Final Word from Wednesday, May 5, 2004

Premier Vladimír Špidla joined the criticism last week of Germany and other EU countries that are violating the EU's stability and growth pact. According to ČTK, he said in Berlin that the rules must be followed. Three days later, his own government in effect came into violation of the stability pact. As a new EU member not in the eurozone, the CR doesn't face any penalties for violating the pact, but it's still technically required to adhere to it. Špidla now says the CR will meet the Maastricht criteria by the end of 2006, so it's ready for the euro in 2008. The problem, as pointed out by Patria Finance, is that he forgot to say what he's going to do about the budget deficit. CNB Gov. Zdeněk Tůma said diplomatically yesterday that it's still possible for the CR to adopt the euro in 2009 or 2010. It's merely a question of the willingness of the government to do what's necessary, he said. Czech National Bank


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