"If nothing extraordinary happens, the Commission will give its positive opinion for the accession of Estonia to the euro zone on 12 May," an EU official said, clearing the way for Baltic country to join the euro in 2011.
On 12 May, the European Commission is also scheduled to publish its convergence report for 2009. "It will be the day of deepening and also possibly gradually widening the euro area," Economics Commissioner Olli Rehn said on Wednesday (14 April) during a press conference in Brussels.
"I will already have this Friday the first exchange of views in Madrid with finance ministers in the Eurogroup and in the Ecofin on this important subject," he added.
The informal meeting of Eurogroup and eurozone finance ministers will last until Sunday, according to the schedule of the EU's Spanish Presidency.
Last March, the European Commission expressed a generally positive comment on the Estonian economic programme for the coming years.
"The Estonian authorities implemented in 2009 a decisive consolidation of public finances, which contributed to the ongoing adjustment in the economy and has helped bring public finances in line with the expected lower growth," reads the text.
Indeed, according to the Estonian government's estimations, the public deficit is set to regularly decrease as a percentage of GDP in the coming years. Tallinn foresees a deficit of 2.6% in 2009, 2.2% in 2010 and 2.0% in 2011. In order to access the euro zone, candidate countries have to keep this figure below 3%.
Inflation trap
Rather than deficits, the biggest problem facing the Baltic country has always been inflation, which has tended to be higher than the 2% target established by the Maastricht Treaty. In 2008, Estonian prices rose by 10.6%, far above than the reference value set by the Commission on the basis of the average rate of inflation in that year's three best-performing EU countries.
Inflation in Estonia was mainly fuelled by the rapid growth which followed the country's EU accession in 2004. But GDP collapsed in the wake of the 2008 global financial crisis, slowing down economic growth which had until then reached double-digit figures.
One positive effect of the crisis was that it finally brought inflation in line with the Maastricht criteria. In 2009, Estonian inflation dropped to 0.2% and is expected to remain relatively low in the coming years, according to the national programme approved by the Commission.
However, the latest government figures provided indicate that this data will have to be reassessed due to higher than expected GDP growth forecasts.
During a press conference last Tuesday (13 April), Estonian Finance Minister Jurgen Ligi announced that average annual inflation in 2010 was back on an upwards trend, standing at 1.1% compared with the previous forecast of 0.4%. Next year's forecast was raised to 2% from the previous 1.9%.
Ligi was nevertheless confident that Estonia would not have problems meeting the inflation and fiscal deficit requirements for joining the euro zone.
