Ansip confident on euro adoption next year

TALLINN - In his meetings with the Finnish prime minister, minister of finance and central bank managers, Prime Minister Andrus Ansip affirmed that Estonia has continued to satisfy, in a sustainable manner, all of the criteria for joining the eurozone and is ready to join the eurozone at the beginning of next year. The prime minister also affirmed that Estonia was also planning to continue a conservative budget policy in the future.

“Thanks to keeping our finances in good order and effecting structural reforms, we are ready to join the eurozone from the beginning of next year,” said Ansip at the meetings on April 9. According to the Ministry of Foreign Affairs, last year Estonia already met the inflation criteria in November. Statistics Estonia showed that Estonia’s government sector debt is the lowest in the European Union, at 7.2 percent of GDP. Last year, thanks to the structural reforms and a reduction in public sector expenditures, Estonia’s government sector deficit was only 1.7 percent of GDP, which is also one of the lowest in the European Union. Estonia’s budget had a deficit of over 3 percent of GDP only in 1999, with the budget either balanced or in surplus, from 2002-2007, when the lion’s share of reserves was accumulated. “To date, we have government sector reserves worth approximately 25 billion kroons (1.6 billion euros), which is 11.7 percent of our gross domestic product,” Ansip explained.

In the estimation of Matti Vanhanen, prime minister of Finland, Estonia is likely the only country in the European Union to meet all of the Maastricht criteria. “The euro requires a positive signal, which Estonia’s accession to the euro zone will certainly provide,” Vanhanen said. “I hope that Estonia is able to join the eurozone as soon as possible, as this is very important also to Finland,” Vanhanen added.

Jyrki Katainen, Finnish minister of finance, acknowledged the work by the Estonian government at the meeting with the prime minister. “Your activities have been absolutely right for the country, and I set great store by it,” Katainen affirmed. According to Katainen, it is impossible to create new jobs without a stable economic environment. “The euro objective is important in the creation of stability,” said Katainen. Both the Estonian prime minister, the Finnish government head and minister of finance agreed that Estonia’s accession to the eurozone would alter the relations between the two countries, particularly through a tightening of economic relations.
Currently, Finland is the most important export market for Estonia. Finland is the second biggest foreign investor in Estonia. Estonia’s exports are closely tied to the eurozone, with no less than 70 percent of Estonia’s exports headed to countries in the eurozone.

At his meeting with Vanhanen, Ansip also provided information on Estonia’s bid for its candidacy as the IT agency’s host country and thanked its neighbor for supporting Estonia. Namely, the Finnish prime minister has affirmed, in an official letter, Finland’s support for Estonia’s candidacy as host country for the IT agency.
In addition, tax policy issues were also discussed at the meeting. The need to coordinate the excise tax policy of both countries in the future was affirmed. The Estonian and Finnish government heads voiced the opinion that, in the future, too, it would make sense to continue increasing the proportion of consumption and environmental taxes, while reducing income taxes.