WARSAW, Dec 14: Polish central bank Governor Leszek Balcerowicz warned on Saturday that economic gains from Poland’s historic European Union membership deal depended on completing deep structural and fiscal reforms.

Poland would maximize the benefits of joining the wealthy bloc if it exchanged the zloty as soon as possible for the euro, Balcerowicz said, rebuffing appeals for a go-slow from both the EU and the European Central Bank.

Poland, along with nine other countries, clinched a deal at the EU summit in Copenhagen on Friday to join the EU in May 2004, prompting Balcerowicz to preach his oft-repeated calls for reforms.

“We are being given a chance,” Balcerowicz told reporters. “But the degree to which we take advantage of this opportunity depends on public policy. Maximizing the benefits requires a radical change in fiscal policy.”

Balcerowicz, a proponent of fiscal austerity who authored Poland’s “shock-therapy” market reforms after the 1989 fall of communism, believes spending needs to be curbed to make room for growth-boosting investment.

The Polish economy is emerging from its deepest slowdown in a decade, and growth needs to accelerate for the country to close a wealth gap with the EU. Gross domestic product per head in Poland is just two-fifths the EU average.

Balcerowicz’s views are broadly backed by the leftist government’s Finance Minister Grzegorz Kolodko, who has promised fiscal reforms in 2004 and supports the central bank’s calls for quick euro entry.

“There is agreement on this on both sides of this street,” said Balcerowicz, referring to the finance ministry and the central bank which are located on opposite sides of a central Warsaw street.

Balcerowicz reiterated he hoped Poland would adopt the euro in 2006 or 2007 at the latest. But asked how likely was this entry date, viewed by markets as unrealistic, he said: “I think it is possible and we have to do all we can to make it happen.”

Details of Kolodko’s agenda are still vague and many analysts say the 13-month-old government’s reform drive is losing momentum amid low approval ratings and fears of social backlash against painful cutbacks.

Wide support for the government’s economic agenda is key to winning backing for EU entry in a referendum next year.

Poland’s budget, which needs to be scaled down if Poland wants to adopt the euro, is burdened by lavish welfare spending and debt-laden heavy industries which are still on the hands of the state.

But the government’s unease with reforms was plain earlier this week when it shelved plans for a UK-style mining overhaul in the face of angry protests from thousands of coal miners.—Reuters