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IMF: Euro adoption the solution for Eastern Europe

Tuesday, Apr 07, 2009

The central and east European countries should consider the option of adopting the euro, even unilaterally, at least to alleviate some of the burden of foregn debts of USD 413 billion.

The idea of quasi-membership was proposed in a report by the International Monetary Fund (IMF) from a month ago, quoted by the Financial Times on Monday.

The document was not published and it is not clear whether it reflects the official stance of the institution.

The report proposes relaxing the Maastricht criteria for entry among the countries sharing the single currency to create “unofficial” eurozone members with no voting rights in the management of the European Central Bank (ECB). This means that they will have no say on monetary policy matters.

The IMF argues that adoption of the euro would not only shore up confidence in Eastern Europe but also help the region pay off foregn-currency debts, especially for countries whose national currencies have been increasingly battered by the global crisis.

A similar proposal was made in end-March by the Confederation of Employers and Industrialists in Bulgaria (CEIB). “Back at the end of 2008 it became clear that the only solution for CEE countries with currency boards is a quick unilateral adoption of the euro. This is an additional argument for Bulgaria to sign a safeguard agreement with the IMF, the only one that can negotiate the euro adoption and the entry into the eurozone with the ECB. With the decisions at last week’s G20 summit, the IMF is now a global financial institutuion, and not only for countries in a state of crisis. Therefore having an agreement with the fund is no problem,” said yesterday Ivo Prokopiev, chairman of CEIB and co-publisher of Dnevnik.

The Bulgarian finance ministry said it has not changed its position and are against a swift adoption of the euro. “This is not a unilateral decision of any country but of the ECB and the EU as a community. No country can make up its own mind and adopt the euro right away,” finance minister Plamen Oresharski told Dnevnik.

The Bulgarian National Bank (BNB) declined to comment.

Source: Dnevnik.bg