December 5, 2010 / 2:00 PM / 8 years ago

Czech crown to stay long with no euro opt-out needed: PM

PRAGUE (Reuters) - The Czech Republic does not need to negotiate a formal opt-out from joining the euro currency, which would not be to the country’s advantage for a long time, Prime Minister Petr Necas said on Sunday.

The Czechs have been cautious about adopting the euro and Necas’s center-right cabinet has pushed the issue far into the future, saying it would not set any date during its term in office, which will end in 2014.

Necas said during a televised debate the euro zone had changed since the Czech Republic made a commitment to eventually adopt the euro, due to the economic crisis and the EU’s response to it

“At this point, it is clearly showing that the costs of keeping the crown are lower than those of adopting the euro,” Necas during a televised debate. “It will remain like that for a very long time.”

The Czech economy is highly dependent on exports, and companies that have seen their margins shrink due to the long-term firming of the crown have been calling for adoption of the single currency.

But Necas said keeping the crown would help in the process of alignment of the Czech economy with the euro zone and would keep inflation low.

Necas said eurosceptic Czech President Vaclav Klaus had asked the government to consider negotiating an opt-out from the country’s commitment to join the euro, which was mentioned in a central bank document for the cabinet.

But he said there was no need for that.

“No one can force us into joining the euro... We have a de facto opt-out,” he said.

He said the country would decide when to join the ERM-2 exchange rate mechanism, a precursor to euro membership that applicants must remain in for at least two years, and this gave the government enough discretion on timing.

He also said euro adoption was a “theoretical problem” given the fact that the country had to first narrow its budget gap and undergo reforms of its pension and healthcare systems before it could apply.

Reporting by Jan Lopatka; Editing by Karen Foster

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