Estonia may opt for euro adoption in mid-2010

Estonia is capable of complying with the Maastricht (euro) criteria this year.. July 1, 2010," Andrus Ansip said during a media briefing. Ansip said later this year recession-hit Estonia might ask the European Commission and European Central Bank for an assessment on the country's preparedness to adopt the common currency. He urged lawmakers to draw up a supplementary state budget to bring down the deficit to 3 percent of gross domestic product, the level required for adopting the euro.

Estonia is undergoing its steepest recession since independence in 1991. The statistics office announced Wednesday that GDP shrank 3.6 percent last year and 9.7 percent in the fourth quarter, making it the second worst performing economy in the EU after neighboring Latvia. Liechtenstein pledges tax openness Adopting the euro has been a key target for the Estonian government for many years.

Estonia originally planned to phase the euro in 2007 but was forced to postpone the plan because of high inflation. Inflation has retreated rapidly and amounted to an annual 3.4 percent in February. Analysts expect to continue falling throughout the year. Estonia already fulfills the national debt to GDP ratio another criteria for introducing the euro.

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Estonian Kroon Not Threatened by Global Financial Crisis

A large number of businessmen establish investment companies in Estonia to run worldwide business because of a favourable tax system and business climate. Moreover, small countries known for flexible administration will adjust to the crisis faster and will therefore recover from the crisis faster as well. This is the case with Estonia, too.

Recently commenting on the prospect that the national currencies of the Baltic states could be devalued, Almunia, the EU's Economic and Monetary Affairs Commissioner, cautioned that the situation had to be looked at one country at a time. That's provided that the government will continue applying measures," the commissioner said in an interview with the Estonian daily Eesti Paevaleht.

According to Almunia, the currency peg that is part of the currency board system will ensure that the currency is stable even under the conditions of very volatile markets. Almunia said the EU was well equipped to bring down risks and solve problems. As an example, he cited the loan packages held out to Latvia and Hungary together with the IMF.

The commissioner did not believe Estonia would be among the countries needing similar financial aid in the future because of a much better and healthier position. The question rather is about how to lay the basis for renewed economic growth in the difficult situation and attract investments again," he said.

The Estonian tax system is simple and attractive. This is the case with Estonia, too." Please do not contact PRWeb. We will be unable to assist you with your inquiry. PRWeb disclaims any content contained in these release. Our complete disclaimer appears here. Disclaimer: If you have any questions regarding information in these press releases please contact the company listed in the press release. Please do not contact PRWeb®. PRWeb® disclaims any content contained in these releases.

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Estonian inflation fall raises eurozone entry hopes

Figures from Statistics Estonia confirmed that the consumer price index stood at 3.4 per cent compared to February 2008, the lowest figure since June 2005. As recently as June 2008, Estonian inflation stood at 11.4 per cent. Reductions in fuel and housing costs had a large effect on the index, Statistics Estonia said.

The news will be welcomed by Prime Minister Andrus Ansip, who has identified entry to the eurozone as the nation's number one priority. Ansip's government is implementing a tough austerity budget in order to cut costs and kickstart the economy on a more sustainable basis than previously, when a property bubble and huge inflows of foreign capital created large imbalances.

The Baltic state missed out on its planned entry in 2007 because of its inability to control inflation, despite meeting all the other Maastricht criteria which act as the rules for Euro adoption. Prices will continue their downward trend in coming months,' said Bank of Estonia economist Martin Lindpere. The Estonian economic slowdown is reducing demand.

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