Examining the Euro case
MichaŠŠ DybuŠŠa, chief economist with BNP Paribas:
"The pensions question needs to be resolved between Poland and Eurostat and at some point there will be some form of agreement. The final exchange rate for the Euro will need to be found and calculations would indicate that a rate could be 4.20 zŠŠoty or even slightly less at 4.10.
"If you look at Poland and the rest of the Central European countries, they are much closer to convergence in terms of business structures than, say, Portugal, Greece and Ireland were, and that will allow them to withstand the asymmetrical shock of convergence.
"Secondly, the Euro zone offers the benefit of taking advantage of lower interest rates. In the Euro zone they have a base rate of 2 percent and in Poland interest rates are 6.5 percent. This is a tremendous difference and will be greatly appreciated by businesses. So from these points of view we can say the quicker the better in terms of joining the Euro zone.
"In terms of entry, Slovenia is particularly well placed, but if you look at the four Central and Eastern European countries-Hungary, Czech Republic, Slovakia and Poland-we are well placed because not all the other countries have such good economic track records.
"Opposition might come from old EU countries like France and Germany, which are suffering at the moment and might say taxes are too low and that Poland will offer unfair competition. This is the political dimension, and if France and Germany do not feel very secure it could prove a difficulty. One can imagine that Poland's fiscal policy and figures will not only be scrutinized in Brussels but will be examined in great detail in the likes of Paris and London. I can't talk for the political sector but the business sector is prepared to weather this and that indicates the strength of Poland in these areas.
"The only area where I can see a detrimental effect is the death of the Polish markets. That will mean there is no more work for people like me and we will have to find other work. Putting that aside, there seems to be a certain amount of optimism when you consider membership in the Euro zone."
Chief Economist with ING Bank ¨ŤlŠöski Mateusz Szczurek has this to say:
"The only reason why Poland is not aiming at an earlier date is that Euro zone accession is costly politically. Were politicians interested in keeping the budget deficit below 3 percent of GDP within the year, this would speed up the process. But this is not going to happen and the reason is that EMU entry is not the highest position on the politician's priority list-especially the outgoing government.
"There are certain issues that we should be concerned about. These include the final exchange rate. The zŠŠoty is currently gaining but you don't want it to go too far because then you start having problems with exports.
"But [putting off] entry to the Euro zone could create other problems because inflation might come into play if Poland waits too long. The problem with inflation is that keeping inflation within the range could be a problem if manufacturing keeps growing at such a high rate. So the quicker Poland gets into the Euro the quicker it can stop worrying about inflation. Of course, for myself it will mean the death of the financial market here and I will not have a job.
"So the question is whether it would be possible to enter the zone and here there appears to be one additional obstacle-the Eurostat organization's decision on Poland's private pension funds. Poland was trying to convince Eurostat that it was not fair to include the cost of introducing the pension funds in the deficit. And it is difficult to make any comparison to pension funds for, say, Germany, where the figures do not include the explicit debt for future pensions. These are not the same figures really and this needs to be addressed."
"The pensions question needs to be resolved between Poland and Eurostat and at some point there will be some form of agreement. The final exchange rate for the Euro will need to be found and calculations would indicate that a rate could be 4.20 zŠŠoty or even slightly less at 4.10.
"If you look at Poland and the rest of the Central European countries, they are much closer to convergence in terms of business structures than, say, Portugal, Greece and Ireland were, and that will allow them to withstand the asymmetrical shock of convergence.
"Secondly, the Euro zone offers the benefit of taking advantage of lower interest rates. In the Euro zone they have a base rate of 2 percent and in Poland interest rates are 6.5 percent. This is a tremendous difference and will be greatly appreciated by businesses. So from these points of view we can say the quicker the better in terms of joining the Euro zone.
"In terms of entry, Slovenia is particularly well placed, but if you look at the four Central and Eastern European countries-Hungary, Czech Republic, Slovakia and Poland-we are well placed because not all the other countries have such good economic track records.
"Opposition might come from old EU countries like France and Germany, which are suffering at the moment and might say taxes are too low and that Poland will offer unfair competition. This is the political dimension, and if France and Germany do not feel very secure it could prove a difficulty. One can imagine that Poland's fiscal policy and figures will not only be scrutinized in Brussels but will be examined in great detail in the likes of Paris and London. I can't talk for the political sector but the business sector is prepared to weather this and that indicates the strength of Poland in these areas.
"The only area where I can see a detrimental effect is the death of the Polish markets. That will mean there is no more work for people like me and we will have to find other work. Putting that aside, there seems to be a certain amount of optimism when you consider membership in the Euro zone."
Chief Economist with ING Bank ¨ŤlŠöski Mateusz Szczurek has this to say:
"The only reason why Poland is not aiming at an earlier date is that Euro zone accession is costly politically. Were politicians interested in keeping the budget deficit below 3 percent of GDP within the year, this would speed up the process. But this is not going to happen and the reason is that EMU entry is not the highest position on the politician's priority list-especially the outgoing government.
"There are certain issues that we should be concerned about. These include the final exchange rate. The zŠŠoty is currently gaining but you don't want it to go too far because then you start having problems with exports.
"But [putting off] entry to the Euro zone could create other problems because inflation might come into play if Poland waits too long. The problem with inflation is that keeping inflation within the range could be a problem if manufacturing keeps growing at such a high rate. So the quicker Poland gets into the Euro the quicker it can stop worrying about inflation. Of course, for myself it will mean the death of the financial market here and I will not have a job.
"So the question is whether it would be possible to enter the zone and here there appears to be one additional obstacle-the Eurostat organization's decision on Poland's private pension funds. Poland was trying to convince Eurostat that it was not fair to include the cost of introducing the pension funds in the deficit. And it is difficult to make any comparison to pension funds for, say, Germany, where the figures do not include the explicit debt for future pensions. These are not the same figures really and this needs to be addressed."
