INTERNATIONAL MONETARY FUND: EASTERN EUROPE TO JOIN EUROZONE

Crisis-hit European Union states in central and Eastern Europe should consider scrapping their currencies in favor of the euro even without formally joining the eurozone, according to the International Monetary Fund. Disclosure of the confidential report, prepared about a month ago, could reignite a fierce debate over strategies to assist central and east Europe. The IMF report was compiled to support a campaign by the fund, the World Bank and the European Bank for Reconstruction and Development to persuade the EU and eastern European states to back a region-wide anti-crisis strategy, including a regional rescue fund. The campaign failed amid widespread opposition from both west and east European states. The IMF, which forecasts a 2.5 per cent decline in regional gross domestic product in 2009, estimates that “emerging Europe” – including Turkey – must roll over $413bn in maturing external debt in 2009 and cover $84bn in projected current account deficits. The report estimates that “the financing gap” – money needed from international financial institutions, the EU and governments – will be $123bn this year and $63bn next, or $186bn in total.