Estonia most likely to see euro in 2008

  • 2005-09-21
  • From wire reports
TALLINN - Estonia's hopes to adopt the euro in 2007 were dashed last week when a European commissioner said that the EU would make no political concessions and the Baltic state would have to join the eurozone on merit alone.

Joaquin Almunia, finance commissioner of the European Commission, said that if Estonia fails to meet any of the terms of transition to the euro, it will not be able to adopt the common European currency, the daily Postimees reported.

"The assessment is not political but purely technical," he said. "Meeting the terms is measured as efficiently and in as cold blood as the radar measuring the driving speed."

He added, "Like ownership of a rally car does not give one the right to drive at 200 [kilometers per hour] on a public road, fast economic growth does not give the right to exceed the established inflation rate."

Lately Estonia's leadership has been concerned by inflation, which continues to climb amid robust economic growth.

The European Commission is apparently going to consider next April whether Estonia's average inflation of the past 12 months meets requirements for adopting the common currency. Andrus Saalik, head of the Finance Ministry's economic analysis department, explained that at most inflation should be 3 percent. "This will be difficult to achieve, but I think it is not impossible to do so," he said.

Private sector analysts were less sanguine. Maris Lauri, an analyst at Hansapank, said Estonia would fail to meet the inflation criteria and thus the euro's introduction would be postponed.

"All signs indicate that meeting the Maastricht inflation criteria has become next to impossible," Lauri wrote on Hansapank's Web page.