(Adds comments on Poland)
LONDON, April 16 (Reuters) - Fitch's sovereign ratings in
eastern Europe do not factor in any expectation the European
Union would allow fast-track euro adoption but a change in that
policy would likely lead to upgrades, Fitch said on Thursday.
The ratings agency also said Poland's decision this week to
take a $20.5 billion stand-by credit facility from the
International Monetary Fund (IMF) would not trigger a change in
the country's "A-" sovereign rating and "stable" outlook.
The global economic crisis spurred some countries in the
EU's eastern wing to speed up efforts to adopt the single
currency as a potential shield against turmoil.
In the face of extreme currency volatility, Poland and
Hungary lobbied for leeway on adopting the euro earlier this
year but both the bloc's executive Commission and the European
Central Bank say strict euro requirements cannot be relaxed.
"If there was a change in EU policy -- which we don't expect
-- that leads to more rapid adoption, then we would expect to
take positive action on the countries affected," Edward Parker,
Fitch Ratings head of emerging Europe sovereigns, told Reuters.
Euro adoption could lead to one- or two-notch upgrades of
foreign currency Issuer Default ratings, Fitch said, adding that
euro adoption would eliminate the risks of potential balance of
payments and currency crises.
But euro zone criteria on foreign debt and budget deficits
could pose problems for some countries as the economic crisis
has caused budget revenues to fall and public borrowing to rise.
Before joining the euro zone, countries must keep currencies
pegged to the euro in the ERM-2 antechamber where it has to stay
in a plus/minus 15 percent band around a central parity.
Analysts say that could pose problems since investors began
ditching assets across central and Eastern Europe last year,
forcing the Polish zloty and other currencies down double digit
percentages against the euro.
Poland's government had said earlier this year it wanted to
join the ERM2 in the first half of 2009 and to swap its zlotys
for euros in 2012. It has since backed away from that target.
NO CHANGE FROM IMF
Fitch said it expected EU authorities to remain resistant to
"premature" euro adoption for fear that a country might find
itself unable to bear the costs of adjustment.
That, Fitch said, could potentially cause a country to leave
the euro "triggering contagion to other countries within the
single currency".
"We don't think that unilateral euroisation is an attractive
option for countries. It would run against EU policy and lead to
a loss of goodwill among EU policymakers and it won't bring the
benefits of proper euro adoption such as access to ECB
liquidity," Parker added.
Parker said Poland's announcement this week that it would
seek the IMF's new flexible credit facility to help stabilise
its currency would help address investor fears over the
country's private sector foreign debt level.
"This helps to reinforce Poland's 'stable' outlook and makes
us more comfortable with its ratings but we can't anticipate any
further change as a result of this," he added.
Poland is the second country after Mexico to use the
facility, designed to provide just-in-case funding for
relatively strong emerging economies.
Fitch said it forecast the next countries to enter the
single currency zone would be Estonia, Lithuania and Poland in
2013; the Czech Republic, Hungary and Latvia in 2014 and
Bulgaria and Romania a year later.
"Timetables for all countries are uncertain, and both later
and early dates are possible," Fitch said.
According to a Reuters poll of analysts taken in January, no
country will adopt the euro before 2013.
(Reporting by Sebastian Tong and Carolyn Cohn in London,
Michael Winfrey in Prague; editing by Stephen Nisbet)
