Entry into EU to cost 42 billion kroons

TALLINN - According to a European Union pre-accession economic program prepared by Estonia's Ministry of Finance, major reforms lasting until 2015 will require 42 billion kroons ($2.42 billion). This amount will have to be spent within the next five years.

The pre-accession program, dealing with economic development until 2015, was discussed at a cabinet meeting on April 17.

The largest amount, about 21.3 billion kroons, will continue to be used to fulfill Estonia's environmental requirements.

Although the adoption of EU tax policies will weigh heavily on price levels here, the impact should be rather more modest, according to the program.

The next five years are expected to bring a 30 percent rise in the prices of electricity, water, sewage, public transportation subsidies and postal services.

The program does not envisage any major changes in the tax system, although the excise tax on motor fuel is to be raised. At the same time the Finance Ministry is counting on a steady decline in the tax burden.

The program provides for the state's continued intervention in private business. With both privately owned and state firms, the government may tap into the stabilization reserve in case of possible economic crises.

Finance Ministry adviser Daniel Vaarik said the program does not envisage the state's role in the economy growing.

The pre-accession program was drawn up to acquaint the European Commission with Estonia's economic policy. It is a document that all countries bidding for membership in the 15-nation club will present.

The program was discussed April 16 in the coalition council whose chairman, Andres Tarand from the Moderates party, said the Moderates and the Reform Party, both of whom are members of the country's ruling coalition, don't quite see eye to eye regarding the document.

The board of the Moderates earlier announced that the party does not support drawing up such a program because it does not pay enough attention to people.