Narodowy Bank Polski

Information from the meeting of the representatives of the Government of the Republic of Poland with the Monetary Policy Council

  1. On 7 February 2005, a meeting was held between the representatives of the Government of the Republic of Poland and the Monetary Policy Council.

  2. The Government and the MPC unanimously agree that Poland's membership in the euro area, preceded by necessary reforms, will contribute to an acceleration of economic growth and thus will be conducive to reducing the economic development gap between Poland and the current members of the euro area.

  3. The essential condition for Poland's accession to the euro area is the compliance with the so-called Maastricht criteria. In order to meet these criteria, it is necessary to fully implement the Convergence Programme, the update of which was passed by the Government on 24 November 2004. Attaining this objective should be supported by proper fiscal-monetary policy mix.

  4. A key element in the implementation of the Convergence Programme is to bring fiscal deficit below 3% of GDP and to keep it at this level. Therefore, the Government and the MPC opt for the introduction of reforms that would substantially and in a sustainable way limit the public finance deficit, and thus contain the increase in public debt. This would also facilitate compliance with the remaining convergence criteria, i.e. low inflation, low long-term interest rates and stable exchange rate. A high and sustainable economic growth rate reconcilable with the inflation target would facilitate the implementation of the Convergence Programme. While assessing the compliance with the convergence criteria it would also be desirable to correctly account for the short-term costs following from the introduction of retirement pension reform, which will limit the level of public debt in the long run.

  5. The Government and the MPC uphold the conviction that the period of Poland's participation in ERM II before its entry to the euro area should not be longer than the required minimum. Thus, the decision to join the mechanism should be taken when it is possible to conclude with a high degree of probability that the reforms being implemented as well as the macroeconomic situation would ensure the compliance with the remaining criteria within this period. Another question discussed was the problem of zloty exchange rate at which Poland will be entering ERM II and subsequently the euro area.

  6. The Government and the MPC also agree that it would be most desirable if the institutions of the European Union interpreted the exchange rate criterion in a way that would eliminate unnecessary macroeconomic risk.

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