Moody’s: Estonia’s reaction to crisis is impressive
17.11.2009, 14:57
Rating agency the Moody’s praised Estonia for efforts made to balance the state budget and noted that implementing the euro will help disperse the risks in the Estonian economy, ERR/LETA news portal reports.
Moody´s says in its market review that thanks to budgets with surpluses compiled in good times, the need to consolidate the Estonian budget is now much smaller than in other EU states.
"Moody´s believes that the majority of the effects of the global economic crisis on Estonia are of passing nature and the situation will improve over a medium-long period,” said the agency’s deputy president Kenneth Orchard.
Moody´s said that the Estonian state apparatus has shown impressive flexibility in reacting to the crisis, cutting costs and finding new income. “Although some measures have been of one-time nature, it is still very important that in a situation where the economy contracts by 13-15%, the expected budget deficit will be just three percent," said Orchard.
Orchard said that the planned implementation of the euro in 2011 will considerably increase the trust of foreign investors towards Estonia and will improve the confidence ratings of the local market.
Although the Estonian market continues to be vulnerable due to the possible negative effects Latvia’s financial problems have on the region, the risks can be dispersed if a positive decision about adoption of the euro comes in May.