(Adds cabinet discussion on date, paragraphs 2-3, 8-11)
By Jan Korselt
PRAGUE, Dec 16 (Reuters) - The Czech Republic has moved toward meeting euro entry criteria and its economy has become more aligned with the euro zone's this year, a joint central bank and government document said on Tuesday.
The cabinet discussed future steps toward euro adoption on Tuesday while debating the annual study, and refrained from setting an entry date, as expected.
It hinted, however, the Central European country could take steps toward euro adoption next year and said the annual assessment will be done in October, a couple months early.
"This year, there has been certain positive movement from the point of view of future compliance with the Maastricht convergence criteria and also partially the economic convergence," the central bank said in a statement on the document.
The Maastricht criteria set limits for euro hopefuls on government debt, interest rates, currency stability and inflation.
The Czechs, who have enjoyed low interest rates and a strong currency in recent years and avoided banking sector collapses, have not set a firm euro entry date, saying they would first have to ensure they join at an appropriate time.
Analysts expect 2013 to be the earliest possible entry point for the Czech Republic.
The cabinet also removed an explicit reference in the analysis to avoid setting an entry date now and not to join the pre-euro ERM-2 exchange rate mechanism next year, hinting that more concrete steps such as setting a target date could be taken toward the end of 2009.
This was done amid pressure from two junior partners in the three-party, centre-right coalition who are much more keen on quick euro adoption than the main ruling party, the rightist Civic Democrats.
"We dropped this text and then the document was adopted unanimously," Deputy Prime Minister Martin Bursik told a news conference.
"The matter is open and it will be a matter of political discussion among the coalition partners."
The analysis said the financial crisis was a temporary, unfavorable factor for euro adoption.
"In these conditions, the outlook for meeting the Maastricht convergence criteria and mainly maintaining and raising the level of achieved convergence of the Czech economy with the euro zone is highly uncertain," the bank said.
Exchange rate volatility sparked by the crisis could make it "very difficult" to meet the criterion of exchange rate stability, which sets limits for currency swings within the plus or minus 15 percent ERM-2 band, the central bank said.
The financial crisis has hit Hungary, a fellow Central European EU member, which has had to tap funding from the International Monetary Fund and the EU to avert a balance of payments or banking crisis.
Hungary and other countries have begun to favor quick euro adoption in order to protect their economies from market turmoil.
The analysis also showed public deficits would remain safely below the limit of 3 percent of gross domestic product, although long-term fiscal stability and removing structural deficits remained a challenge. (Writing by Jan Lopatka; editing by Michael Winfrey, Gary Crosse)