Eesti in brief - 2010-05-26

Estonian Prime Minister Andrus Ansip said on May 21 that people should be very critical about companies that sharply raise prices and justify it with the transition to the euro, reports LETA. Ansip said on national radio that price increases and decreases don’t depend on the currency used in a country, but on the economic cycle and developments in the world economy. In many states that have adopted the euro, prices have really increased, but not more than 0.1 -  0.3 percent. In some countries, however, prices fell, like in Slovakia. Prices have increased at the same time in Estonia, too, although here the euro is not yet in use. Ansip said that people, consumer initiatives and the press should be very critical about activities of companies that try to take advantage of the arrival of the euro and round prices higher. If people condemn such activates and change their preferences, it will affect retailers, Ansip said.

Estonia’s state pension reserves are so low that, according to a worst-case scenario, they will be depleted in June already, and even if the government manages to find enough funds to cover the deficit, it will have to be resolved where to find the necessary billions of kroons next year, reports Aripaev. “The whole shindig around the European debt burden is actually incited by the doubts of investors of the long-term viability of the state’s generous welfare system, and the story of our pension reserve is exactly [the same],” said SEB analyst Hardo Pajula. By April 30, the extraordinary pension reserve contained just 557 million kroons (35.7 million euros). According to calculations, the money should run out in June. The root of the problem is that the part of the social tax that is earmarked for pensions has been allocated at a rate of 1.2 - 1.3 billion kroons to the Social Insurance Board, while over 1.6 billion kroons is needed every month for this purpose.