Estonia nears recovery

According to recent International Monetary Fund report Estonia_s economy is poised for recovery, but further spending curbs may be needed to meet government promises to balance the budget by 2000. The IMF reviews the economies of each of its member states each year and a summary of this review is published if the country approves. It summarizes a June 24 review of the Estonian economy praised bank restructuring efforts and welcomed the spending cuts in Estonia_s supplementary 1999 budget. But it sounded a note of warning on future spending plans. "Directors were of the view that the emphasis should be on additional spending restraint, inter alia by increasing the efficiency of government operations," it said. The fund said Estonia had also agreed to participate in a pilot project for the release of long-secret staff reviews, the documents underpinning the annual reviews. Estonia had made progress in narrowing its current account deficit, reducing inflation and implementing essential structural reforms, although Russia_s economic problems had hurt Estonia_s banking system. The IMF said Estonia_s currency board, a rigid system pegging the Estonian kroon to the euro, provided an appropriate exchange rate peg. The government plans to maintain the currency board and the current exchange rate peg until Estonia joins the Europe_s Economic and Monetary Union and replaces the kroon with the European single currency, the euro.