According to the updated convergence programme approved by the Government today, Estonia will be ready to introduce the euro in the beginning of 2011. The economic forecast on which the programme is based shows that economic decline will stop this year and inflation will remain on the level of 0.4 percent.
Minister of Finance Jürgen Ligi says that as of today, Estonia will meet all the criteria for transferring to the euro. “We met the inflation criterion in November. We believe that Government’s decisions and efficient collection of revenues in 2009 will allow us to meet the budget criterion with a small safety margin. We will continue to improve our budgetary position in following years,” said Minister Ligi.
The growth expectations of Estonia’s export partners, improvement of certainty on the domestic market and the possibility of introducing the euro have strengthened growth expectations. Economic decline will stop in 2010 and we are expecting economic growth to recover to the level of 3.3 percent in 2011.
There should be no significant price increases in 2010 and the consumer price increase will remain around 0.4 percent. Inflation in the next few years will remain between 1-2 percent.
According to our estimations, the general government budget deficit amounted to 2.6 percent of GDP in 2009 and is expected to remain on the level of 2.2 percent of GDP in 2010. Statistics Estonia will publish preliminary data on general government deficit and debt of 2009 on 26th of March.
“Even if the deficit is small, we should not put up with it for long and we therefore want to reach a budget surplus by 2013. In addition to economic growth, this also requires strong expenditure control and structural changes,” added Jürgen Ligi.
The objective of the Convergence Programme is to report the policy of the government of a non-eurozone EU country in meeting the Maastricht convergence criteria and introducing the single currency. Assessment of the Member States’ programmes by the European Commission and Council will take place from February to April and the report prepared as a result of the assessment will be published in May.
Brief introduction: Estonian updated Convergence Programme and Economic Forecast