Current Affairs Czechs put back planned euro adoption date to 2010
The Czech Finance Ministry announced on Tuesday that the country wants to adopt the euro by 2010, around a year later than previously planned. The news came as little surprise - some officials have been admitting for some time that 2010 is the earliest date feasible, and even that, say analysts, is optimistic.
Photo: European Commission
If all goes to plan Czechs will trade in their crowns for euros in 2010,
and not 2009, the date previously bandied about by optimistic cabinet
ministers. The Finance Ministry announced the delay was in line with an
updated strategy preparing conditions for the country's accession to the
eurozone - analysts say that's doublespeak for sluggish public finance
reforms.
But the Czechs are not alone. Fellow new EU members Poland and Hungary, also struggling to slash public spending, have a date with 2010 as well. Slovakia however, says it will join a year earlier, in 2009, a rather ironic fact given that for decades Czechs always looked down on their former federal partners as being economically rather backwards. David Marek, chief economist at Patria Finance.
"It doesn't matter if it's 2009 or 2010. The message of different years is the will of governments to prepare the country for successful euro adoption. The Slovak government is performing very well and has very good economic policy. On the other hand the Czech government is still facing a lot of problems. So the message is the Slovaks are better prepared."
David Marek
David Marek says 2010 is a realistic if slightly optimistic date - the
Czechs, he says, still have to get their fiscal house in order before
they'll be able to hear euros jingling in their pockets. But moving away
from pure economics, what about the Czechs' emotional attachment to their
currency? Will they be joyfully burning Czech crowns on bonfires and
gathering up armfuls of euros?
"I wouldn't say they'll be happy but they won't be so sad or strongly against adoption of the euro as for example people in France or Germany were. It's something that could be a sign of economic prosperity more than something that should be a sign of some instability in future."
And the Czech government hopes to meet the Maastrict criteria of cutting its public finance deficit to below three percent of GDP in 2008. If they can keep that up for two years, euroland here they come.
