The adoption of a common currency in Poland remains a strategic goal of the Ministry of Finance, although, as Artur Radziwiłł, undersecretary of finance and proxy for introducing euro – in the first place, public finance situation in Poland should be stabilized. The entrance to the Eurozone is a strategic goal of Poland. Now the priority for us is to leave the procedure of excessive deficit – comments the undersecretary. The excessive deficit is a challenge for us not only because of the criterion of Maastricht and entrance to the Eurozone. The assurance of public finance stability in Poland is of our own interest – adds.
Strict criteria of Maastricht
The reduction of deficit is one of many conditions, which are essential for the Poles to being able to use euro as an official medium of exchange on the area of Poland in the nearest future. The Treaty of the European Union, signed in Maastricht, envisages that a country applying for the introduction of the Eurozone cannot be under the procedure of an excessive deficit, which may be imposed on a country because of the deficit of governmental and local government institutions’ sector, exceeding 3 per cent of PKB. According to the European Commission, in turn, the deficit in Poland in 2013 totaled 4,3 per cent of PKB.
Among other criteria of Maastricht necessary to satisfy before introducing euro, a high level of price stability and relatively low interest rates are to be enumerated. Moreover, the stability of foreign exchange rate is also essential. It has to be confirmed by participation in the ERM II system for at least two years preceding the strike price, without tensions on the currency market and performing a devaluation against euro.
The fulfillment of these criteria will allow Poland to adopt a common currency, but it will not be enough for the country to manage after introducing euro because a restriction of zloty volatility on the stage of ERM II will limit Poland the ability of fast and free response on changes in the economy.
In shorter term we know that being in one currency area reduces a flexibility of economy and possibilities of responses to shocks. Now we are making a fundamental work by strengthening the stability of public finance in Poland: a new expense rule is being implemented, the deficit is still being reduced, and that will allow us not only to meet the criterion enabling the entrance to the Eurozone, but also it will let us to function better within the Eurozone. On the other hand, we are conducting a number of activities which increase the flexibility of Polish economy – judges Artur Radziwiłł.
And maybe we are better without euro?
The fact of not adopting a common European currency has been doing us rather good so far – Poland, as the only country in the European Union, has not experienced the economic slowdown and it maintained the economic growth. The crisis induced European institutions to introduce reforms and elaborate mechanisms of functioning a common currency. When, within few years, Poland will be joining the Eurozone, this currency should be much stronger and resistant to market fluctuations. Hopefully, Polish politicians, who take party in works of the institutions responsible for the common currency, will supervise it too. We are present and we co-create new institutional frameworks, understanding in what the crisis in the Monetary Union may result and what potential consequences it would have for Poland. We will be making a decision about our readiness to join, when we will have new and reformed institutions of the Eurozone – judges the undersecretary.