Brussels, 12/05/2010 (Agence Europe) - On Wednesday 12 May, the European Commission and the European Central Bank (ECB) announced that Estonia meets the preconditions for joining the euro. In their 2010 report on convergence (analysing the convergence of countries wishing to join the euro and to which a derogation applies - all non-euro member states bar Denmark and the United Kingdom, which have fully opted out), the Commission and ECB call for Estonia to join the euro on 1 January 2011. The Ecofin Council will rule on Estonia's membership of the single currency in July 2010, once it has been given the go-ahead by EU heads of state and the European Parliament.
Expanding the eurozone to include Estonia shows that the EU has confidence in its future but the decision is based on very strict, objective criteria, explained the President of the European Commission José Manuel Barroso. EU Economic and Monetary Affairs Commissioner Olli Rehn said it sent a very clear signal of the euro's role into the medium-term, demonstrating that concerted efforts and a long-term view of stability-focused policies generated positive outcomes. Estonia has been implementing a stable exchange rate policy since 1992, well before it joined ERM II on 28 June 2004, explained Rehn. In 2009, Estonia's deficit stood at 1.7% of GDP, well below the 3% maximum (despite an unprecedented 15% slump in nominal GDP) and the country's sovereign debt levels are “exceptional”, added Rehn. Estonia has virtually no public debt because whereas the EU average is 75% of GDP, Estonia's was only 7.2% in 2009. During the 12 months ending 31 March 2010, Estonia's inflation averaged -0.7 %, well below the 1.0% reference level for March 2010, and it is expected to remain under 1% in the following months. The Commission comments that the long-term interest rates criterion does not directly apply to Estonia because it does not have any long-term reference bonds or comparable gilts to assess the sustainability of the convergence in rates since its gross public debt is so low. Uneven progress has been achieved by the other eight countries covered in the report (Bulgaria, Latvia, Lithuania, Hungary, Poland, Romania, Sweden and the Czech Republic), none of which meet all the criteria. The report can be found at: http://www.ec.europa.eu/economy_finance/articles/ eu_economic_situation/2010-05-12-convergence_report_2010_en.htm. (A.B./transl.fl)