Poland needs more structural preparation before euro adoption – top officials
March 4, 2013
Finance Minister and deputy PM Jacek Rostowski and Central Bank governor Marek Belka
Poland can only benefit from striving to comply with euro zone convergence criteria, according to the participants of a debate on euro adoption, including NBP chief Marek Belka and Finance Minister and deputy PM Jacek Rostowski, who underlined the importance of internal reforms Poland needs to conduct before the potential entry in the euro zone.
Among the necessary reforms named during the debate, co-organized by Finance and Economy Ministries as well as the Central Bank of Poland, panelists enumerated the need to establish mechanisms of ensuring effective allocation of investments, establishing effective macro-prudential oversight, increasing competitiveness as well as strengthening fiscal consolidation with a simultaneous goal of keeping a low level of unemployment, among many others.
Minister Rostowski, suggested Poland should consider setting up its own criteria of readiness for joining EMU.
"We should consider whether we should not say that in order to join the euro zone we need some lower debt-to-GDP relation than the current one," he said, suggesting Poland could also adopt a similar way of thinking regarding unemployment and set an internal target for the jobless rate "2-3 pps lower than in the euro zone according to EU methodology," Rostowski said.
On a similar note, rate-setter Andrzej Bratkowski believes Poland should target attaining an even more restrictive criterion than the 60% debt-to-GDP threshold included in the Maastricht convergence criteria.
"If we want to enter the euro zone in a safe manner, our public debt should be below 40% of GDP," Bratkowski said, arguing that a lower level of public debt would allow Poland to have more maneuvering space in terms of fiscal policy and thus compensate for the lack of independent monetary policy.
Apart from economic issues, participants of the debate underlined the political significance of the euro zone entry, with some experts considering political benefits as greater than economic benefits.
"One should also take into account that staying outside the euro zone could constitute a threat of deep marginalization [of Poland] within the European Union," Rostowski underlined. "One should remember about the costs of staying outside the euro zone, especially in the long-term horizon. . ."
At the sidelines of the debate Rostowski told reporters that Poland should be able to comply with the fiscal Maastricht criterion in H2 2013 when the excessive deficit procedure is lifted. He said that if this happened Poland would certainly maintain the criterion over the coming years. He added that the inflation and interest rate criteria will be much harder to fulfill.
The fiscal criterion assumes a general government deficit below 3% of GDP.