Poland's government still insists that it will be ready to join
the euro in 2006 or 2007. But last month Grzegorz Kolodko, its
finance minister, presented his EU counterparts with proposals
to loosen the fiscal rules.
He argued that budgetary rules should apply to the aggregate
deficit in the euro-area, rather than to each country—an
extension of a British proposal. One Dutch official fumed privately
that profligates would be “free-riding” on the backs
of more frugal countries. But Mr Kolodko is unrepentant: “the
EU should think about Italy or Belgium's public debts—not
to speak of their levels on the eve of EU and [euro-zone] accession.”
These are bold words, although they would carry more weight if
Poland's awesome budget deficit was itself designed to stimulate
economic growth not to put off reforms.
Most analysts doubt that Central Europe's biggest countries—Poland,
Hungary and the Czech Republic—have a chance of meeting
the 3% deficit limit by 2007. Having secured their places in the
EU, these governments may be even more inclined to let budgets
and borrowing rip, delaying euro entry as late as 2010. By that
time the stability pact may no longer exist, and new members may
be able to enter on looser criteria. Punters betting on speedy
convergence may have jumped the gun.