Dec 12 (Reuters) - Slovakia will join the euro in January, shielding its
small and open economy at a time when the global financial crisis swept through
a number of European countries outside the single currency zone.
The crisis has forced other new European Union members to take stock of
their own efforts to adopt the single currency.
Some have stuck to ambitious timetables in the face of internal political
opposition and market volatility, while others have taken a wait-and-see
approach to see how the economic crisis pans out in the coming months.
Following is a summary of where each country stands with their euro adoption
plans (ranked by size of gross domestic product).
POLAND (380 bln euros)
The Polish government has set a formal plan to adopt the euro in 2012. This
would require entering the EU's ERM-2 currency corridor in second half of 2009
at the latest -- a move which is yet not certain given market volatility and
domestic opposition.
The government needs the support of the main conservative opposition, the
euro-sceptic Law and Justice (PiS), to change the constitution to pave the way
to euro adoption. PiS says euro adoption in 2012 is too ambitious and wants a
referendum on the issue. Opinion polls show a slim majority of Poles support
adopting the single currency. Poland is on the verge of meeting euro zone
criteria although economic slowdown may put pressure on its fiscal convergence.
CZECH REPUBLIC (155 bln euros)
The centre-right government has no formal euro entry target but has said it
may set it next year. Prime Minister Mirek Topolanek says he supports the single
currency in principle, but only at a time when the economy has converged enough
with the euro zone to make entry beneficial.
The Czech Republic could meet the criteria -- apart from the compulsory
two-year membership of the ERM-2 exchange rate mechanism it has not joined --
once inflation falls next year.
Czech business as well as the Social Democrat opposition, which is the
country's most popular party, are urging quick euro adoption. Entry is unlikely
before 2013.
ROMANIA (130 bln euros)
The outgoing centrist government set a 2014 date for euro adoption, a target
looking feeble in the face of the economic imbalances in the economy resulting
in high inflation.
The opposition Democrat-Liberal Party, which narrowly won a
Nov. 30 election, wants to stick to the ambitious euro plan. Economists say this
will require a major reform effort and fiscal prudence.
HUNGARY (111 bln euros)
Hungary wants to join the euro "as soon as possible" but it meets none of
the criteria due to years of lax fiscal policies and absence of reform. Before
the financial crisis struck, markets put Hungary's euro entry at 2013-2014 at
the earliest.
Thanks to fiscal measures taken under an IMF-led bailout by the Socialist
government, Hungary is expected to meet the budget deficit criterion of euro
zone entry in 2009.
The country's finance minister has said Hungary may join the pre-euro ERM-2
exchange rate band in 2010, starting the minimum 2-year period there prior to
euro entry.
Some analysts expect Hungary to set a formal entry date next year, ahead of
2010 parliamentary elections.
SLOVAKIA (65 bln euros)
Slovakia will become the 16th member of the euro zone on Jan. 1, 2009. The
formal conversion rate for the switchover was set at 30.1260 crowns per euro.
The imminent euro adoption has largely spared the small economy from turbulence
its larger neighbours experienced last month.
BULGARIA (33 bln euros)
Bulgaria no longer has a euro target date after its double-digit inflation
and high current account deficit frustrated its efforts to join the ERM-2 since
last year.
The latest Reuters poll on the issue showed Bulgaria adopting the euro in
2014. But the country's economy looks vulnerable in the current crisis and its
political situation has been complicated by EU criticism over Sofia's failure to
curb corruption.
BALTIC STATES (74 bln euros)
The ex-Soviet republics of Latvia, Lithuania and Estonia had to put off
their ambitious euro adoption plans when the EU made clear it was not going to
accept them due to their overheating economies, accelerating inflation and big
current account deficits. The three countries are seen as extremely vulnerable
to the current crisis and all three have taken up measures to bring balance back
into their economies.
Estonia aims to adopt the single currency in 2010-12, Latvia in 2012 and
Lithuania in 2011.
(Reporting by CEE bureaus, Editing by Andy Bruce)
