* Poland IMF credit not enough to secure ERM-2 entry this yr
* Forecast unchanged for ERM-2 entry in 2010, euro in 2013
* Czech and Hungary euro zone bids seen delayed till 2014
By Nigel Davies
LONDON, April 28 (Reuters) - A volatile zloty and higher
budget gap will likely delay by a year each Poland's goal of
joining the ERM-2 currency grid in 2009 and its aim of finally
swapping zlotys for euros in 2012, a Reuters poll found.
Warsaw's deal to take a $20.5 billion International Monetary
Fund credit line may help support its zloty currency but it will
not be enough to support its plan to adopt the euro within three
years, the survey's results showed
The poll of 31 analysts also forecast that the Czech
Republic, Hungary and Latvia, whose governments have all
collapsed this year, would not join the single currency until
2014. That was a year later than the last poll's predictions as
public finances and currencies across the ex-communist region
continued to take a battering.
On Monday, Poland's centre-right government stuck with the
2012 target date but conceded it now looks untenable after
months of turbulence for the zloty and a jump in its budget
deficit to way past the euro zone's 3 percent ceiling.
But analysts stuck with a forecast made in a poll in January
for Poland to enter the euro currency antechamber in 2010 and
full entry to be granted in 2013.
Analysts said stability in the zloty, which has lost 30
percent against the euro from all time highs last summer, was
one of the major issues.
"There is no logic in putting the zloty in a strait jacket
in the current weak global market environment," said Timothy Ash
at RBS. "Maximum policy flexibility is required at these times,
and the National Bank of Poland does not need its hands tied
behind its backs on the rate setting front."
Once inside ERM-2 a euro candidate country must keep its
currency within a trading band of +/- 15 percent around a
central parity rate, which could prove difficult given such
recent strong swings in the zloty's value.
The zloty <EURPLN=> has shed almost 6.5 percent to the euro
since April 15 after surging to a three-month high on the back
of Warsaw's seeking the IMF credit line.
Along with other criteria, countries aspiring to enter the
euro zone must also maintain a government deficit below 3
percent of GDP. A top cabinet aide in Warsaw told Reuters last
week the gap could instead hit 4.6 percent this year -- meaning
the Poles face a renewed struggle to bring it back down while
trying to prop up an economy that looks set to contract.
"We expect Poland to push hard but (it) will be held back by
due process and not be able to enter until the first half of
2010," said Peter Attard Montalto at Nomura International.
COLLAPSE TO PROMPT DELAYS?
Under pressure from the economic crisis, the Hungarian and
Latvian governments collapsed this year among widespread public
discontent. The Czechs succumbed to a no-confidence vote last
month based mainly on domestic infighting, although the
opposition there, too, pinned it to economic turmoil.
The poll's change in consensus forecast in the three states'
potential euro dates underscored how deeply political risk has
become entwined with the economic crisis and investor sentiment.
The wider global slowdown has pushed down export orders
across the industry-heavy region by as much as a third in the
worst cases, while joblessness is rising and governments are
slashing budgets as a contraction in growth hits tax revenues.
Latvia expects a contraction of around 14 percent this year,
Hungary around 6 percent, and the Czechs 2 percent, forecasts
that have helped put some reforms like euro entry on the back
burner as policymakers struggle to keep economies afloat.
"Although the recent instability of the (Czech) koruna has
encouraged more rapid movement toward euro adoption, the
government's collapse in March means further delays," said
Sharon Fisher at IHS Global Insight.
The survey showed Estonia was still forecast to enter the
euro zone in 2013. Romania and Bulgaria were not seen coming on
board until 2015, unchanged from last time.
The stability of those forecasts comes despite the severest
recession raging in many parts of the euro area since the Second
World War.
That does not appear to have damaged ambitions. Many outside
the 16-nation bloc have tried to speed up efforts to adopt the
euro as a potential shield against the crisis.
Meanwhile, the outlook for Turkey's EU membership looked a
touch more positive, with analysts predicting it could happen in
2019, a year earlier than the previous poll.
(For poll data click on <EMUPOLL30>)
(Polling by Bangalore Polling Unit; Editing by Patrick
Graham)
