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UPDATE 1-Poland may not need charter change for euro-PM

Published 03/17/2009, 11:13 AM
Updated 03/17/2009, 11:16 AM
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WARSAW, March 17 (Reuters) - Poland may not need to change its constitution to enter the euro zone, Prime Minister Donald Tusk said on Tuesday, citing experts, but he said he personally would still prefer to amend the charter beforehand.

Tusk's centre-right government sees speedy euro adoption as an insurance policy against financial turmoil that has spread across central and eastern Europe and wants to adopt the common currency in 2012, a date many economists view as too ambitious.

Its plan faces a political challenge from the eurosceptical main opposition party, Law and Justice (PiS), which is blocking an amendment of the constitution to allow euro entry.

The charter currently stipulates that only the National Bank of Poland can conduct monetary policy and print money, tasks assumed by the European Central Bank inside the euro zone.

"There are experts' opinions, based on experiences of other countries, which say constitutional change may be an unnecessary step (for adopting the euro)," Tusk told a news conference.

"I would prefer that this constitutional change take place before (euro adoption) to show that there is a consensus for this project," Tusk added.

A country planning to join the euro zone must first spend at least two years in the ERM2 mechanism where its currency cannot move more than 15 percent from an agreed exchange rate, making the currency potentially vulnerable to speculative attacks.

The government wants to put the zloty into ERM2 in the first half of this year, though Tusk's point man on the issue, Deputy Finance Minister Ludwik Kotecki, was quoted on Tuesday as saying the Polish currency needs to be stable for two to three months before entering the grid.

The zloty has lost around 30 percent of its value against the euro since touching all-time highs last summer.

PRESIDENT AGAINST

President Lech Kaczynski, a conservative eurosceptic often at odds with the government, invoked the risk of speculation on Tuesday when he reaffirmed his opposition to early ERM2 entry.

"It is clear that when we enter ERM2, our foreign reserves would be threatened with speculation," Kaczynski told students during a trip to Piotrkow Trybunalski in central Poland.

"At this point, I see no reason to enter ERM-2... I am strongly against this project now. But I am ready to discuss whether Poland should enter the euro zone in six or nine years' time," he added.

Kaczynski is the twin brother of Jaroslaw Kaczynski, leader of PiS and a former prime minister. (Writing by Karolina Slowikowska and Gareth Jones; editing by Stephen Nisbet)

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