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Czech Finance chief wants to set euro adoption target in March

Czech Finance Minister Miroslav Kalousek said he wants a new date to be set for euro adoption so the country remains committed to switching currencies.

Kalousek, speaking in an interview on public radio station Radio Cesko today, plans to submit the national euro-adoption strategy to the government in March, including a new timetable for dumping the koruna. The government in October dropped a plan to adopt Europe's common currency in 2010, citing the deteriorating outlook for public budget deficits. The country joined the European Union almost three years ago and is required to switch when ready. „I tend to prefer a project with a specific timetable, which determines not only the target date but also contains milestones on the path to the goal,” said Kalousek. „My experience shows that any project” that „lacks concrete dates and control points gets postponed indefinitely.” The new government led by Mirek Topolanek should decide whether to set a new date for adopting the euro now, to use a rolling approach to evaluate the situation every year, or to delay a decision on the target date until 2008 or 2009 when it's clear that the necessary changes to the economy have been enacted, central bank Governor Zdenek Tuma said in a January 3 interview with Mlada Fronta Dnes.

The month-old government, which has no firm majority in a hung parliament emerging from last June's elections, wants to cut taxes and spending and reduce economic regulations before the country begins sharing the euro. The country is set to breach this year's pledge to the EU to keep the public-spending shortfall below 3.3% of GDP as welfare spending jumps. The threshold for euro applicants is 3% of GDP. „That we have to carry out unpopular reforms to adopt the euro is a false, buck-passing argument, which I refuse,” Kalousek said. „We have to do the reforms to stop eating up our future for the sake of ourselves and our children. That is the cardinal reason.” The Czechs are the fifth of the 10 nations that joined the EU in 2004 to delay targets for the switchover. Eastern European members are struggling either with excessive budget deficits or too fast inflation, making it hard to comply with rules for entering the euro zone. Slovenia is the first country from that group that started using the euro. (Bloomberg)