This means that euro adoption seems unlikely in the near future.
Why do you think the Constitution will not be amended?
Simply because [Law and Justice], the party that needs to support the idea of amending the Constitution, is euroskeptical and is not willing to enter the euro zone quickly. We also have the presidential and parliamentary elections in 2010 and 2011, respectively. This means that the head of the parties that focus on the euroskeptical electorate won't support the idea of EMU entry.
How would the central bank's decision to raise interest rates affect euro adoption?
By raising interest rates, the central bank will prepare Poland in terms of inflation. But this means that Poland will only be prepared, but will still not adopt the euro. To put it simply, the Polish economy in terms of macroeconomics will meet the Maastricht criteria, but will not comply with EU law because of the Polish Constitution. Without the change of the Constitution, no one will look at the Maastricht criteria because the legal criteria have greater weight.
You're also pessimistic about a 2016 deadline. Why?
You should remember that in 2004-2005 we talked about 2008. Then many people believed in 2009-2010 and in fact this date was moved. Simply put, there is no euro adoption process in Poland. There's nothing to make me believe that a faster adoption is likely.
