Poland could adopt the euro in 2011

Poland could adopt the euro in 2011 said Prime Minister Donald Tusk on Wednesday at the Economic Forum in Krynica, an announcement that evoked optimism in the market sending the złoty to rise 1.6 percent against the euro.

PM Tusk's announcement is the firmest declaration yet on a goal for the entry into the euro zone, which previously has been estimated at 2013. Until now, the government said that Poland would adopt the euro when it will be possible.

"Our ultimate goal is 2011. That is our government's aim. This is a hard demand, but manageable," said Tusk. The Polish złoty gained 1.6 percent to the euro and 1.4 percent to the dollar after the announcement.

However, Piotr Kalisz, senior economist at Citi said that entering the euro zone in 2011 is impossible. "Maybe the Prime Minister's statement outlines plans and shows that the government wants to enter the euro in 2011, but I think it is very unlikely," he told WBJ.

In order to adopt the euro, Poland needs to fulfill the Maastricht criteria, which requires Poland to be in the ERM 2 system for two years. "Poland should have entered ERM 2 in the first half of 2008. We are now in the second half of 2008 and we cannot turn back time," he said adding that the earliest the euro will be used in Poland would be 2012.

Meanwhile, central bank policymaker Dariusz Filar said that Poland's entry is possible at the end of 2011 and not at the beginning. Another member of the Monetary Policy Council Marian Noga said that adopting the euro was "technically" possible.

On Wednesday, the Tusk government approved a draft budget bill that slashes Poland's deficit in order to prepare the country to meet the Maastricht criteria.