WASHINGTON, Aug 21 (Reuters) - Delaying the adoption of the euro in Poland would give the economy time to adjust to the impact of the global financial crisis but the Polish authorities are determined to move ahead as planned, the IMF said in documents published on Friday.
The International Monetary Fund said adopting the euro was a good move for Poland but waiting until the economy recovers properly from the global turmoil would ensure a smoother transition.
"The increased uncertainty in global markets and the current cyclical conditions have tilted the short-term balance in favor of maintaining monetary policy independence and a flexible exchange rate for now," the IMF said in the documents detailing annual economic discussions between Poland and IMF staff in June 2009.
"Delaying euro adoption would also allow the economy to adjust to possible changes in long-run financing prospects prompted by global deleveraging," the Fund added.
In response, the Polish authorities acknowledged there may be a need for short delays in adopting the euro in 2012 but overall said there were benefits to moving ahead as planned.
"(The authorities) recognized, however, that adopting the euro in 2012 may not be feasible and a short delay would be necessary," the IMF said of its talks with the authorities.
"Still, the authorities considered that an early adoption target would help galvanize support for fiscal consolidation and structural reforms," it added.
Warsaw originally hoped to adopt the euro zone common currency as of 2012, but the sharp economic slowdown has forced the center-right government to alter the schedule, saying it is realistic to adopt it in 2014.
The Fund said a delay would also allow exchange rate volatility to subside in Poland, as well as time to marshal enough political support to ensure the smooth passage of constitutional changes required to make the change.
The IMF also urged Poland to revamp its fiscal framework by introducing rolling and binding three-year expenditure limits to shore up confidence in the government's policies.
The authorities disagreed, arguing they did not see the need for forward-looking expenditure rules and that the strict yearly deficit limits were enough to ensure credibility of fiscal policy.
"They do not see a need for introducing binding expenditure ceilings in their multiyear fiscal plan, noting that these would be difficult to implement, given their dependence on uncertain projections, and could run the risk of being interpreted as entitlements," IMF staff said of its talks.
Overall, the IMF said Poland had weathered the global crisis relatively well, and the economy has continued to expand even as all its neighbors have been mired in deep recession. (Reporting by Lesley Wroughton; Editing by James Dalgleish)