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The Truth About the Euro and Estonia

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Hopefully our article about Estonia and Euro did not scare you too much!

As most of our readers understood already, the article we published yesterday about the European Central Bank cutting Estonia off the Euro zone was nothing but a joke for celebrating the 1st of April.

Nevertheless, the discussion about the adoption of the European Union unique currency continued even in the last few days, makingAnsip forecast about January 2011 slightly optimistic.

The national economy is supposed to contract by 8.5 per cent this year – last year forecasts planned a lighter 3.5 per cent drop – and such an increase will not do any good to the recession hitting the former Baltic tiger.

And even if the progresses Estonia made for reaching the Euro zone are absolutely considerable – we should not forget that the country already fulfils the national debt to GDP ratios – the budget deficit is risking to become one of the main obstacles for reaching a goal national politicians have been talking about since far too much time now.

PM Andrus Ansip lately asked lawmakers to modify the State budget for bringing the deficit down to 3 per cent of the Estonian GDP according to the parameters set by the European Union for adopting the Euro, but this might be not enough if not supported by effective policies devoted to increase both industrial production and internal demand.