Skip to content. | Skip to navigation

Personal tools
Sections
You are here: Home Breaking news Czech Republic says euro entry date on hold

Czech Republic says euro entry date on hold

15 December 2011, 17:54 CET
— filed under: , , , ,

(PRAGUE) - Czech authorities said Thursday the country would not seek entry into the ERM II mechanism, the two-year waiting room for eurozone candidates which pegs their currencies to the euro.

"The Czech National Bank and the finance ministry have recommended not to fix a target euro adoption date and hence not to seek entry into the ERM II mechanism in 2012," the institutions said in a joint statement.

They added that the Czech Republic's compliance with the euro adoption criteria was in doubt for the nearest future as the country's inflation is likely to rise above the limit following an increase in sales tax next year.

Besides, the central European country of 10.5 million is struggling to comply with the 3.0-percent ratio of the public deficit to gross domestic product (GDP).

The state budget for 2012, passed by lawmakers on Wednesday, reckons with a public deficit of 3.5 percent for next year.

The country's centre-right government, bent on austerity, expects to cut the deficit, covering the budgets of the central government, welfare systems and local authorities, to 2.9 percent in 2013 and 1.9 percent in 2014.

But the future is uncertain given the ongoing debt crisis and the sharply deteriorated growth outlook in the eurozone.

"We cannot conclude that we have reached sufficient progress creating conditions for euro adoption that would allow us to fix a target date for eurozone entry," the central bank and finance ministry said.

The finance ministry expects the Czech economy to grow by 2.1 percent this year and slow down to 1.0 percent in 2012, following 2.7-percent growth in 2010.

The Czech Republic is obliged to join the euro under the terms of its 2004 EU entry agreement, but there is no deadline for the move and Prague has said several times it is not planning to adopt the euro in the near future.


Document Actions