Analytics, Economics, Estonia, Latvia

Charles Goodhart.

"Latvia already knocked on the door of IMF for help. When do you think that Estonia will do the same?" asked Goodhart, former chief adviser of the Bank of England and member of the British monetary policy committee that determines the base rate for British pounds.

Goodhart's views have already drawn criticism from Estonian leaders who say that Goodhart is a typical economist who has limited knowledge about the differences between Estonia and Latvia, or that there is a currency board system in Estonia. All he sees is rapid economic decline, high current account deficit and inflation and rapid growth in borrowing of recent years.

According to critics, Goodhart is paying no attention to the fact that it is legislatively difficult to devalue the kroon or that, unlike Latvia, Estonia has had a budget surplus for years and accumulated billions in reserves that amount to 10% of GDP. Moreover, Latvian government has repeatedly issued bonds, most recently in February, which is something that Estonia has not done.