which until now have been either directly or indirectly protected by the state. and principal solutions to this problem shall not differ from the decisions made in the first half of 1990s. it is true that, for example, opening up of the electricity market to free competition is definitely more time - consuming than privatisation of many industrial enterprises. but, surely, restructuring of the electricity sector does not differ in principle from the reform in the banking sector. in both cases the state must ensure the availability of the critical infrastructure in estonia and communication with the external markets - in one case, it means payment systems, in the other case interconnections with the european and scandinavian grids. in both cases the government has to ensure supervision over the market actors ’ behaviour and establish clear rules. in both cases the government must have action plans or guidelines for crisis management. and when these guidelines and relevant national policies are in place, there will be no impediments to the complete opening of the market. the task of the government is not to delay the opening of the market but rather to speed it up. i am positive that, like in the banking sector, the society will benefit from this. it will result in more efficient production, lower prices, better service quality and curb the power of the monopolistic producers. to date, as in the early 1990s, we again face the question of what is the right fiscal policy. of course, today this problem is raised in a slightly different way. but, in essence, it is the same question - what fiscal policy shall ensure the stable development of the estonian economy within the fixed exchange rate regime and as part of the euro area. i shall return to this question towards the end of my presentation. thus the economic policy key issues we are facing in the beginning of the 21st century resemble in many aspects the problems we tried to resolve in the beginning of 1990s. we have achieved progress in finding solutions to some of the problems, others have remained unresolved. one thing is clear - undue postponement of tough issues is no good to anybody. if we want to be treated as equal partners in the european union, if we want to sustain the rapid growth rate and growing income level, we must tackle these problems with similar resolution and energy we did 10 years ago. b. challenges facing estonian economy on its way to the european union - internal policy so - what are today ’ s and tomorrow ’ s challenges facing estonian economy? filled with pride for the

fixed prices ) increased by almost 40 %. it is also demonstrated by the remarkable interest of the private sector and its readiness to invest. structural changes in the economy can also be regarded as quality indicators - changes in the distribution between the industrial, agricultural and service sectors. still, in the forthcoming years we must keep a watchful eye on the external equilibrium of our economy, the current account deficit and its financing, changes in the productivity and competitiveness. it is obvious that no country, not even estonia, when planning its economic policies should assume, for example, a 8 - 8 % current account deficit spanning several years. even if the latter is in the initial years financed through foreign direct investments, the adaptation of the economy is inevitable. the slower the economic growth is during the adaptation period, the more painful it is for the society. the goal of the economic policy should be the prevention of the internal demand - driven boom immediately prior and after the eu accession which will be followed by a significantly slower growth phase. pre - accession economic programme and macroeconomic risks all these important issues are, to a certain extent, reflected in estonia ’ s pre - accession economic programme which was recently approved by the government of the republic. i stress that the projections which form the basis of the national pre - accession programme and the premise that in estonian economy the real total output is going to increase at the rate of about 6 % per year are attainable only if the current economic policy continues. keeping of the macrobalance is of critical importance for sustaining the economic growth and credibility of the monetary policy. the kroon ’ s fixed exchange rate and the forthcoming entry into the euro zone are by no means “ free lunches ”. b. 2 challenges facing estonian economy on its way to the european union - internal policy - joining the emu estonia ’ s entry into the euro zone is contingent on the fulfilment of economic criteria applicable to the single currency countries - on the other hand, one can say that only these economies that meet the requirements can benefit from the transition to the single currency. and estonia ’ s monetary and exchange rate policy during the pre - accession period and immediately after the eu accession should be considered against this background. first, the fixed exchange rate of the estonian kroon against the euro and the currency board system will remain unchanged before and after the accession to the european union. the adoption of the euro will take place in three stages in accordance with the acquis - joining the european union