Estonia looks to euro in 2011

  • 2009-10-29
  • Oskars Magone

Estonia hopes to become the first Baltic state to take on the currency

TALLINN 's Estonia has set its sightson adopting the euro in 2011 following an IMF report released earlierthis week praising the country's fiscal management.

"A full-fledged crisis has beenavoided due to existing buffers and a determined response by both thepublic and the private sector," an IMF press release said.

"As a result of present and pastefforts, euro adoption in 2011 appears within reach," it said.

Estonian politicians were quick toembrace the news, expressing confidence that they would be able tofulfill the Maastricht criteria 's which govern countries aiming tojoin the eurozone 's and adopt the currency within the next twoyears.

The Estonian Central Bank has alsoconfirmed that the country could be ready to adopt the euro in 2011.

Estonia has previously missed itstargets for euro adoption, the first of which passed in 2007, due tohigh inflation. Though inflation, which is expected to drop to withinthe requirements in the next few months, is no longer a problem forthe country, it has struggled to keep the budget deficit undercontrol.

A draft budget submitted last monthforesees a deficit of 2.95 percent 's barely below the 3 percentmark needed to join the eurozone.

The IMF press release also warned,however, that Estonia should not rely on euro adoption as a catch-allto boost the economy.

"Euro adoption is no panacea and theeconomic outlook remains challenging," the press release said.