1. Economic Crossroads: From Recovery to Sustainable Growth in the Baltics and EU
Jürgen Ligi
Minister

2. From steep fall of GDP to rapid growth
EU prognosis for economic growth 2012 : Estonia 3,2% , Lithuania 3,4%, Latvia 2,5% , in eurozone 0,5%.
Eurostat

3. Government sector budget position in the Baltics and EU%
Eurostat

4. Employment rate (% share of employed in working-age population)
Eurostat

5. General government debt
Source: Eurostat, European Commission, Ministry of Finance of Estonia.
* 2011–2012: European Commission Spring Forecast. May 13, 2011.

6. Key factors of recovery - case of Estonia
Conservative fiscal policy
- Consolidation effort - 16% of GDP in
- Balanced or surplus budget
- Low government debt
Flexibility
- Labour market
- Within the system
Openness, transparency and low corruption
Scandivavian financial market integration
-Surveillance

7. Crisis management
Financial assistance programmes for Portugal Ireland and Greece
Greece loan facility
Establishment of EFSF and ESM
Increased flexibility of EFSF and leverage options in pipeline
In European banking stronger capitalization and surveillance
Europe entered the crisis with absolutely no toolbox to address the unique challenges of sovereign solvency and financial stability in a common currency area.

8. Economic governance
Overhaul of the economic and budgetary policy co-ordination in the EU:
”Six Pack”- Reformed preventive and corrective arms of the Stability and Growth Pact
The “European semester” + Euro Plus Pact to enforce the surveillance and peer pressure
In pipeline enhanced budgetary surveillance proposals by the Commission (H. V.Rompuy)
Six pack- limiting expenditure growth, enacting the debt criterion, more straightforward decision making with early sanctions. Minimum requirements for the budgetary frameworks and new excessive imbalances procedure to prevent bubbles and competitiveness problems: alert mechanism followed by analytical and recommendation phase and backed-up by sanctions.
Fiscal responsibility needs to remain with member states (MS) and no bail-out rule should be strictly honored
- structural reforms,consolidation, conservative budget and fiscal policy and surveillance etc.
Stronger and more integrated European financial sector is necessary

9. Thank you!