No. 13




Transition to the euro must remain an economic policy priority in Estonia

The Estonian government and the central bank, Eesti Pank, have set the goal of joining the euro zone at the first opportunity—as soon as Estonia fulfils the necessary conditions.

On 27 April of this year, the government decided that the previously set goal of joining the euro zone on 1 January 2007 is not realistic due to the inflation level, and that preparations should be launched for a transition date of 1 January 2008. Provided that that current economic policy trends continue, the postponement of the adoption of the euro by a matter of months should not create a backlash in the Estonian economy. Naturally, accession to the euro zone will require economic policy support at home. Economic policy actions that increase internal demand should be avoided or reduced; and if controlled prices are changed, their influence on inflation and on compliance with the Maastricht inflation criterion should be considered. Eesti Pank supports the government decision to postpone a hike in the alcohol and tobacco excise tax. To halt the rate of growth of real estate loans, the central bank stiffened regulations on banks in relation to home loans from 1 March.

Full article in Estonian