Budget surpluses, corruption, fractious parliamentary politics and power cuts. The Banker’s selection of the world’s leading finance ministers reveals that a cool head is key to success whether the economy is under pressure or in bloom.

  Finance Minister of the Year/Global and Europe Aivar Sõerd, Finance Minister Estonia 

Since the beginning of the transition process in 1991 from a former Soviet Union country to an open market economy, Estonia has demonstrated exceptional economic stability. A consistent application of sound economic policies and the deep institutional support given to a free market propelled Estonia’s excellent performance. Recently, the country’s economic results have reached a pinnacle. Estonia has been growing at an extraordinary 12% year-on-year in the first half of 2006, from almost 10% in 2005 and at an average of 7.6% over the past six years.

However, problems arise even when things go exceptionally well. Estonia’s rapid growth may overheat the economy, with wage growth quickening and the property market continuing to boom. The currency board system, which Estonia joined in the pre-euro phase, means that the central bank is not able to pursue an autonomous monetary policy. The cooling down of the economy is then mainly left to government intervention, fuelled by a budget surplus. Such budget surplus was necessary for securing long-term economic and political stability, taking account of the rapid economic growth as well as the ageing and decreasing population.

Finance minister Aivar Sõerd has achieved just that. Estonia’s 2005 budget surplus was 2.3% of gross domestic product, the third highest among EU countries, after the more established economies of Denmark and Finland. And Estonia is comfortably meeting all the Maastricht criteria to join the euro, apart from for the country’s inflation levels that caused the government to delay plans to enter European Monetary Union in January 2008. In particular, Estonia’s government debt rating is favourable compared with other new EU entrants. Moody’s assigns the country an A1 rating, which is enjoyed only by two other new members: the Czech Republic and Hungary.

“Estonia stands out as an EU member state with a sustainable and strong financial position. Why? An important reason is that Estonia is part of the most dynamic region in the EU and our already high economic growth accelerated to about 12% in the first half of 2006,” says Mr Sõerd. “But no less important is the fact that we have been able to contain spending pressures and are trying to think long term within the framework of our revamped budget strategy.

“On the revenue side, our strong fiscal position has been helped by the improved tax administration, co-operation by taxpayers, decrease of the grey economy and other positive trends. On the expenditure side, the key decision was made in spring 2006, when the government approved the national budgetary strategy for 2007-2010.

“[The] budget for 2007 improves Estonia’s fiscal position further and it will be historic in many ways. It is the first budget to be prepared on the basis of the national budgetary strategy; and for the first time a surplus is being planned [previous ones just happened]: 1.2 % of the GDP [Estonia's budget, as presented to parliament, is traditionally too conservative and is usually incremented later in the year]. That will positively impact government reserves and the sustainability of the state pension system.

Finance Minister of the Year/Americas María Antonieta Del Cid de Bonilla Finance Minister (2004-2006), Guatemala 

Finance Minister of the Year/Africa Zakia H Meghji Minister of Finance Tanzania

Finance Minister of the Year/Middle East Ibrahim Al-Assaf Finance Minister Saudi Arabia

Finance Minister of the Year/Asia Vu Van Ninh Minister of Finance Vietnam

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