Czech central bank urges postponing euro entry

(PRAGUE) - A fragile recovery in the eurozone and fiscal uncertainty at home means EU member Czech Republic should hold off setting a date for joining the euro, the central bank and finance ministry said Monday.

"The Czech Republic's readiness to join the euro has improved over past years," the central bank CNB and finance ministry said in a joint statement.

But the country of 10.5 million people must "boost the sustainability of its public finances in relation to an ageing population and increase labour market flexibility" before fixing an entry date.

Prague pledged to join the euro under its 2004 EU accession terms and now meets the inflation, public finance and interest rate convergence criteria.

"In the eurozone itself, the recovery is fragile and the risks of deflation and another economic slump into a recession persist," the statement added.

The CNB expects Czech GDP to grow by 2.5 percent this year after a 0.7-percent contraction in 2013.

Nearby Lithuania will join the eurozone as its 19th member in January while neighbouring regional economic powerhouse Poland has yet to fix an entry date.