By Gareth Jones and Karolina Slowikowska
WARSAW, Feb 13 (Reuters) - The weakness and volatility of the zloty may force Poland to delay its plan to adopt the euro until 2014 in the worst case scenario, a senior ruling party official said on Friday.
Prime Minister Donald Tusk's centre-right government aims to join the euro in 2012, a plan that requires the zloty to enter the euro's antechamber, the European Exchange Rate Mechanism (ERM-2), in the next few months.
"In the worst case scenario this could mean we adopt the euro in 2014," Zbigniew Chlebowski, head of the ruling Civic Platform's parliamentary group, told Reuters.
"In May we will make a final decision (on whether to join ERM-2 this year). Much will depend on the currency market and whether it is still volatile," he said. Before joining the euro, a country must keep its currency inside the ERM-2 grid for at least two years, where it trades within a plus/minus 15 percent range around a central parity.
Many economists are sceptical that the government can meet its 2012 euro target date, citing political as well as economic difficulties. A recent Reuters poll of analysts saw Poland joining ERM-2 in 2010 and adopting the euro in 2013.
"If the market is still volatile (in May), this could mean that the chances of ERM-2 entry this year may be lower. In May we could say, for example, that we delay ERM-2 entry by a year because it would be difficult to make a decision (to enter ERM-2) with such a market situation," Chlebowski said.
The zloty has lost about 30 percent of its value against the euro since touching all-time highs last summer as investors have fled emerging markets perceived as too risky at a time of global economic crisis.
It has shed about 10 percent since the start of 2009 alone.
"We cannot peg the zloty in a grid at the current level and the current instability," Chlebowski said, adding that in his view the ideal rate for swapping zlotys for euros would be between 3.40 and 3.80 compared to Friday's level of 4.64.
OPTIONS
Chlebowski said he expected the zloty would still be under pressure in May not only because of the global financial crisis but also because of currency options that have brought some Polish exporters to their knees.
Economy Minister Waldemar Pawlak called on the government this week to back a proposed law that would allow companies to walk away or renegotiate their outstanding options with banks -- a suggestion met with scepticism by Poland's finance minister.
The government is working on a bill that envisages not cancellation of contracts but the introduction of mechanisms allowing for their speedier and more efficient renegotiation, Chlebowski said.
The zloty should receive a boost from government plans to tap into a large pool of euros now starting to flow into Poland as European Union structural funds, he said. The funds are intended to modernise the country's creaking infrastructure.
"Some funds that we will get from the EU, and which will amount to about 10 billion euros this year, could be exchanged on the market to strengthen the zloty," he said.
Chlebowski said the finance ministry was now analysing when these funds could start to be used. (Additional reporting by Pawel Sobczak; writing by Gareth Jones, editing by Stephen Nisbet)