Poland will probably adopt the euro in 2012 if the government can ensure the move will benefit as many Poles as possible, including those who are not well-off, Prime Minister Donald Tusk said on Thursday.
Hopes of quicker euro adoption were one of the main reasons behind markets’ warm welcome of the election victory of Tusk’s center-right Civic Platform last year, which ran a campaign promising the euro, lower taxes and less red tape. Tusk’s government, in office for just over 100 days, has so far refused to set a formal entry date, however. He said this was because of uncertainties related to the global economic outlook and insisted the government was working to make euro entry possible. “2012 is quite probable. We will do it quickly and efficiently, but we are not going to set a specific target date. I prefer to make promises that I can keep,” Tusk told Reuters in an interview.
Tusk said, however, that adopting the single currency may harm the financial standing of Poles, still way behind in the race to catch up with their richer Western counterparts nearly 20 years after the fall of communism in 1989. “Poland in no way can be compared to any country that is already in the euro zone ... I am talking about millions of Poles, that live on the verge of the social minimum ... The number of people who are not well-to-do is incomparably bigger,” Tusk said. “We cannot ignore the social problem. We want to enter the euro as quickly as possible but not for the price that large group of Poles would have to pay,” Tusk added, pointing to the possible growth of inflation following euro entry as his main concern.
Tusk played down concerns, however, that the government became cool on the euro after the election victory. “Nobody needs to convince me, finance minister (Jacek) Rostowski, other ministers, to undertake action that requires courage, that requires a risk, also in the face of public opinion,” he said. “(We will enter) when we reach the status of a country, that meets all the requirements.”
Central bank controversy
Tusk said he would not approve one of two candidates for central bank deputy governor, Witold Kozinski, due to his controversial views on currency interventions. Kozinski, an ex-central banker, was nominated to join the central bank board by the bank’s governor Slawomir Skrzypek earlier this year. He spooked markets by suggesting currency interventions might be used to tame the vibrant zloty. Poland has had a free float for almost a decade. “I cannot take responsibility regarding Mr. Kozinski,” Tusk said. He said he would approve the other candidate to the board, commercial banker Piotr Wiesiolek. Tusk’s comments spurred an immediate reaction from the central bank, which said it would not withdraw Kozinski’s nomination, signaling a deepening of the row between the government and the central bank.
The row at the central bank erupted when two of Skrzypek’s deputies resigned at the start of the year. One accused the governor of mismanaging the bank and pressing the bank’s economists to massage down inflation forecasts. When Skrzypek, a political appointee of the previous conservative administration, took the job in January 2007, analysts said he lacked credentials for the job. Tusk said the central bank appeared to be in a crisis. “I am a fanatic supporter of central bank independence but I am aware that, (before Skrzypek) we have never had a political leadership at the central bank,” he said. (Reuters)