Estonia: Proving its EMU credentials
Overview:
While all three of the Baltic States continue to undergo horrendous recessions, Estonia has differentiated itself from its two neighbours both by having been better prepared for the economic crisis and having responded to it more comprehensively. The former was the product of sustained strong implementation of economic policies over a number of years. The latter, has been the result of a stronger commitment to the key strategic goal of early EMU entry. While Latvia and Lithuania have ultimately allowed fiscal deficits to rise sharply to try and soften the impact of the sharp downturn, Estonia continues to attempt to keep the fiscal deficit within the Maastricht criteria limit of 3% of GDP. Painful though this is Estonia will ultimately see the benefit by adopting the Euro several years ahead of its neighbours.