As eurozone crisis bites, newcomer Estonia urges austerity

[Äike]

As eurozone crisis bites, newcomer Estonia urges austerity

As the eurozone struggles with a crippling debt crisis Estonia, which will adopt the currency next year, is urging the single currency bloc to heed Tallinn's example of fiscal responsibility.

With its 2009 public debt totalling just 7.2 percent of gross domestic product (GDP), the Baltic state of 1.3 million people boasts the lowest level in the entire 27-member European Union.

In stark contrast, Italy's 2009 public debt reached an EU and eurozone-record 115.8 percent of Gross Domestic Product, way above the official 60 percent limit, according to recent Bank of Italy figures.

Moreover, the center-right government of Prime Minister Andrus Ansip claims reserves of 11.7 percent of GDP.

So Estonia is set to be the eurozone's shining example of sustainable spending when it formally adopts the currency on January 1, 2011.

"We believe in conservative fiscal policy here in Estonia," Ansip told a group of foreign journalists in Tallinn recently.

"We don't want to borrow money at our central government from our children and grandchildren - everybody has to pay his bills himself," he said.

"People are supporting conservative fiscal policy in Estonia, even despite all those painful budgetary cuts and tax increases," Ansip added.

And he insisted that "stronger discipline inside the eurozone will be good for the entire European Union."

In the drive to tackle the economic crisis and to switch to the euro, Ansip's government slashed public spending as the global slump battered Estonia's export-driven economy.

Eurozone members are required to hold their annual public deficits - the shortfall between revenues and spending by central and local government - to 3.0 percent of GDP or lower.

The latest EU estimates show that this year Estonia will come in at 2.4 percent, a level most European countries can only dream of.

Last year, the public deficits of eurozone members Greece and Ireland hovered near 14 percent of GDP.

[Breedingvariety]

What does it mean for a country to be a shining example within EU?
-It means the country has lost all sovereignty to the EU bureaucracy. It means the country is pathetic puppet more so then other countries within EU.

Austerity is not the solution. It is impoverishment of people.

[Äike]

What does it mean for a country to be a shining example within EU?
-It means the country has lost all sovereignty to the EU bureaucracy. It means the country is pathetic puppet more so then other countries within EU.

Austerity is not the solution. It is impoverishment of people.

It means that when the majority of the EU countries are starting to solve the problem, then Estonia has already solved them and will have economic growth quite soon.

[nisse]

TBH, I don't understand why Estonia wants into the Euro zone :|
Seems like a bad place to be right now, especialyl if you are not doing so bad for yourself as it is.

[Äike]

TBH, I don't understand why Estonia wants into the Euro zone :|
Seems like a bad place to be right now, especialyl if you are not doing so bad for yourself as it is.

Our currency is tied to the Euro anyway, if anything happens to the Euro then it also influences our currency. Theoretically, we already have the Euro, as our currency is tied to it. The Kroon's value goes up and down together with the Euro. Only the appearance of our money will chance in 2011.

Euro is still better than the currency of a small country of 1.3 million people, with one of the smallest economies in Europe.

I doubt that the Estonian economy will stop growing when we have the Euro.

[nisse]

Our currency is tied to the Euro anyway, if anything happens to the Euro then it also influences our currency. Theoretically, we already have the Euro, as our currency is tied to it. The Kroon's value goes up and down together with the Euro. Only the appearance of our money will chance in 2011.

Is it legally tied to the euro or is this just the market trend? If you can regulate the market volume of your currency yourselves, seems joining the euro will just be giving up a bit of freedom....if there is already some legal tie though than I guess you are not losing that much.

Anw, from a tourist perspective, I think having your own currency is fun (although a bit impractical)

[Äike]

Is it legally tied to the euro or is this just the market trend? If you can regulate the market volume of your currency yourselves, seems joining the euro will just be giving up a bit of freedom....if there is already some legal tie though than I guess you are not losing that much.

Anw, from a tourist perspective, I think having your own currency is fun (although a bit impractical)

There's a fixed rate since 31. December 1998. 1 euro = 15.6466 Estonian kroons. Even if the Euro should fall and 1 euro = 0.000001 dollars, then 1 euro would still equal 15.6466 Estonian kroons.

If the value of the Euro drops, then so does the value of the Estonian kroon. Joining the Eurozone isn't "giving up our freedom", as it is already gone since 31 December 1998.

I personally like Estonian money, it looks a lot nicer than euros and I also dislike having my pockets full of coins.

If I would rule the EU(), then even the paper money would have a national side, just like the coins.

[Treffie]

Interesting article here.

But Estonia seems ready to embrace a brave new dawn. Who in their right mind would want to join the euro?

[poiuytrewq0987]

I hope the Euro crashes and burn, I sure would love to see the dollar back on the top again.