TALLINN - Prime Minister of Estonia Andrus Ansip has denied pledging transition to euro currency by 2010.
Ansip said he mentioned the possibility of Estonia addressing the European Commission's criteria on inflation by October or November this year.
It's projected Estonia could join the eurozone by July 1, 2010, should the government be successful in meeting criteria on its budget deficit by the end of the year.
"Nobody can guarantee that even if all goes according to forecasts, Estonia will join the eurozone from July 1, 2010," Ansip was reported as saying in online news portal Postimees.
At a government press conference on March 12 Ansip said Estonia could approach the EC this year to examine the country's progress in addressing the Maastricht criteria, a prerequisite of adopting the euro.
Under the Maastricht criteria EU member countries must address issues of inflation, debt levels, financing, government deficit and interest rates before adopting the euro.
Another option is for Estonia to request an extraordinary assessment of the criteria by the EU and European Central Bank that would serve as the basis for transition to the euro.
A regular assessment could take place at the beginning of next year.
According to Ansip, a fast transition to euro would help make Estonia more attractive to foreign investors.
"Our labor is still cheaper than in the majority of the European countries," he said.
A transition to the euro is also seen as necessary to end speculation on devaluation of the kroon.
Ansip said investors were looking to lower production costs given the current economic crisis and were looking to countries with cheaper manufacturing possibilities, including Estonia.
However, investors were continuing to be constrained by fears of devaluation.
Andres Kuningas, who is an advisor to the EU and International Affairs Department in Ministry of Finance in Estonia, said devaluation was neither the cause nor the solution to the current economic downturn.
According to Kuningas current imbalances in the economy were created by the boom period, but said overall the Estonian economy was flexible enough to withstand the pressures during tougher times.
"At the moment we can see the response for these imbalances: the labor market is going through adjustment [including the reduced wage pressures]; enterprises are reevaluating their expenditures; the external balances are improving with the current account deficit decreasing."
"Inflation is receding and the government is keeping the budget under control," Kuningas told The Baltic Times.
Kuningas said adoption of the euro is necessary for Estonia's full integration to the EU and to ensure the credibility of its economy.
"Euro adoption would in today's economic situation give an additional boost to restore confidence and provide a basis for stable economic development, and once and for all stop speculation about devaluation. The euro would also add an extra boost to the growth potential," he said.