WARSAW (Reuters) – Poland’s aim to be ready in 2011 to join the euro is ambitious but achievable, although the EU’s largest ex-communist state will have to battle inflation on the way, leading World Bank officials for the region said.

Thomas Laursen, the bank’s chief for Poland and the Baltic States, said Warsaw’s economically-liberal cabinet would have to progress on deregulating the economy and loosening up its labor market to ensure an easy ride towards the single currency.
“I think this plan is very ambitious but credible so I think with the right policies that we’ve seen and further reforms which are under way it’s achievable,” Laursen told Reuters in an interview late on Tuesday.
Poland’s Prime Minister Donald Tusk announced two weeks ago that the country aimed to be ready to adopt the euro in 2011, although his officials say the country will likely only join the single currency in 2012.
Laursen said that the Polish economy, expected to grow 5.5 percent this year, is in better shape than many of its regional peers but it also needs to press on with a number of long-awaited reforms.
Poland’s robust growth, which reached 6.6 percent last year, has led to labor shortages in some areas of the economy and double-digit wage growth, adding to inflation and forcing the central bank to tighten monetary policy.
“If you look in the short to medium term, inflation and wage growth will be difficult issues,” Laursen said.
“I’m hopeful that some social partnership, formal or informal, can be established that would allow for moderate wage growth and will help bring down inflation and thus alleviate the burden on monetary policy,” he added.
In July and August inflation stood at 4.8 percent, almost double the central bank’s 2.5 percent target.
Poland has cut its public sector deficit, historically one of the major road-blocks on its path to the euro, to below the Maastricht Treaty’s ceiling of 3 percent of gross domestic product. But another World Bank official said the government still needs to show restraint on fiscal policy to ensure long-run growth.