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.