Kolodko hedges euro bets due to exchange rates

Finance Minister Grzegorz Kolodko said yesterday that the timing of Poland's planned switch from z otys to euros depends not only on budget reforms and g rowth, but also on the exchange rate. The Minister wants to meet the single currency's strict entry terms in 2005, an ambitious target given the wide bu dget deficit and the high fiscal costs of European Union membership, expecte d to be won in 2004. But he made clear that meeting the so-called Maastricht criteria in 2005 did not mean adopting the euro in the shortest possible tim e-frame - in 2006 or 2007. Kolodko has repeatedly called for a weaker z oty but the Polish currency remains under upward pressure from pre-accession portfolio capital inflows.The strong z oty has added to woes s urrounding Poland's worst economic slowdown in a decade, which has more than doubled the budget deficit and unemployment while undermining the political will to tackle structural reforms. (Reuters)