UPDATE 1-Czech PM says against setting euro target date now

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By Marek Petrus

The Czech Republic should refrain from setting a target date for euro adoption this year, as the government is unable to ensure it will be met, Prime Minister Mirek Topolanek told Reuters on Tuesday.

Asked whether he personally thought a euro adoption target date should be set this year, Topolanek replied through his spokeswoman: "No. No responsible government gives a date which it cannot influence. Setting a date is a pure formality."

Topolanek, leader of the right-wing Civic Democrats (ODS), reiterated his party's lukewarm stance towards the euro.

He has said in the past the country should adopt the single European currency only once it is certain that its economy is mature and flexible enough to give up autonomous interest rate and exchange rate policy.

The government has been holding talks with the central bank (CNB) on a draft euro adoption strategy after abandoning an earlier 2010 target date as the fiscal gap widened beyond the EU's limit of 3 percent of gross domestic product (GDP).

The independent CNB has advised the government against announcing any target date, clashing with Finance Minister Miroslav Kalousek [ID:nL20101551].

Kalousek, a member of the small Christian Democrat party, has spoken in favour of anchoring reforms of public finances by setting January 1, 2012 as a new date.

The Finance Ministry wants the cabinet to discuss the euro adoption plan in the next few weeks.

The lower house of parliament is expect to give its final endorsement to a sweeping fiscal reform bill during a session which starts at 2 p.m. (1200 GMT) on Tuesday.

The bill raises the sales tax and cuts income taxes, and curbs an increasingly costly welfare system as part of a medium-term plan to cut the public finance deficit to 2.5 percent in 2010 from a forecast 4.0 percent 2007 shortfall.

[PRAGUE/Reuters/Finance.cz]