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BBN: Although the rest of the world looks at Estonia and Latvia as if they had a common disease, analysts and investors bring out remarkable advantages that help Estonia to distinct and shot itself in better light than Latvia, Äripäev reports.

Lars Christensen, senior analyst at Danske Bank considered countries' financial situation to be the key difference.

"Estonia's luck is that you have currently more time to order the economy. In the worst case Latvia may run out of money soon," Christensen said.

Joakim Helenius, big holder of investment company Trigon Capital agreed that Estonia's ace is reserves. Latvia didn't collect reserves and was more aggressive than Estonia with increasing expenditures.

Maris Lauri, macro analyst at Swedbank said that there are notably fewer economic ties between Estonia and Latvia than thought. The relation between two countries is rather mental.

"Latvia's public sector was larger and less efficient compared to other economy than Estonia's and Latvia's budget has been in deficit nearly all the time, they don't have reserves as well," Lauri said.

Estonia's north neighbour Finland is a big advantage, think Helenius and Latvia's former Minister of Finance, Uldis Osis.

"Finland is like a friendly big brother, at the same time Latvia's big brother is only Russia, which is not so friendly," Helenius said.

He brought out tight cooperation between Finland and Estonia and Finnish entrepreneurs' interest of investing to Estonia.

"I feel that Estonia would do better if it linked itself with Nordic countries more strongly," Helenius said.

He believes that Finland and Sweden are willing to support Estonia through hard times.

Osis brought out that Estonian entrepreneurs and politicians have behaved more careful and less lavish than their Latvian colleagues. Also loan boom and its current ravaging affect were more massive in Latvia.
 
The analysts have said that if Latvia devalues its lat the pressure on Estonian kroon is big.

"Likeness of devaluation in Latvia is 50:50, but if they devalue then Estonia 70-80% would follow them," Osis said.
He said that it inevitably brings chain reaction and borrowing money from Nordic countries may not save Estonia.

"The loan money would go to black hole and paying time would come soon," Osis said.

Christensen said that Estonia could prepare for the worst, but hope for the best.

"Devaluation is a political decision, not good or bad solution. I'll leave it to my good friend Jürgen Ligi (the Minister of Finance - edit), who probably doesn't think I'm his friend," the analyst said.

Andrus Säälik, the head of macro economy department at the Ministry of Finance said that devaluation wouldn't improve Latvia's competitiveness, since Latvia's export has high import content. Devaluation also has controversy impact on inflation. Relatively lower salaries would not be for long in the time of labour free movement. Looking at Latvia's situation, media interest and rumours don't seem to have reasonable basis, Säälik said.