Will Greek debt crisis impact Czech euro adoption?
Member states of the Eurozone are discussing ways of helping Greece and its debt-laden economy, while there are growing concerns about some other countries that use the single European currency. But what will the crisis mean for the Czech Republic, which is itself hoping to adopt the euro in around five years’ time?
The Czech Republic last year failed to fulfil two of the four criteria for euro adoption: it had a budget deficit higher than three percent of GDP, and also failed to join the Eurozone’s exchange rate mechanism. But politicians hope that by 2013 all the conditions will be met and the country will trade crowns for euros two years later.
“The major problem in the Czech Republic is the consolidation of its public finances. Without it, there is no chance of meeting the Maastricht fiscal criteria, and I think we should also take into account that as a result of the Greek crisis, the monitoring of fiscal positions is likely to be strengthened.”
Fiscal discipline is one of the key issues of general elections being held just four weeks from now. Mr Dědek says that when a new government is formed, the situation in the Eurozone will have calmed down, and Czechs will join the grouping as soon as they meet all the requirements.
“I don’t think that the Greek situation will have any lasting impact. It might be my wishful thinking, but I think that it implies that the situation of Greek finances will be so acute when the new government comes up with its new strategy for the adoption of the euro.”
But the vice-governor of the Czech National Bank, Mojmír Hampl, said on Thursday the deadline for adopting the euro was very much up in the air. The Czech Republic is, however, bound by its accession treaty to the EU to join the Eurozone sooner or later, although the treaty sets no particular date. Economist Lubomír Lízal from think-tank CERGE EI believes that the Greek crisis will eventually lead to an overhaul of the Eurozone’s strategy for accepting new members.
“I think that future developments concerning the Czech Republic and its accession to the Eurozone will depend more on the Eurozone itself. I think that the Eurozone will somehow re-asses the whole admission process and the ways of handling public finances in Eurozone states. So in my opinion, there is not going to be any new admissions to the Eurozone, maybe one just to show it’s possible, and I don’t think the Czech Republic will join soon.”
Meanwhile, ordinary Czechs may be losing enthusiasm for the currency. A new survey suggests that for the first time since 2001, more Czechs are against adopting the euro than for it.
