IMF says Czech euro delay shows need for reform

PRAGUE, Nov 21 (Reuters) - A move by the Czech Republic to delay euro adoption beyond a 2010 target date emphasises the need for strong fiscal consolidation, an IMF official said on Tuesday.

IMF Assistant Director Subhash Thakur told a news conference in Prague consolidation needed to start immediately as the Czechs look to adopt the single currency in the future.

The Finance Ministry expects the Czech public sector deficit to grow to 4.2 percent of GDP next year from 3.5 percent this year, far above the 3 percent limit for euro adoption.

The slippage in the outlook for euro adoption -- the Czechs have not set a new target date -- has mirrored similar delays in other new EU member states, which have been caused mostly by loose fiscal policies and inflation.

((Reporting by Marek Petrus, Writing by Alan Crosby; prague.newsroom@reuters.com; Reuters Messaging: alan.crosby.reuters.com@reuters.net; +420 224 190 477))

Keywords: ECONOMY CZECH IMF EURO