Czechs could adopt euro in 2012

VIENNA (Reuters) - The Czech Republic could adopt the euro in 2012 if the government makes it its priority, Czech central bank (CNB) Vice-Governor Ludek Niedermayer said on Monday.

Niedermayer told the Reuters Central European Investment Summit it was necessary to set a euro entry date at least three years before the intended target date.

The government abandoned an earlier target of 2010 entry, mainly due to high budget deficits and a lack of reforms that would secure the long-term sustainability of public finances.

It has refused to set a new target, although Finance Minister Miroslav Kalousek had pushed for 2012.

Niedermayer said 2012 could still be possible if politicians wanted it. "Economically it should be feasible," he told the summit, taking place in Vienna.

The government has pledged to cut the budget deficit to 2.95 percent of gross domestic product next year from 3.6 percent expected in 2007, below the 3 percent threshold for euro entry.

Niedermayer said other euro criteria could also be met in time. "I think that we should be able to get inflation under control as we want and this would assure that we would meet ... (the) criteria," Niedermayer said.

"So it is possible but it is a matter of political priorities, and as long as there is no priority there is not a project (to join the euro)," he said.

Despite not setting a target, Prime Minister Mirek Topolanek and Kalousek have both said 2012 is still possible.

Niedermayer also said euro candidate countries should aim to be well within the official euro criteria, because otherwise there could be discussion about the sustainability of their performance.

Czech Republic neighbor Slovakia, which wants to join the euro zone in 2009, has suggested political considerations may come into the picture that could block the country's entry bid.

"It is up to us to fulfill the figures if we want to join the euro ... then if the answer still will be 'no', then it would be serious discussion," he said.

(For summit blog: summitnotebook.reuters.com/)