Friday

18th Oct 2019

Estonia postpones euro adoption until 2008

Estonia has announced that it will postpone the adoption of the euro by a year, setting itself January 2008 as its new target date.

"Our new euro day is now January 1, 2008," said Estonian prime minister Andrus Ansip.

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"In view of the developments concerning inflation, January 1 2007 has become unrealistic as a date to join the eurozone," the Estonian government said in a statement.

"It has been decided to continue with the necessary technical preparations to adopt the euro on January 1 2008," the statement continued.

Tallinn postponed joining the bloc's common currency after the country failed to meet the strict inflation targets required by the EU.

To join the euro, countries must have an inflation rate which is not higher than the average of the three lowest rates in the eurozone, plus 1.5 percent.

According to the most recent inflation figures, this means that Estonia's inflation rate must be less than 2.4 %.

In 2005, the inflation rate in Estonia went up to 4.1% - mainly due to the rise in global fuel costs and Estonia's rapid economic growth.

In order to be in a better position to fight inflation, the government said that it would postpone a planned increase in tobacco and alcohol taxes until January 2008.

The Estonian decision was welcomed by the European Commission.

"We obviously take note of the new target date," said a commission spokeswoman.

Commissioner Joaquin Almunia "welcomes Estonia's realism in this respect" she added.

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