| Based on Commission’s assessment, and on the European Central Bank’s own Convergence report, the Commission proposes that Estonia adopts the euro in 2011. Assessment of Estonia Inflation The average inflation rate in Estonia during the 12 months to March 2010 was -0.7%, well below the reference value of 1.0% for the same month, and likely to remain below the reference value in the period ahead. Considering the large distance to the reference value, relatively flexible markets and prudent polices, Estonia’s price performance is assessed as sustainable. However, Estonia will need to remain vigilant to keep inflation at a low level, notably by maintaining an ambitious fiscal policy stance and by keeping domestic demand in line with fundamentals. Public finances Estonia is not the subject of a Council decision on the existence of an excessive deficit. The deficit and debt are well within the acceptable limits for the convergence assessment: the deficit was 1.7% of GDP in 2009 despite an unprecedented 15% decline in nominal GDP. The deficit is expected to amount 2 ½% this year and in 2011 according to the Commission’s spring forecasts. The general government debt stood at 7.2% of GDP in 2009, which is also well below the Maastricht limits and will remain so even though the public debt is forecasted to increase further by 2013. Interest rates The long-term interest rate criterion is not directly applicable for Estonia, as no benchmark long-term government bonds or other appropriate securities are available to assess the durability of convergence as reflected in long-term interest rates. The absence of suitable bonds reflects a very low level of gross public debt, reflecting the budget surpluses in 2002-2007. While financial market risk perceptions vis-à-vis Estonia increased at the height of the crisis, their development during the reference period, as well as a broader assessment on the durability of convergence, including Estonia’s continued prudent policies, supports a positive assessment on Estonia’s fulfilment of the long-term interest rate criterion. Exchange rate As for the exchange rate criterion, Estonia has been a member of ERM II since 28 June 2004. In the two-year period ending 23 April 2010, the Estonian kroon has not been subject to severe tensions and there has been no deviation from the ERM II central rate since kroon’s participation. Finally, Estonia’s legislation in the monetary field is compatible with the EU legislation. Based on this assessment, and on the European Central Bank’s own Convergence report, the Commission proposes that Estonia adopts the euro in 2011. | |
| Veronika Kimsen info@1office.ee | |
