Will 2011 Bring Euro to Estonia?

Further confirmations are coming and the 1st January 2011 seems most likely day the day Estonia might *finally* see the dream of being part of the Euro zone becoming true.

Olli Rehn, responsible for the Enlargement of the European Commission, said to Reuters that the European Commission will evaluate if Estonia is ready to join the Euro zone in the first part of 2010 also adding that “the next likely candidate is Estonia”.

Public finances are stabilized and this confirms that Estonia is almost ready to become the seventeenth country to use the common European currency. Rehn also pointed out that “Estonia is rather close, but we will have to ensure that all the rules are respected, that the (EU) treaty is respected, and we will return to this matter in the coming spring.“

If the evaluation will be positive and the Estonian entrance will be backed by all the 27′s EU foreign ministers, Estonia will then formally adopt Euro starting from January 1st 2011.

Estonia is now going through a period of recession, that comes after the positive time that followed the entrance of the country in the European Union back in 2004.
Estonians are divided about the advantages of joining the euro zone but a small majority of people backs the process. The government hopes to enter as it expect that the adoption of the Euro could boost the economy, attracting foreign investments and so helping the country to overcome the recession.

As AFP/LETA reported, Estonian kroon is pegged to Euro at a rate of 15.6466 to 1 euro. The IMF said this was a “moderate overvaluation” but it could be solved without changing the rate.  The IMF added that there is the possibility to peg again the kroon to the euro at a more depreciated level but, even if it could offer some advantages, it might be disruptive for both Estonia and the entire region.