By Jonathan Cable
LONDON, Jan 25 (Reuters) - Slovakia is still expected to
adopt the euro next year but other Eastern European countries
are at least four years away from joining the currency bloc as
inflation concerns linger, a Reuters poll showed on Friday.
A poll of 34 analysts and strategists, taken Jan 15-24,
found some adoption dates are now expected to be a year later
than forecast in an October poll, with Estonia and Lithuania now
seen joining in 2012 and the Czech Republic and Poland in 2013.
"Inflation is now a hurdle for all of the new member states
except for Slovakia," said Sharon Fisher at Global Insight.
Slovakia is expected to become the next euro user, ditching
its crown currency in 2009, having brought inflation under
control and reduced its fiscal deficit.
Wide fiscal deficits and pension reforms have forced the
Czech government to abandon euro adoption in 2009-2010 and the
central bank said last month it planned to mint more crown coins
due to uncertainty about the timescale for euro adoption.
Malta and Cyprus took euro zone membership to 15 earlier
this month, but added only 0.2 percent to the region's economy.
ENTRY BARRIERS
The poll found inflation worries were the biggest hurdle for
countries aspiring to join the euro club, as in October. Latvia
saw prices rise over 14 percent in 2007, while Bulgaria, Hungary
and Poland have also struggled to keep inflation under control.
The Czech Republic, Hungary and Poland must also control
budget deficits before adopting the euro. A condition of entry
to the euro zone is that government deficits must not exceed 3
percent of gross domestic product.
"Hungary has the greatest problems with its state budget,
but the Czech (Republic) and Poland also have to take a careful
look at it," said Hans Hercksen at Bayern LB in Munich.
Hungarian Prime Minister Ferenc Gyurcsany told Reuters in an
interview on Wednesday that reductions in the budget deficit
would exceed government forecasts as tough economic reforms
began to pay dividends.
Last year he slashed the deficit to below 6 percent of GDP
from 9.2 percent.
Poland's new government, which won a parliamentary election
in October and is more euro-friendly than its predecessor, plans
to lower public debt and boost privatisation revenues.
"Euro adoption (for Poland) in 2012 is likely. This is our
central scenario. It could be delayed by a year or two," Fitch
Ratings analyst Davis Heslam said.
CROATIA NEXT IN THE EU
As for entry to the European Union, analysts still think
Croatia will be next, following Romania and Bulgaria's entry
last year, but this is not likely until 2009 at the earliest.
Albania, Macedonia, Montenegro and Serbia are seen joining
the 27-member bloc in 2015 and Bosnia in 2016, while Turkey will
not gain entry until 2019, according to the Reuters poll.
Turkey began membership talks in 2005 but negotiations have
slowed sharply amid disputes over penal reforms, human rights
and Cyprus.
The division of Cyprus into an internationally recognised
Greek Cypriot south and a breakaway Turkish Cypriot state
remains a hurdle to Turkey's bid to join the EU with the body
freezing some negotiations due to Ankara's refusal to open ports
and airports to Greek Cypriot traffic.
Analysts gave a median 20 percent probability that the EU
would suspend negotiations with Turkey and a 25 percent chance
that Turkey would pull out of the talks. The October poll
forecast a 20 percent chance that Turkey would pull out.
"Even if willingness to accept Turkey has decreased and
could decrease further in the next few years, a suspension of
the talks appears very much unlikely given the importance for
stability in the region," said Elizabeth Gruie at BNP Paribas.
FOR POLL DATA CLICK ON <EMUPOLL30>
(Polling by Bangalore Polling Unit; Editing by Ruth
Pitchford)
