TALLINN - The continuing climb in world oil prices might prevent Estonia from meeting the Maastricht inflation criteria necessary for adopting the euro, a government official warned this week, which would delay the country's entrance to the eurozone.
Erki Lohmuste, an analyst with the Finance Ministry, said the Maastricht price stability criterion had become a factor that Estonia could not cope with, according to estimates of both the Finance Ministry and the Bank of Estonia.
"At the same time, these forecasts didn't take into account such a high world market price for oil, which means the continued rise in oil prices may foil meeting the inflation criteria next spring," Lohmuste told the Baltic News Service.
"If meeting the criteria is postponed too long, adopting the euro on Jan. 1, 2007 may indeed be in jeopardy," he said. "But let's wait and see what the next few months will bring," he added.
The Bank of Estonia, too, said the price of oil has surged past even the boldest estimates made in spring. "Therefore the Bank of Estonia inflation forecast of 3.4 percent for this year offered in spring is an underestimate and is subject to review in the fall," Ilmar Lepik, chief of the department for central bank policy at the Bank of Estonia, said.
Boosted by higher oil prices, eurozone inflation accelerated to 2.2 percent in July, according to preliminary figures. Annual inflation in Estonia surpassed that of the eurozone by 1.6 percentage points.
Latvia, however, still remains the leader as far as inflation. Based on July 2004 's July 2005 data, average consumer prices rose 6.1 percent, compared with 3.8 percent in Estonia and 1.8 percent in Lithuania, the Latvian Statistics Bureau reported.
Nevertheless, Estonia was the Baltic leader in July, posting a 0.4 month-to-month rise in consumer prices, higher than the other two countries.