Polish central bank concerned at govt's euro entry plans-sources
* Polish c.bank believes quick euro entry risky -sources
* Bank chief wants more real convergence before euro
* Without c.bank support, accession tough sell for gov't
WARSAW, Jan 18 (Reuters) - Poland's central bank says the government's drive for an early entry to the euro poses needless risks for the economy, a stance set to complicate the government's bid to rally support for its policy.
The bank's executives are worried that the government's push for early entry is driven by political imperatives but should be based on economics, sources familiar with the bank's thinking told Reuters.
Senior government policy-makers have shed their doubts about joining a single currency in a state of turmoil and now want to press ahead fast with accession because they believe otherwise Poland cannot be in the European Union's political inner circle.
Accession by Poland, eastern Europe's biggest economy, would represent a vote of confidence in the battered currency union.
A decision on when to join will be taken by the Polish government and not the central bank.
However, if the bank, and especially its influential governor Marek Belka, is not behind the decision to join, it will make it much harder for the government to build a political support for the move.
"Joining the euro right now would be like getting a ship into a canal in a major storm. It could work but ... what are the chances?" said a source inside the central bank.
Most Polish policy-makers had, until late last year, shelved entry until a later date because of the turmoil inside the euro zone. But they have been forced to re-consider after realising that fundamental decisions about the future shape of European integration are being taken now.
They believe that unless Poland is a euro member, it will not have the weight to influence those decisions, frustrating Warsaw's aspiration to be in the front rank of EU players.
Central Bank governor Marek Belka has been mildly cautious about the timing of euro entry, saying the time will be right for Polish entry when the euro zone's debt crisis has stabilised.
Interviews with people close to the central bank have revealed that the bank's reservations about the idea of swift entry are stronger, and more fundamental, than is apparent from its public position.
"The political factors are very clear ... But from the financial and economic point of view, we need more time," said a source inside the bank.
"In fact the entire history speaks against the political approach to euro adoption. That's how Greece made it in ... so we must be very cautious. We are sceptical here at the bank."
To qualify to join the euro, Poland would have to meet a set of technical criteria. These include low inflation, low long-term interest rates, a stable currency or a deficit of no more than 3 percent of the gross domestic product.
Achieving this would cause some pain for the Polish economy, though many economists say it can be done. Keeping the deficit on track for euro convergence is already limiting the government's ability to use public spending to stimulate the slowing economy.
Poland's gross domestic product growth slowed to 1.4 percent in the third quarter of 2012, the lowest level in three years. Some economists say there is a real prospect Poland, the only EU member to keep growing since the financial crisis erupted in 2008, could slip into recession.
A second source, who has talked to Belka about the issue, said the bank's big concern was that even if Poland meets the technical convergence criteria, on several fundamental measures its economy would still be out of step with those inside the single currency.
"Belka is convinced that Poland should first reach or at least get close to what he calls real convergence, otherwise the risk for the economy could be too big," said the second source, who, like the others, spoke to Reuters on condition of anonymity because of the sensitivity of the issue.
Poland's wages and productivity levels are still far behind the EU average, something the bank believes will create an imbalance with existing euro zone members.
"Imagine a Pole earning 1,000 euros and a German 20 kilometres down the road 3,000 for the exact same job. The economy's competitiveness would take a huge beating. Either the Pole's salary would need to be raised or he would emigrate," said a third source, close to the central bank.
"So it is obvious why Belka does not think this is a good idea, not for now anyway. There should be more real convergence."
President Bronislaw Komorowski has said Poland's economy will be ready for euro adoption as early as 2015. Supporters of membership who are close to the government say entry, realistically, could happen in 2016 or 2017.
Poland's ruling politicians have so far largely avoided talk of the potential economic drawbacks of euro entry, focusing instead on the political aspects.
A policy adviser to the president told Reuters in October that the opportunity to be at the heart of EU decision-making meant that the benefits of joining the euro outweighed potential short-term costs for the economy.
The central bank's role in any euro accession process is, on paper, restricted to keeping track of technical convergence. In reality, it has considerable influence.
Belka is a former prime minister who is well connected with influential policy-makers, and he is seen by many Poles as an authority on what is right for the country's economy.
"How could the government even hope to get public and political support for the project if the central bank is against?" said Iwona Jakubowska-Branicka, a sociologist at the University of Warsaw.
The bank itself though is hoping that the issue will be resolved without the need for open conflict with the government, said the third source.
"Belka simply hopes that the idea that Poland could be adopting the euro in the next few years will dissipate, like many policy ideas of the PM in the past," said the third source.
"This is why the central bank is unlikely to speak loudly against it for now."
(Editing by Christian Lowe and Ron Askew)