The newly emerging Czech coalition government does not plan to adopt the euro currency during its term, according to chairman of the TOP 09 parliamentary club Jan Jakob and ODS deputy chairman Zbyněk Stanjura. According to them, Czechia does not strive to meet the conditions for the adoption of the euro, which would also not be advantageous for the country right now.
The SPOLU coalition (ODS, KDU-ČSL, and TOP 09) and Pirates and Mayors and Independents (STAN) do not plan to adopt the euro currency during the term of office of the newly forming government.
“We respect the program of SPOLU. Adoption of the euro is not on the agenda. We do not meet the criteria for the adoption of the euro, so it is more a question for our successors,” said Jan Jakob.
Critics of the euro say it erodes economic competitiveness, especially in terms of exports. Countries like Poland, Czechia and Hungary have been growth success stories in the last years, partly because they have the ability to work with their own currencies. Countries such as Spain and Greece, for example, saw their manufacturing sectors greatly diminished following the adoption of the euro.
“Public finances are in such a state that we do not meet the criteria to enter into the eurozone. We have to adopt the euro when it will be advantageous for the Czech Republic, which it is not yet,” said Zbyněk Stanjura.
According to the August forecast of the Ministry of Finance, public finances will end up in a deficit of 7.7 percent of GDP this year. The deficit is expected to fall to 5 percent next year. According to the ministry, the deficit should continue to decline in the coming years, up to 4.1 percent in 2024. Last year, the public finance deficit was 5.6 percent of GDP. According to the Ministry of Finance, total public debt should rise from last year’s 37.7 percent of GDP to 43.5 percent of GDP this year.
Under normal circumstances, without the effects of the coronavirus pandemic, the European Union requires a public finance deficit below 3 percent of GDP and a debt below 60 percent of GDP for allowing the adoption of the euro. However, last March, in order to support the economies affected by pandemic measures, the European Commission suspended the rules, announcing that these conditions would not return until the beginning of 2023.
Last December, in a joint statement, the Czech National Bank and the Ministry of Finance again recommended the government not to set a date for joining the eurozone
However, the Czech Republic has committed to taking steps to be ready for accession to the Euro Area as soon as possible.