View Full Version : Finance Minister of the Year for Emerging Europe 2010

10-10-2010, 09:47 AM
Finance Minister of the Year for Emerging Europe 2010 (http://www.emergingmarkets.org/Article/2690728/Polls-and-Awards-Europe/Finance-Minister-of-the-Year-for-Emerging-Europe-2010.html)

Jürgen Ligi, Estonia

Jürgen Ligi has steered Estonia’s economy from severe recession to recovery and – against all odds – euro accession

Estonians take a definite pride in their qualities of calmness and reserve, which they feel qualify them as being ‘Nordic’ rather than ‘Baltic’. Similarly, finance ministers are supposed to be the politicians who are best at keeping their head in times of crisis.

Jürgen Ligi is just such a figure – unflappable and a man not given to making rash decisions. Such traits were exactly what were called for over the past 18 months to steer his country from one of the worst recessions in history to recovery and – against all odds – euro accession on January 1, 2011. This achievement is also what has won Ligi Emerging Markets’ finance minister of the year for emerging Europe, an award he stresses “is about Estonia’s efforts in general, not mine in particular”.

Despite a widespread belief that euro adoption was the goal of Estonia’s economic policy, Ligi insists it always took second place to the need to realign an overheated economy. Instead, the euro became a useful tool to communicate that need to the population at large.

“The Maastricht criteria were a very good symbol to explain to people, but not a purpose in themselves. The purpose was sustainable fiscal policy. Our decline was so sharp (GDP swung from +7% in 2007 to -14% in 2009) that we had to start very quickly.”

Ligi took over as finance minister in June 2009. Fiscal consolidation had already started, but he quickly reckoned that existing plans were much too weak to cope with the scale of the crisis. “It’s almost impossible to come back to balance or to surplus if you do not start the cutting in time,” Ligi says.

“If we had failed with the euro, it would symbolically have been a big loss – though I don’t think the opposition had any good alternatives.”

With the worst of the crisis seemingly over, Ligi’s new priority is a return to growth at a sustainable level to avoid a repeat of the Baltic bubble.

“A conservative estimate of GDP growth for this year is 2%. Maybe we will be better than that. Next year 3.5% is the official number, but the recovery will still be difficult because of structural problems. This will be a sustainable level, but we will see what happens with our exports as they are driving growth at the moment.”

The award is just the latest instance of international praise for the manner in which Estonia showed Europe that serious fiscal and structural reforms were both needed and possible.

“The general policy of consolidation in Europe is very Estonian-like, very Nordic-like,” says Ligi. “Things being done in Europe now are similar to what we have been doing. We often suspect that no one else knows where, or who, we are, because we are so small and young. But maybe now others have come round to our way of thinking.”