The original proposal was for a significantly larger loan of CZK 137.4 billion. Credit: Freepik.

Coalition Parties Divided On Adoption of Euro In Czech Republic

The coalition government parties do not agree on the approach to adoption of the Euro currency in the Czech Republic, which is expected to become a topic of the parties’ programmes for the parliamentary elections due in two years, according to comments of the parties’ representatives to CTK.

The senior coalition party, the Civic Democrats (ODS), formerly strongly Eurosceptic, now acknowledges an internal discussion on the issue. The junior TOP 09, which identifies itself as among the strongest supporters of Euro adoption, considers 2030 as a realistic date for the Czech Republic to join the countries using the single European currency. The other supporters of adopting the Euro adoption, the Mayors and Independents (STAN) and the Pirates, say it is a long-term task to gradually explain to the public the benefits of replacing the Czech crown with the Euro.

The five-party government coalition also includes the Christian Democrats (KDU-CSL).

“The Civic Democratic Party has been holding open discussions on the topic of the possible adoption of the Euro for a long time, in which we see rational arguments for and against,” ODS spokesman Jakub Skyva told CTK. “However, the adoption of the Euro is not a primary issue to us at the moment, nor is it part of the government policy statement. The main and fundamental priority for us now is healthy and functioning public finances, which are one of the prerequisites for adopting the Euro.” 

A lively discussion on this topic took place at the ODS spring conference. Prime Minister and ODS leader Petr Fiala told CTK afterwards that inflation must first be tamed and the budget put in order.

According to his recent statements, he considers it likely that the Czech Republic will meet the key Maastricht criterion for adopting the Euro next year, meaning that the public budget deficit will drop below 3%.

“The current weakening of the Czech crown, which was preceded by its strengthening, proves that it is still extremely costly for Czech exporters and importers to secure themselves against exchange rate risk,” TOP 09 MP Milos Novy told CTK. “Membership of the eurozone would not only eliminate this risk completely, but would also bring us lower inflation, lower interest rates and more stable public finances. From the point of view of adopting the euro, TOP 09 still considers the year 2030 realistic.” 

According to former lawmaker Jan Farsky (STAN), his party considers the adoption of the Euro an important step for the further development and future course of the country.

“In our opinion, there is no doubt about the economic benefits of the Euro, the advantages clearly outweigh the disadvantages,” he told CTK. “In a society that has historically been influenced by strong Euroscepticism due to the previous governments, it is our task to gradually explain these positive sides and benefits to the general public, along with the technical steps that need to be taken to adopt the common currency.” 

Deputy Finance Minister Jiri Valenta (Pirates) noted that the government had committed to striving to meet the Maastricht criteria for entry to the Eurozone as soon as possible.

“This must be met. On behalf of the Pirates, we also advocate joining the European Exchange Rate Mechanism, i.e. linking the crown to the Euro,” he said. “This will save the state budget tens of billions of crowns a year in debt servicing, and households and businesses can also save money. Moreover, we would gain the possibility to participate in the decision-making on the monetary policy of all eurozone countries, which is a significant advantage for us as an export-oriented economy.” 

At the same time, he noted that there has never been an open, constructive debate in the Czech Republic on whether or not to adopt the euro. “Thus, there is a lot of confusion circulating in the public space, also because of populists, and people are understandably worried about a possible change. It is right to work on this, because it is not good to push through such a fundamental step by force and without fully informing the citizens about what it can bring them and, on the contrary, what the risks might be.” 

The opposition Freedom and Direct Democracy (SPD) and ANO are opposed to adopting the Euro.

“At the moment, the advantages of our own currency clearly prevail for our economy and I am convinced that this situation will not change in the foreseeable future,” Alena Schillerova, chair of the ANO deputy group, wrote to CTK. “We do not want to give up our own monetary policy, import the problems of southern Europe to the Czech Republic and give further impulses to price increase by adopting the Euro.” 

Almost three-quarters of the Czech public (73%) are against the adoption of the Euro, according to a spring poll by the Centre for Public Opinion Research (CVVM). This is about the same as two years ago. “The level of [approval for adopting the Euro] has been around one-fifth since 2011 and has not exceeded one-quarter, which is also confirmed by the current survey,” said CVVM.

Coalition Parties Divided On Adoption of Euro In Czech Republic
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