(Recasts, adds more quotes, analysts, background)
By Gareth Jones
WARSAW, April 1 (Reuters) - Poland signalled the possibility of delay in its path to the euro on Wednesday, in comments economists said confirmed their doubts that Warsaw could meet its target date of 2012 for adopting the common currency.
Deputy Finance Minister Ludwik Kotecki, who is the government's point man on euro adoption, said the zloty remains too volatile at present to enter the pre-euro European Exchange Rate Mechanism (ERM2).
Under a road-map drawn up last autumn, Prime Minister Donald Tusk's centre-right government envisages ERM2 entry in the first half of this year. A candidate country must keep its currency in the grid for at least two years before euro adoption.
"Zloty volatility is too high. In these conditions we cannot think seriously about entering the (grid) and pegging the entry rate," Ludwik Kotecki told radio PiN.
The zloty has lost about 30 percent of its value against the euro since touching all-time highs last summer amid a general investor flight from risk. The currency jumped 2.2 percent on Wednesday to 4.56 against the euro after sharp losses.
"We still have time, a few weeks, to think about whether the conditions set out in the road map can be fulfilled... If not we should think of some change," Kotecki said, adding that the government was sticking for now to its 2012 euro target date.
Economists said the government was preparing Poles for inevitable delay in the euro adoption plan but said financial markets had already factored in such a scenario and would likely take any such announcement in their stride.
"The two conditions for ERM2, lower zloty volatility and political consensus, are unlikely to be met in the near future. The question now is how and when the road-map will be changed," said Maciej Reluga, chief economist at Bank Zachodni WBK.
REASONS FOR DELAY
DemosEuropa, a Warsaw think-tank, said the balance of argument was swinging in favour of delaying ERM2 for both economic and political reasons.
With growth slowing fast in the European Union's largest ex-communist economy, shrinking tax revenues will make it more difficult for the government to keep its budget deficit within three percent of gross domestic product as required by EU rules.
"Curbing spending radically at a time when the economy is threatened by recession would be economic and political folly," DemosEuropa said in a note.
Also, the European Commission and European Central Bank are likely to favour zloty appreciation within ERM2 as the current exchange rate favours Polish exports at the euro zone's expense.
"Of course the government too would prefer a stronger zloty in the long run, but at the moment (of global recession) it sees its weakening as a substitute for a fiscal stimulus Poland cannot really afford," DemosEuropa said.
Politically, the government has made no headway in trying to convince the eurosceptic main opposition party to cooperate in amending Poland's constitution, a key step for euro entry.
"Legally, they can enter ERM2 without changing the constitution, but the more important question is should they take such a risk," said Reluga.
On Wednesday, the head of Tusk's ruling Civic Platform in parliament, Zbigniew Chlebowski, was quoted by the state PAP news agency as saying constitutional change was likely to come in 2011, when Poles are also due to vote for a new parliament.
He also said 4.0 zlotys per euro would be a good exchange rate for entering the ERM-2 grid, much stronger than the 4.60 level it currently trades.
Tusk remains far ahead of his rivals in opinion polls but Poland's growing economic woes could narrow his lead. The main opposition Law and Justice party wants to put off euro adoption for many years, saying it would harm Polish competitiveness.
"The lack of political consensus around entry into ERM2 and euro adoption is a serious impediment as it would make the zloty inside ERM2 hostage to domestic politics," said DemosEuropa. (Additional reporting by Adrian Krajewski and Karolina Slowikowska) (Editing by Toby Chopra)