Estonia Needs Backup Plan for Euro Defections, President Says

Estonia, which adopted the euro at the start of last year, needs a “plan B” to weather defections from the single-currency region, President Toomas Ilves said.

“We must be honest with ourselves and the European Union in general,” Ilves said in a meeting with Finnish Prime Minister Jyrki Katainen in Tallinn today. “We also need to be prepared for considerable future changes to the current euro area, where some of us will move on and others will remain.”

Estonia and Finland, “with their responsible and conservative fiscal policy, have repeatedly proven that they are among those that are making progress,” Ilves said in comments distributed by e-mail after the talks.

Estonia, whose public debt stood at 6 percent of gross domestic product at the end of 2011, is among the three least risky euro states. Its five-year credit-default swaps closed at 110 basis points yesterday, behind Finland’s 76 basis points and Germany’s 87 basis points.

To contact the reporter on this story: Ott Ummelas in Tallinn at oummelas@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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