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Estonia (11) -- News -- 2010
The European Commission made a proposal for Estonia to be admitted to the euro zone in 2011
13.05.2010
The European Commission evaluated Estonia's readiness for accession to the euro zone and made a proposal for the country to be admitted to the euro zone in 2011.
In the Commission's opinion, Estonia will enter the euro area from a considerably better position than many previous entrants.
The Baltic state has clearly done its homework and has achieved one of the strongest fiscal positions in the European Union, the EU executive said.
"To ensure that the adoption of the euro is a success, Estonia must maintain a prudent fiscal policy stance," said Olli Rehn,
EU economic and monetary affairs commissioner. Estonia also needs to "remain vigilant and react early and decisively" if signs of macroeconomic imbalance
or deterioration of competitiveness emerged, he said. "Our conclusion on Estonia sends a strong signal to our member states and the broader audience.
It shows that the euro area is functional, attractive and able to respect and deliver on its commitments and objectives, respecting fiscal discipline and prudent economic
policies on member states," the Commission said.
Estonia (11) -- Analyses -- 2010
More about the invitation
13.05.2010
In the Commission's evaluation, Estonia clearly meets the Maastricht criteria for the euro. The country's inflation rate is -0.7% (compared to reference of 1%),
the public deficit is 1.7% of GDP (reference 3%), and public debt 7.2% of GDP (reference 60%). The Commission judged that Estonia also meets the long-term
interest rate stability requirement even though the country has no government bonds on which to base an evaluation.
Massimo Suardi, the official dealing with euro changeover matters at the European Commission's Directorate General for Economic and Financial Affairs,
said they analysed other indicators related to interest rate stability, such as the low level of public debt, credit ratings, and short-term interest rates.
The reference value of the inflation criterion was established on the basis of figures of three EU member states with negative inflation. One of them was Estonia,
whose average 12-month inflation in March was minus 0.7%.
Estonia's national currency the kroon has been pegged to the euro since June 2004. Decisions by several more bodies are needed for the plan to switch to the euro from the start of next year to become final.
On 8 June a meeting of the EU finance ministers, Ecofin, will take place.
They will discuss the enlargement of the euro zone on the basis of the assessments of the Commission and the European Central Bank (ECB) and the Commission's proposal.
The European Parliament is due to give its opinion on the enlargement decision at the session taking place from 14-16 June. A summit of EU leaders is scheduled
for 17-18 June that will offer an assessment of the convergence report by the ECB and the proposal as regards euro zone enlargement.
The final decision about enlargement will be made at a meeting of Ecofin taking place immediately after the summit. That will be on 13 July, but there is no obligation
to make the decision at the meeting immediately after the summit.
The Ecofin decision has to be unanimous. Before the Ecofin decision a positive recommendation has to come from the finance ministers of euro zone members (the euro group).
This is a step added by the Lisbon Treaty that has never been used before. The euro group meets a day before Ecofin.
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