Gronicki says ERM-2 just around the corner
The złoty is most likely to strengthen and may join the pre-euro exchange-rate mechanism ERM-2 in 2006, Finance Minister Mirosław Gronicki said last week.
"The decision as to the timeframe [of ERM-2 entry] is to be made by the government together with the central bank, as ERM-2 entry, which may happen next year, will change monetary and rate policy," Gronicki told Gazeta Wyborcza in an interview.
Gronicki painted a markedly upbeat picture of the Polish economy in the next few years. "In the most likely scenario the złoty will gain, the government's net borrowing needs will fall, while the economy should grow by four to five percent and in such a situation it is very probable that public debt will not exceed 55 percent and after 2010 it will fall below 50 percent," he said.
The złoty, which was Central Europe's best performer in 2004, lost some ground earlier this year due to a wider emerging market sell-off and expectations of interest-rate cuts, but still remains relatively strong at around zł.4.13 to the euro.
Gronicki said strong economic fundamentals should underpin the currency and upcoming general elections on September 25 should not translate into a weakening of the currency if the new government sticks to financial discipline.
Poland's top opposition party Law and Justice (PiS), tipped to form a ruling coalition with liberal Civic Platform (PO), said in its economic policy plan last week that it favored tightening the budget though opposed quick euro adoption. "The only danger would be a government created by populists. But such a probability is relatively low," Gronicki said.
He added that economic growth, which slowed to 2.1 percent year-on-year in the first quarter, should accelerate in the second half of this year as consumption and investment pick up.
"We have a good starting point for growth acceleration: a balanced current account, low inflation and a declining fiscal deficit," he said.
Gronicki also reiterated that the 2006 budget draft, which the Ministry is currently working on, will reduce the budget deficit further and pave the way for euro adoption in 2009.
"If the 2006 budget will be in line with the convergence program that we presented to the EU, financial markets will understand this and so the złoty and bonds should avoid bigger changes," Gronicki said. (Reuters)
"The decision as to the timeframe [of ERM-2 entry] is to be made by the government together with the central bank, as ERM-2 entry, which may happen next year, will change monetary and rate policy," Gronicki told Gazeta Wyborcza in an interview.
Gronicki painted a markedly upbeat picture of the Polish economy in the next few years. "In the most likely scenario the złoty will gain, the government's net borrowing needs will fall, while the economy should grow by four to five percent and in such a situation it is very probable that public debt will not exceed 55 percent and after 2010 it will fall below 50 percent," he said.
The złoty, which was Central Europe's best performer in 2004, lost some ground earlier this year due to a wider emerging market sell-off and expectations of interest-rate cuts, but still remains relatively strong at around zł.4.13 to the euro.
Gronicki said strong economic fundamentals should underpin the currency and upcoming general elections on September 25 should not translate into a weakening of the currency if the new government sticks to financial discipline.
Poland's top opposition party Law and Justice (PiS), tipped to form a ruling coalition with liberal Civic Platform (PO), said in its economic policy plan last week that it favored tightening the budget though opposed quick euro adoption. "The only danger would be a government created by populists. But such a probability is relatively low," Gronicki said.
He added that economic growth, which slowed to 2.1 percent year-on-year in the first quarter, should accelerate in the second half of this year as consumption and investment pick up.
"We have a good starting point for growth acceleration: a balanced current account, low inflation and a declining fiscal deficit," he said.
Gronicki also reiterated that the 2006 budget draft, which the Ministry is currently working on, will reduce the budget deficit further and pave the way for euro adoption in 2009.
"If the 2006 budget will be in line with the convergence program that we presented to the EU, financial markets will understand this and so the złoty and bonds should avoid bigger changes," Gronicki said. (Reuters)
