UPDATE 1-Czech FinMin gives up euro entry date

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The Czech Finance Ministry said on Monday it had given up attempts to set 2012 as the target date for joining the euro zone, yielding to pressure from the prime minister and the central bank.

A ministry spokesman said the date was removed from a draft euro adoption strategy due to be discussed by the cabinet this week or soon after.

"The date is not there," the spokesman said.

The decision is in line with comments by Finance Minister Miroslav Kalousek, who told Reuters last week he was in a minority in the cabinet with his plan, and might give it up.

Prime Minister Mirek Topolanek has long been opposed to setting any euro entry date, and he has won the backing of the central bank which has also recommended the cabinet should not set any target at this point.

The Czechs have been forced to abandon their previous target of 2010 due to yawning public deficits.

Kalousek had been eager to set a target date in order to focus policymakers on pushing through economic reform quickly and making the country fit for the euro in 2012, regardless of whether the country actually joins the euro zone then.

The Czechs expect a 2007 budget deficit of 4 percent of gross domestic product, despite economic growth topping 6 percent.

The government has pushed through parliament a mixture of tax and spending cuts and plans further savings to push the deficit down to 3.2 percent next year and 2.5 in 2010, below the euro zone ceiling of 3 percent.

The prime minister and his Civic Democrats (ODS) have however been against any rush into the euro zone, saying the new EU member needed to undertake a wide range of fiscal, healthcare, pension and labour market reforms and only then decide on the right timing for euro entry.

The country has enjoyed low inflation and interest rates below the euro zone, which has narrowed the appeal of a quick euro entry.

[PRAGUE/Reuters/Finance.cz]