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Polish PM: zloty may need to stabilise before ERM-2

Published 03/01/2009, 07:56 AM

WARSAW, March 1 (Reuters) - Poland may need to wait for its currency to stabilise before joining the ERM-2 mechanism required before adopting the euro, Prime Minister Donald Tusk said on Sunday.

But Tusk reiterated that the move into the European Exchange Rate Mechanism (ERM-2), a waiting room that would peg the Polish zloty to the euro, did not need opposition support nor a constitutional amendment allowing Poland to drop its currency.

"In the case of ERM-2, everybody knows that a change of the constitution or backing of the opposition is not required," Tusk said in a radio interview ahead of a European Union summit in Brussels.

"We do seriously consider voices that say that the exchange rate should stabilise in order for the ERM-2 entry to be safe."

Economists say that while an eventual euro adoption would help Poland and other central and eastern European economies in the long run, pegging their currencies to the euro within a tight 15-percent corridor could rob them of flexibility and even open them up to speculative attacks.

Tusk's centre-right government aims for Poland, the EU's largest ex-communist economy, to enter the euro zone in 2012, preceded by stepping into ERM-2 in the first half of this year.

President Lech Kaczynski and the main opposition party, led by his twin brother Jaroslaw, are against an immediate push towards adoption of the euro because they say it would harm Poland's efforts to deal with the global financial crisis.

The Polish zloty has fallen as much as a third against the euro since peaking in July 2008, but it has risen some 7 percent since mid-February. (Reporting by Rob Strybel, writing by Chris Borowski, editing by Will Waterman)

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