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This year, the Czech Republic seems poised to record a public finance deficit relative to GDP of 2.2%, staying below the 3% threshold set by the Maastricht criteria for euro adoption. This development is surprising, considering the initial statements made by the Finance Minister, Zbynek Stanjura, who had expressed opposition to the adoption of the euro, emphasizing that the Czech Republic did not meet any of the Maastricht criteria. A shift in perspective could spark new discussions on the nation’s accession to the European single currency.

President’s New Year Address

In his New Year address, President Petr Pavel emphatically raised the issue, reasserting the need to adopt the euro. “After years of discussion, the time has come to translate our commitment to adopting the single currency into concrete actions,” emphasized Pavel. Despite ongoing analyses of the positive and negative impacts of euro integration into an open, export-oriented economy strategically positioned in the center of Europe, Pavel underscored that the single currency represents a logical step for the future.

The year 2024 will mark the twentieth anniversary of the Czech Republic’s accession to the European Union and the twenty-fifth anniversary of joining NATO. In his speech, Pavel highlighted this occasion as a moment to reflect on the past and project into the future, acknowledging the commitments made. Indeed, the Czech Republic committed to adopting the common currency in the EU accession treaty of 2004. Among the ten countries that joined the EU at that time, the Czech Republic, Poland, and Hungary are yet to adopt the euro.

Pavel emphasized that the European Union provides the country with an opportunity to exert influence and promote national interests. Alongside NATO, this constitutes a guarantee of robust partnerships on which the Czech Republic can rely—a factor of immeasurable value in the current economic and political landscape.

Expert Statements

Contrasting and more varied are the opinions expressed by other political figures in the country on this matter. The Minister of Finance, Zbyněk Stanjura, who was the first to express a dissenting opinion, claiming the Czech Republic’s non-compliance with any of the four criteria, is seeking approval from the entire government to refrain from taking steps toward possible entry into the eurozone next year. This issue marks the first division within the government since its formation. Stanjura’s plan is facing opposition from other government members who have sent numerous criticisms of the proposal.

In addition to ministers, the Union of Industry and Transport has also voiced dissent through the Minister of Transport and Vice Secretary of ODS, Martin Kupka. According to Kupka, the improvement of public finances is a crucial step toward adopting the European currency. He has also criticized the government for not taking concrete actions to restore the position of the government coordinator for euro adoption, previously held by Oldřich Dědek until 2017. However, Kupka expresses skepticism about the possibility of initiating the transition during the first term of Prime Minister Peter Fiala.

According to the Vice President of the Union of Industry and Transport, Radek Špicar, the government’s failure to reintegrate the euro coordinator, despite four out of the five program parties being in favor of euro adoption, is difficult to justify. Špicar additionally supports the introduction of the option for businesses to invoice in euros, highlighting that loans to Czech businesses denominated in euros are growing by 10% annually.

In the camp favoring the introduction of the single currency are minority parties in the government, particularly STAN, Piráti, and TOP 09, the main critics of Stanjura’s proposal, as well as the opposition led by SPD and ANO. The latter party is already preparing a proposal for a popular referendum to present to the government, but, as anticipated by Kupka, ODS is ready to reject the proposal in line with the principle of representative democracy.

Population Survey

A significant percentage of citizens, exceeding two-thirds, believe that the adoption of the euro in the Czech Republic will not bring any personal benefits. In contrast, approximately one-fifth of respondents are convinced of the advantages stemming from the adoption of a common European currency. These findings are the result of a flash survey conducted by the Median agency for Radiožurnál, with the publication overseen by iROZHLAS.

“Among those expressing a favorable opinion, entrepreneurs stand out, two-fifth of them are in this category, along with students, who exhibit a positive sentiment rate of 45%,” states Ivan Cucker, one of the survey’s authors. Cucker suggests that the results reflect widespread concerns about a potential increase in prices.

Furthermore, 60% of respondents express a desire to decide on the adoption of the euro through a referendum. This percentage represents over 70% of those who oppose the adoption of the single currency.

Source: https://brnodaily.comhttps://www.ceskenoviny.cz , https://www.irozhlas.cz

Image source: photo iStock @Maciek_Schulz

Graphic source: https://storyset.com/

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