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. Last Updated: 07/27/2016

Estonia Fights Soaring Debt

TALLINN, Estonia -- A 65 percent rise in Estonia's current account deficit in 1997 prompted more talk this week of steps to dampen demand in the booming Baltic state.

The central bank said Wednesday the current account deficit was 13 percent of gross domestic product in 1997 versus 9.8 percent in 1996, totaling 8.45 billion kroons ($579 million) versus 5.11 billion kroons.

The central bank and government acted last year to brake soaring bank lending and halt a consumer boom as Estonia's economy grew by what many saw as an unsustainable 11.8 percent in the first half of the year.

"It is clear that the worsening balance of payments and 65 percent growth in the current account gap is not good and such growth cannot continue," said Heido Vitsur, adviser to Estonian Prime Minister Mart Siimann. "It is a danger signal which must be reacted to," he said.

Estonian central bank deputy head Peter Lohmus said the data showed bank capital adequacy ratios may have to rise and hoped the government would continue to tighten its belt.