* Skipping, loosening euro adoption criteria "not an option"
* CEE countries still need to address budgets, imbalances
* Euro adoption no "quick fix", but "key anchor
* Compliance with criteria in interest of all
By Boris Groendahl and Sylvia Westall
VIENNA, Nov 16 (Reuters) - Accelerated adoption of the euro
by waiving or loosening entry criteria is not an option for the
European Union's central and eastern European member states, the
EU's economic and monetary affairs Commissioner said on Monday.
While euro adoption remains a key policy anchor for the new
EU member states, hit particularly hard by the global financial
crisis, compliance with convergence criteria remains key for
keeping the euro currency in shape, Joaquin Almunia said at a
Austrian central bank conference in Vienna.
European Central Bank (ECB) Governing Council member Ewald
Nowotny, head of the Austrian central bank, also said at the
conference that fulfilling the criteria for euro adoption was
key for the sustainability of joining the single euro currency.
"An accelerated euro area enlargement that would require a
waiver or a loosening of the entry criteria specified by the
treaty is not an option," Almunia said.
A Reuters poll last week showed analysts expect Estonia to
be the next country from Central Europe to join the euro zone in
2012, a year sooner than predicted in August. Further entrants
would not come before 2014, the poll showed. []
It is the European Commission, the EU's executive arm, that
has the power to recommend that a country is ready to join the
euro zone, which now has 16 members.
"Euro adoption should not be seen as a quick fix to economic
vulnerabilities," Almunia said a speech delivered to the
conference. "(Euro membership) does not eliminate the need to
work out underlying imbalances."
Along with other criteria, countries seeking euro membership
must maintain a budget deficit below 3 percent of gross domestic
product (GDP) and have to stay within certain inflation limits.
Almunia said that it was unlikely the region would return to
pre-crisis potential growth and needed to address fiscal and
structural problems.
"Potential growth in the region is ... unlikely to return to
pre-crisis trends in the short term," he said. "It is important
to address further accumulated imbalances and re-establish a
robust and sustainable growth and convergence path."
"This will require continued efforts particularly in the
fiscal and structural fields."
BUDGET DEFICIT MAIN ISSUE
Nowotny said that the main challenge was currently budget
deficit target as many emerging European countries have loosened
fiscal policy to fight the financial crisis.
"Against the backdrop of the current crisis, the discussion
is revolving around the fiscal stance of countries," he said.
"It is ... a challenge to manage the trade-off between
providing support to those hit hardest by the crisis and
correcting fiscal imbalances to ensure sustainability and to
qualify for (euro entry)," he said.
However, Nowotny noted that differences were stark between
different countries in the European Union and that euro adoption
should be decided case-by-case.
Estonia's deputy central bank governor Marten Ross said on
the sidelines of the conference that his country could meet the
conditions for adopting the euro by the spring of next year.
"It's definitely possible, we are working in that
direction," Ross told reporters, adding that the budget deficit
would be the biggest potential hurdle in the process.
He said that Estonia could emerge from one of Europe's worst
national recessions by the middle of next year and its budget
would likely be on track to meet the Maastricht Treaty's target
in both 2009 and 2010, though it remained the biggest risk
because of its relatively small buffers.
(Reporting by Boris Groendahl; editing by Patrick Graham)
