Central Bank: situation favourable for Czechs to adopt the euro by 2007

The Central Bank has called on the Czech government to adopt reforms in public finances that would make it possible for the Czech Republic to adopt the currency of the European Union, the euro, as early as 2007. In a statement released on the bank's internet site Friday, the Central Bank said that analysis had shown that overall the situation was favourable for the Czech Republic to join the Eurozone relatively quickly. But, the bank stressed the need for some changes in economic policy to ensure the opportunity would not be missed. At the same time the bank has conceded that the outlook for current fiscal policy is not entirely consistent with the quick adoption of the euro. Criteria which must be met in order for the country to adopt the European currency requires, for example that the public finance deficit not exceed 3 percent of the Gross National Product. Current budget policy indicates, however, that by 2006, the public finance deficit could exceed 6 percent of the GNP.