Ülo Kaasik: Estonia's economic development depends on sustainable fiscal policy
Archived Articles 06 Oct 2009  EWR
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Estonian Bank Press Release

Today, 6 October, Head of the Economics Department of Eesti Pank ÜLO KAASIK spoke at the euro seminar organised by the Confederation of Estonian Trade Unions. He stressed in his presentation the importance of sustainable fiscal policy from the point of view of both the development of the Estonian economy and the objective to change over to the euro.

Ülo Kaasik highlighted in his speech the good adjustment ability of the Estonian economy. "Estonia's economy is displaying positive signs of stabilisation, which shows the flexibility of our economic environment. The adjustment ability of our enterprises is reflected by export figures, which have remained strong against the backdrop of the current economic situation, as well as by the stabilised volumes of industrial production," said Kaasik, adding that risks are nevertheless still there and Estonia must maintain its readiness to react to possible changes.

Kaasik emphasised that it is very important Estonia has been able to adjust without taking on an enormous debt burden owing to its reserves accumulated in good times and to fiscal surpluses. "We need sustainable fiscal policy in order to ensure sustainable economic development and the recovery of growth. Our success depends on the speed of restoring fiscal balance and regaining fiscal surpluses," Kaasik stated.

When speaking about the outlooks for euro adoption, Kaasik said it will be possible for Estonia to meet all the Maastricht criteria necessary for the changeover to the single currency by the end of this year. "Fiscal balance poses the largest question mark and in order to meet this criterion the government should do everything to avoid a deficit of over 3 per cent," he said, adding that it is a feasible objective.

In addition, Deputy Head of the International and Public Relations Department of Eesti Pank Katrin Kask provided at the conference an overview of the principles of euro adoption and of practical issues related to the changeover to the single currency.

The euro seminar organised by the Confederation of Estonian Trade Unions took place in the National Library of Estonia.
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