Far from ready
One central banker has even insisted that Poland will not be ready to enter the ERM-2 exchange-rate system in 2006-2007-the waiting room for eurozone entry.
Dariusz Filar, a member of the Monetary Policy Council (MPC), said significant fiscal reforms were crucial to get the budget deficit below the euro limit of three percent of GDP. "The current measures are not enough," Filar said.
This year's budget deficit is forecast at 3.9 percent, down from last year's 5.4 percent. The government wants it below three percent in 2007, two years prior to entering the single currency. However, fiscal reforms, such as reducing state subsidies to farmers' pensions and raising social security contributions from the self-employed, have stalled.
Economy Minister Jerzy Hausner, the author of the reform package, says the government will wrap up attempts to implement the reforms in March. The government expects to save around zł.25 billion, which is almost half of what it wanted to save between 2004 and 2007.
However, the looming election will influence political action, and unpopular reforms so close to voting day are unlikely.
Dariusz Filar also said he was not too concerned by the strength of the złoty, which hit 25-month highs against the euro last week.
"The MPC does not overemphasize the threat that results from the złoty rate," he said, and he also warned that an election would probably weaken the Polish currency. "Looking back at history in Poland, all political climaxes strongly influenced the złoty to weaken. We do not know how investors see the risk which will accompany the election period." (Reuters)
Dariusz Filar, a member of the Monetary Policy Council (MPC), said significant fiscal reforms were crucial to get the budget deficit below the euro limit of three percent of GDP. "The current measures are not enough," Filar said.
This year's budget deficit is forecast at 3.9 percent, down from last year's 5.4 percent. The government wants it below three percent in 2007, two years prior to entering the single currency. However, fiscal reforms, such as reducing state subsidies to farmers' pensions and raising social security contributions from the self-employed, have stalled.
Economy Minister Jerzy Hausner, the author of the reform package, says the government will wrap up attempts to implement the reforms in March. The government expects to save around zł.25 billion, which is almost half of what it wanted to save between 2004 and 2007.
However, the looming election will influence political action, and unpopular reforms so close to voting day are unlikely.
Dariusz Filar also said he was not too concerned by the strength of the złoty, which hit 25-month highs against the euro last week.
"The MPC does not overemphasize the threat that results from the złoty rate," he said, and he also warned that an election would probably weaken the Polish currency. "Looking back at history in Poland, all political climaxes strongly influenced the złoty to weaken. We do not know how investors see the risk which will accompany the election period." (Reuters)
