Eurozone accession has been a long-term goal for Estonian government. Photo by Daniel Greene.

TALLINN — A crucial milestone toward Estonia’s 2o11 eurozone entry was passed Wednesday when the European Commission indicated in its 2010 Converge Report that the smallest Baltic state is ready to join.

The Commission found that none of the other nine European Union states, including Latvia and Lithuania, seeking entry to the eurozone are sufficiently ready to adopt. The EU Economic and Financial Affairs Council (ECOFIN) will take the final decision on the adoption of the euro in Estonia in July, after the European Parliament has given its opinion and the EU heads of state have discussed the subject at their summit meeting in June.

In a reversal of his doubts last week, EU Commissioner for Economic and Monetary Affairs Olli Rehn lauded Estonia’s efforts toward eurozone integration.

“Estonia has achieved a high degree of sustainable economic convergence and is ready to adopt the euro on Jan. 1, 2011. We commend Estonia for its long-standing commitment to prudent policies,” Rehn said.

“To ensure that the adoption of the euro is a success, Estonia must pursue its efforts to maintain a prudent fiscal policy stance. Estonia needs also to remain vigilant and react early and decisively in case signs of build-up of macroeconomic imbalances and/or losses of competitiveness were to appear. It must now speed up its practical preparations to ensure that the changeover takes place smoothly,” Rehn said.

Eurozone accession has been a long-term goal for the Estonian government and is reflected in the 2010 national budget. The government implemented many unpopular cuts and tax hikes to keep the deficit level below the limit imposed by the Maastricht criteria.

Unsurprisingly, the Estonian government praised the Commission’s decision.

Estonian Minister of Finance Jürgen Ligi said in a Wednesday press conference that the euro will give credibility to to the country in this tough economic time and pledged that the ministry’s prudent financial policies will continue unabated.

“We are happy that European Commission valued Estonia’s choices at the time of crisis with their report,” Ligi told reporters.

In a later interview with Baltic Reports, Ligi said that a negative answer from ECOFIN meeting on July 13 will be unlikely.

“Estonia will get the euro at any case, that’s the deal and obligation,” Ligi told Baltic Reports. “If there will be delay then our economy will suffer and there will be a lot of disappointment. The fiscal policies, however, will not change.”

Prime Minister Andrus Ansips’ office characterized the Commission’s decision as redeeming the tough budgetary decisions his government made.

“The assessment of Estonia that was provided today by the European Commission was undoubtedly very gratifying. The report clearly confirms that our responsible fiscal policy has been the correct path for Estonia,” spokeswoman Liina Lepik told Baltic Reports.

— Baltic Reports reporter Kai Joost contributed to this article.

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