Polish government gives green light to EU fiscal pact

(WARSAW) - Poland's government on Tuesday gave the green light to an EU fiscal pact requiring members with high debt to keep their structural deficits below 0.5 percent of gross domestic product to overcome the eurozone crisis.

The pact must now be approved by parliament and the president. It is expected to pass smoothly.

Agreed in principle in March by 25 European Union states -- the Czech Republic and Britain remained outside -- the treaty was demanded by Germany as the price of financial solidarity with debt-laden eurozone partners like Greece and will introduce "golden rules" making balanced budgets mandatory.

The pact must be approved by 12 of 17 eurozone members to take effect at the start of next year.

"The pact allows countries outside the eurozone, like Poland, to participate in discussions on its future and on potential changes to the pact itself," Prime Minister Donald Tusk said Tuesday in Warsaw, confirming his cabinet's approval.

Warsaw is aiming to meet all the macro-economic targets for eurozone entry by next year, but insists it will join only after the bloc's debt crisis is permanently fixed.

An ex-communist country of 38.2 million, Poland boasts the Europe's sixth largest economy, one which has posted growth each year over the last two decades.

It has also kept its national debt under 60 percent of gross domestic product, as stipulated by its constitution. This is also part of the fiscal pact's so-called "golden rules".

The pact also stipulates that a member's structural deficit -- which strips out one-off effects such as debt repayments and the economic cycle -- should be capped at 0.5 percent of gross domestic product.