Estonia makes important promises to IMF

TALLINN (BNS) - The government and the Bank of Estonia pledged in an additional economic policy memorandum to the International Monetary Fund signed in November to use all extra income to establish a fiscal surplus in 2001.

Among other things, the government and the central bank promised that if the money lost in the banking crisis of 1998 is partly recovered it will not be used to balance the budget, considering the one-shot nature of this income.

It also promised that the government budget's deficit will not surpass 1.25 billion kroons ($70.03 million) by June 30, 2001, that the government budget shortfall will not be above 1.15 billion kroons by March 31, 2001, and that a careful watch will be kept over loan market developments.

If the need arises, the government and the Bank of Estonia will apply monetary and financial policy measures to curb loan growth. The government will continue the privatization of the energy complex after completing the sale of a stake in the Narva Elektrijaamad (power plants).

The IMF approved the interim report on Estonia's 2000-2001 economic policy program on Dec. 13.

A Bank of Estonia's press release Dec. 14 stated that Prime Minister Mart Laar and the governor of the Bank of Estonia, Vahur Kraft, signed the additional memorandum on Nov. 24.

The document contains the government's and the Bank of Estonia's vision of the country's economic situation.