TALLINN - The Finance Ministry said that, while Estonia was unlikely to meet the inflation criterion for adopting the euro in the first half of 2006, it was still possible to rein in inflation to the required level in the second half of the year.
Finance Minister Aivar Soerd told Parliament last week that, as of September, annualized inflation ran at 4.2 percent. He said Estonia's inflationary performance would probably be evaluated using Finland, Sweden and the Netherlands as a reference base, so the maximum rate of inflation to qualify for the eurozone was likely to be 2.8 's 3.0 percent in the first half of next year.
Apart from the timing of the evaluation, the choice of methodology will also be important, the minister said. In this respect a number of different approaches are possible.
Base inflation in Estonia runs at an annual rate of around 2 percent, he pointed out, and the country's problem was rising energy prices and their affect on the economy.
