rahandusministri kohtumine läti ajakirjanikega (eng)
TRANSCRIPT
Meeting with Latvian journalists
Jürgen LigiMinister of Finance
Why euro for Estonia?
• Confidence booster• Fixed exchange rate from 1992– Stable currency a cornerstone of
economy– had to be supported by strong fiscal
policy• Open and flexible economy • Transparency and high governance
standards• Small currency vulnerable during
turbulence
Estonia’s euro accession
• Fiscal deficit 1.7 per cent of GDP as of 2009
• Public debt at 7 per cent of GDP as of 2009 (the EU average around 80 per cent)
• 12-month average inflation rate -0,7 per cent (March 2010)
• Fixed rate of exchange for 18 years
• On June 8, 2010 ECOFIN ministers recommended to accept Estonia to the euro area; formal decision by ECOFIN in July 13
• January 1, 2011 – changeover date
Euro has helped our economy to recover more sharply
2001
2001Q2
2001Q3
2001Q4
2002
2002Q2
2002Q3
2002Q4
2003
2003Q2
2003Q3
2003Q4
2004
2004Q2
2004Q3
2004Q4
2005
2005Q2
2005Q3
2005Q4
2006
2006Q2
2006Q3
2006Q4
2007
2007Q2
2007Q3
2007Q4
2008
2008Q2
2008Q3
2008Q4
2009
2009Q2
2009Q3
2009Q4
2010
2010Q2
2010Q3
2010Q4
2011
2011Q2
2011Q3
2011Q4
2012
2012Q2
2012Q3
60
70
80
90
100
110
120
130
140
GDP
Private consumption
Investment
2005=100
Economic growth dynamics%, y.o.y
2005
Q2
Q3
Q4
2006
Q2
Q3
Q4
2007
Q2
Q3
Q4
2008
Q2
Q3
Q4
2009
2009Q2
2009Q3
2009Q4
2010
2010Q2
2010Q3
2010Q4
2011
2011Q2
2011Q3
2011Q4
2012
2012Q2
2012Q3
2012Q4
-20
-15
-10
-5
0
5
10
15
20
Es-tonia
Latvia
Export was the main economic growth driver in Estonia during 2010-2011
%, y.o.y
2005
Q2
Q3
Q4
2006
Q2
Q3
Q4
2007
Q2
Q3
Q4
2008
Q2
Q3
Q4
2009
2009Q2
2009Q3
2009Q4
2010
2010Q2
2010Q3
2010Q4
2011
2011Q2
2011Q3
2011Q4
2012
2012Q2
2012Q3
2012Q4
-40
-30
-20
-10
0
10
20
30
40
Estonia
Latvia
EU27
Unemployment rates have fallen below EU average
20
30
40
50
60
70
0
5
10
15
20
25
61.0
9.3
Employment rate
Unemployment rate (rs)
% %
Euro changeover caused the CPI of Estonia to rise by 0.2–0.3 percentage points
%, y.o.y
2005 2006 2007 2008 2009 2010 2011 2012
-4
0
4
8
12
16
Es-tonia
Latvia
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 9m
-4
0
4
8
12
16
20
Es-tonia
Latvia
Lithua-nia
% of GDP
*FDI inflow into Estonia without financial sector was 5.9% of GDP in 2011
Euro increased the interest to invest in Estonian economy
FDI inflows in Baltics
Sovereign ratings were increased by rating agencies
• S&P has increased the Estonian credit rating to AA-, which is the highest rating ever for Estonia
Country S&P rating
Austria AA+
Belgium AA
Estonia AA-
Czech Republic AA-
Slovak Republic A
Slovenia A
Poland A-
Malta A-
Latvia BBB
Lithuania BBB
Estonian credit rating dynamics
1997234567891011121998234567891011121999234567891011122000234567891011122001234567891011122002234567891011122003234567891011122004234567891011122005234567891011122006234567891011122007234567891011122008234567891011122009234567891011122010234567891011122011234567891011122012234567891011
3
4
5
6
7
8
9
10
BBB+
A-
A
AA-
BBB
BBB+
A-
A
A+
Baa1
A1
S & P Fitch Moody's
General Government deficit/surplus
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011-10
-8
-6
-4
-2
0
2
4
6
8
10
1.1
-3.4
-4.4
EstoniaLatviaEU27
% %
General Government gross debt
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110
10
20
30
40
50
60
70
80
90
100
6.1
42.2
82.5
EstoniaLatviaEU27
% %
Lessons for Latvia?
• Focus on the implementation of criteria has been the right approach
• But reforms are not made because of euro – they’re needed anyway
• Public support will increase together with awareness– Estonian support moved from ca 50% to ca 65%
in 1 year
• Euro area is now institutionally much stronger than in 2011