(Refiles to correct spelling of deputy finance minister's first name in 12th paragraph)
* Finance minister sees zloty stabilising
* Zloty stability a condition for ERM-2 entry
* Poland doesn't expect to need the credit line
(Adds dealer, deputy finance minister)
By Patryk Wasilewski and Pawel Sobczak
WARSAW, April 15 (Reuters) - Poland's decision to become the second country after Mexico to seek a standby credit line at the IMF is an insurance policy that should stabilise the zloty on the path towards the euro, officials said on Wednesday.
Poland's announcement on Tuesday that it would seek a $20.5 billion zlotys flexible credit facility was welcomed by the International Monetary Fund, helping boost the zloty and tighten the yields on Polish debt.
Finance Minister Jacek Rostowski said the move, which would boost the central bank's reserves by about a third, would smooth the way towards joining the ERM-2 mechanism, an antechamber to eventual euro adoption.
"From the very start we have said the zloty stability is one of the conditions for the ERM-2 entry," Rostowski said in a radio interview. "I hope it (zloty volatility) is behind us ... I think access to the IMF funds will significantly help us."
Poland's centre-right government has set itself an ambitious goal of joining the euro zone by 2012.
It had recently softened its stance on moving into the ERM-2, which would put the zloty in a trading band, as soon as the first half of 2009, but with the IMF's backing the step has become more realistic later this year.
Rostowski has said the credit facility would help Poland to protect the zloty against "uncontrollable depreciation" similar to that which chopped as much as a third of its value against the euro earlier this year.
Poland's currency has gained more than 15 percent in the last two months on the back of improved sentiment, especially towards the stronger emerging markets.
"The zloty has started to be relatively stable since the G20 summit, where officials started to talk about a potential support from the IMF," said Jakub Wiraszka, a dealer at BRE bank.
Analysts said the funding would also help Poland with cheaper access to international credit markets and lower its debt servicing costs.
Unlike IMF loans in previous crises that were used as the last resort by troubled developing markets, the flexible credit facility is seen as a just-in-case funding for relatively strong emerging economies.
Rostowski's deputy Ludwik Kotecki said Poland will likely ultimately not use any of the one-year credit facility.
"This is cash that will boost the central bank's reserves," he said at a meeting with analysts. "This will be for use if needed, but I think there won't be such a necessity."
With Poland and Mexico on board, economists say that countries such as South Africa, Indonesia or even the Czech Republic could join the programme meant to provide temporary liquidity if the markets seize up again. (Additional reporting by Dagmara Leszkowicz; writing by Chris Borowski; editing by Stephen Nisbet)