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Czech Republic: Euro Introduction No Issue Yet

Published: December 21, 2012; 00:02 · (Vindobona)

The Czech Prime Minister Petr Necas explained that the Czech Republic does not strive for becoming a member of the Eurozone.

Czech Republic: Euro Introduction No Issue Yet / Picture: © Vindobona.org

The adoption of the common currency is no issue yet in the Czech Republic, Necas said at a press conference. Joinng the Eurozone would not be recommendable at the moment as the economic and public debt crisis is still unsolved. On the occasion of a state visit in Austria, the Czech President Vaclav Klaus said that the Czech Republic should not join the Eurozone.

Necas explains that the Czech Republic would not be harmonized with the Eurozone. At the moment, the Czech Republic would not meet the Maastricht criteria. The current public debt level comes at 48% of GDP. Hence, the indebtedness is substantially below the 60% threshold. According to the Czech Ministry of Finance, the price stability criterion would be violated this year. Next year, the budget deficit will reach about 2.9% of GDP, which is slightly below the 3.0% threshold. However, the budget deficit of 2012 is anticipated to reach up to 5.0% of GDP. Initially, the expected deficit was 3.2%. The higher deficit is due to restitution payments.

As a result, the euro introduction will be no issue in the near future, Necas says and refers to the current problems in the Eurozone. In an interview with the Czech newspaper Hospodarske noviny in summer, Erste Group´s CEO Andreas Treichl said that the Czech Republic should stay outside the Eurozone for the time being. „The euro is a project, which should have provided an approach of the economic development of the countries. In the last three or four years, we could see that the Eurozone countries are moving away from each other. If this development will continue, the Czech Republic should not join the Eurozone.“ Although the problems of the Eurozone also affect the Czech Republic, the own currency would be a big benefit. Thus, the Czech Republic should not give up its currency, Treichl stated.