Estonia looks to euro in 2011

Oct 29, 2009
Oskars Magone

TALLINN – Estonia has set its sights on adopting the euro in 2011 following an IMF report released earlier this week praising the country's fiscal management.

“A full-fledged crisis has been avoided due to existing buffers and a determined response by both the public and the private sector,” an IMF press release said.

“As a result of present and past efforts, euro adoption in 2011 appears within reach,” it said.

Estonian politicians were quick to embrace the news, expressing confidence that they would be able to fulfill the Maastricht criteria – which govern countries aiming to join the eurozone – and adopt the currency within the next two years.

The Estonian Central Bank has also confirmed that the country could be ready to adopt the euro in 2011.

Estonia has previously missed its targets for euro adoption, the first of which passed in 2007, due to high inflation. Though inflation, which is expected to drop to within the requirements in the next few months, is no longer a problem for the country, it has struggled to keep the budget deficit under control.

A draft budget submitted last month foresees a deficit of 2.95 percent – barely below the 3 percent mark needed to join the eurozone.

The IMF press release also warned, however, that Estonia should not rely on euro adoption as a catch-all to boost the economy.

“Euro adoption is no panacea and the economic outlook remains challenging,” the press release said.

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