Äike
06-17-2010, 08:49 AM
As eurozone crisis bites, newcomer Estonia urges austerity (http://www.etaiwannews.com/etn/news_content.php?id=1290219&lang=eng_news&cate_img=35.jpg&cate_rss=news_Business)
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.
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.