The leaders of 27 European Union countries, Thursday, giving them the green light to Estonia to adopt the euro currency is problematic since January 1, 2011.
“As a signal that the euro zone is open to all, we make sure that Estonia will adopt the euro on January 1 next year. We congratulated Estonia on the results and all of his efforts,” said President Herman Van Rompuy the European Union after the EU summit in Brussels agreed to step these.
European Parliament gives green light on Wednesday, which means that Estonia is guaranteed to become the 17th state to switch to a common currency. In Tallinn, Prime Minister Andrus Ansip praised the news as confirmation that “a responsible fiscal policy we’ve walked right to Estonia.”
The European Commission has determined that Tallinn has to meet strict entry criteria. This includes keeping the national debt and public deficit under control, including inflation, with limited fluctuations in foreign exchange markets and interest rates. The future single currency was still not clear in the eyes of some analysts, despite trillions of dollars to the program of economic stabilization and the euro zone countries massive rescue package for debt ridden agreed by Greece last month.
Fears for euro zone debt problems sending gold prices hit a record high this month, while the euro slipped as investors seek safer assets. Against the background of this problem, the membership of Estonia viewed not only as a vote of confidence in this country but also in a common currency. Joseph Daul, chairman of the European Parliament, European People’s Party, center-right, said the decision to allow the Baltic nations into the euro club is an act of “trust.”
“This is the belief of Estonia against the euro, despite the current difficulties, which gave a positive signal to markets,” he said in a statement.
“This is also the belief of the EU in the Estonian government has ensured that public debt remains the lowest of all EU member states.”
According to the latest estimates of the European Union, Estonia will record public deficit amounted to 2.4 percent of gross domestic product this year and debts amounting to 9.6 percent of GDP – a level that most Europeans can only dream. However, the European Central Bank has warned that it may be difficult for Estonia to keep up the inflation under control after joining the euro zone. Estonia, with 1.3 million inhabitants, is initially hoping to join the euro club in 2007 but prevented by a high inflation rate at that time.
State quickly shifted from a communist command economy to a free market after the escape from the Soviet bloc collapsed in 1991 and its economy began to grow rapidly, especially after joining the EU in 2004. Hit by the global crisis in 2008, the government cut public spending Estonia to deal with a crisis and maintain its efforts to switch from national currencies, Kroon, to the euro. Estonian Kroon was created in 1992 to replace the Soviet ruble. First pegged to the German mark, and then linked to the euro exchange rate in 2002 and since then has not changed.