UPDATE 2-Czechs unlikely to set target date for euro entry now

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By Marek Petrus

The Czech Republic will probably refrain from setting any target date for euro adoption this year after Finance Minister Miroslav Kalousek told Reuters on Tuesday he might abandon his efforts to pick 2012 as an official goal.

"I seem to be in a minority," Kalousek said in an interview after parliament approved a package of fiscal reforms aiming to trim the fiscal deficit toward the EU's ceiling of 3 percent of gross domestic product (GDP) and get the country's euro adoption efforts back on track.

Kalousek has been at odds with the independent and largely euro-sceptic central bank (CNB) which has advised the government against announcing any target date after abandoning a previous 2010 goal [ID:nL20101551].

The minister's view also seemed to lack the backing of Prime Minister Mirek Topolanek who told Reuters through his spokeswoman on Tuesday that the country should refrain from setting a euro target date now.

Kalousek, a member of the small Christian Democrat party, said he respected the CNB's stance and acknowledged the critics' point that it was not overly important whether any target for gaining euro entry would be set and what date it would be.

His primary concern was to get the economy ready for joining Europe's 13-member single currency zone in 2012, even if euro adoption was eventually postponed beyond that date which he has long preferred as the best choice.

"What really bothers me is to make sure that all the obstacles standing in the way of euro adoption are removed so that the year of 2012 becomes a realistic date for entry, regardless of whether or not the euro is adopted then," he said.

RESOLVE KEY FOR MARKETS

The government has been holding talks with the CNB on a draft euro adoption strategy after abandoning the earlier 2010 goal as the fiscal gap widened beyond the European Union's limit to a forecast 4 percent of gross domestic product (GDP) in 2007.

Asked whether the prime minister 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's view confirmed the lukewarm stance towards the euro in his right-wing Civic Democratic Party (ODS).

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 Finance Ministry wants the cabinet to discuss the euro adoption plan in the next few weeks. Investors have poured billions of euros of investment into financial markets and manufacturing plants in the Czech Republic and other central European countries with the view that their integration with the core EU and eventually the euro zone would boost long-term growth prospects.

But analysts said markets were loath to take any euro entry timetables for granted.

"For markets what is important is to see that the right policies are in place and there is resolve on the part of political establishment, because of past slippage on euro plans not only here but in other countries in the region as well," said Viktor Kotlan, chief economist at Ceska Sporitelna.

Keywords: CZECH EURO/

[PRAGUE/Reuters/Finance.cz]