Tuesday, February 17, 2009

Romania will stick to 2014 euro entry goal

BUCHAREST, Feb 17 (Reuters) - Romania's centre-left government will affirm its 2014 euro adoption goal in an upcoming convergence report due to be sent to Brussels this week, a senior cabinet official said on Tuesday.

Other governments in eastern Europe such as Hungary and Poland have stuck by their euro zone entry plans this week even as local currencies plunged due to economic concerns, threatening to revive inflation and destabilise the economies.

But Poland's central bank has cast doubt on Warsaw's plans to adopt the euro in 2012, saying it is hard to find economic arguments supporting entering the mechanism (ERM-2) in the current situation.

Romania's former centrist Liberal cabinet, in power from 2004 to 2008, has set 2014 as the country's euro adoption target.

"The report is being prepared to be ready to be sent to Brussels probably in the next 2-3 days. Neither the euro entry goal nor the ERM-2 (European Exchange Rate mechanism) timing of 2012 have been changed," the official told Reuters.

The latest Reuters poll of economists predicted Romania's leu joining the ERM-2 mechanism in 2012, and see the country becoming a full member of the 16-country wide bloc in 2015.
Analysts in Poland have been saying the turbulent global markets and the spreading economic recession could pose a serious threat to exchange-rate stability once the zloty is in the ERM-2 grid and vulnerable to speculative attacks.

But in Romania, finance minister Gheorghe Pogea said before his appointment late last year that the crisis highlights the need to meet earlier pledges on euro adoption, as the club would offer the new EU member state better ground to defend it from similar woes to those hitting eastern Europe.

Most economists see the poor Black Sea state as one of the most vulnerable in Europe because of its vast current account deficit, which means most foreign investors have long fled its markets, leaving the leu trading near record lows to the euro.

The Maastricht Treaty's targets on deficits, exchange rates, and inflation are the main headaches for those in the bloc's ex-communist arm seeking to join the euro as they strive to converge with western European economies.

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