🔺 What to do when markets are at an all-time high? Find smart bargains, like these.See Undervalued Stocks

PREVIEW-New majority in sight for Estonian coalition

Published 03/04/2011, 07:30 AM
Updated 03/04/2011, 07:32 AM

* Polls show centre-right govt set for re-election

* Economy recovering from 14 percent fall in 2009

* Estonia joined euro zone in January

By David Mardiste

TALLINN, March 4 (Reuters) - Estonia's centre-right coalition has a good chance of being re-elected on Sunday. keeping the new euro zone member on a path of fiscal conservatism in the debt-ridden single currency area.

An opinion poll on Thursday showed the Reform Party of Prime Minister Andrus Ansip and its partner Pro Patria and Res Republica Union would win a combined 54 percent of the vote, which would give them a majority in the 101-seat parliament.

A poll on Tuesday was less clear-cut, showing Ansip may need to negotiate with a third party, possibly the centre-left Social Democrats, to secure a majority.

However, political analysts believe the country of 1.3 million people will stick to its policies of keeping a tight rein on finances, which allowed it in January to become the 17th country to adopt the euro, with the lowest debt burden in the European Union.

"As indicated by several polls our base-line scenario is for a similar coalition to the existing one, so we are not expecting any significant changes to political or economic policy," said Annika Lindblad, emerging market analyst at Nordea Bank.

The Centre Party, the main opposition grouping, has been hit by allegations it asked for funding from Russia, Estonia's huge neighbour which is traditionally regarded with distrust. The party has denied the allegations.

The Social Democrats entered the government with Ansip after the last election in 2007, but that coalition split.

DROP IN OUTPUT

Ansip's government was in a minority for a while, but defections from smaller parties eventually gave it 51 seats.

Thursday's opinion poll, carried out by TNS Emor and reported in the media, gave Ansip's Reform Party 29 percent support and Pro Patria/Res Publica 25 percent.

A Turu-uuringute poll commissioned by the newspaper Postimees and issued on Tuesday, gave the ruling coalition 35 percent backing, leaving it needing support elsewhere for a majority, which could come from the Social Democrats.

Estonia suffered a drop of 14 percent in economic output during the 2009 recession, the third worst in the EU after fellow Baltic states Latvia and Lithuania.

The government had to cut spending to keep its budget deficit within euro-zone limits to adopt the currency.

Estonia remains one of the poorest countries in the EU, which it entered in 2004, the same year it joined NATO.

Its fiscal shape is sound -- the European Commission has forecast a total public sector budget deficit of 1.6 percent of output for 2011, in line with the euro area average.

State debt, forecast at 9.5 percent of output for this year, will be by far the lowest in the euro zone and well below the average 86.5 percent of gross domestic product. The government has pledged to get the budget back in balance by 2014.

Estonians can vote via the Internet until March 2 and then on election day at polling stations between 9 a.m. and 8 p.m. (0700 and 1800 GMT). (Editing by Andrew Dobbie)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.