LONDON — Greece needs to undergo austerity on the scale that some of the euro zone's newest and poorest members have adopted, and stands to remain a burden on its partners in the bloc for years to come, Estonian Finance Minister Juergen Ligi said on Friday.
The economy of the first euro area nation to request an international financial rescue will pose a problem for the other 16 nations in the currency union "for years—a decade for sure," Mr. Ligi said in an interview with Dow Jones Newswires. "It will take time before they return to the [debt] market. Of course structural reforms and political processes take time."
Mr. Ligi, speaking to economics students in London, said Greeks have yet to experience true austerity by Estonian standards, despite a string of spending cuts and tax increases that have sparked widespread public unrest, most recently, in a strike by public-sector unions this week.
"Greece hasn't seen real austerity," Mr. Ligi said. "They are consuming five times more than we did [in Estonia] 20 years ago, or maybe four [times], maybe three. Have they adjusted now? No they haven't. They are living clearly above their means at the expense of borrowed money."
Estonia is the euro zone's poorest country in terms of per-capita economic output, according to official data.
Mr. Ligi's comments echo those of other euro-zone nations that are increasingly frustrated with Greece's failure to meet its fiscal targets and with its ever-rising financing needs. Finland, Slovakia, Austria and the Netherlands are among those that have expressed bailout fatigue and want to limit the duration of the process.
That impatience may make it even harder for the currency bloc to agree to further bailout requests as Greece's pleads for more time to implement reforms. Spain and Cyprus are also looking likely to tap the euro zone's bailout funds for their debt financing needs.
Mr. Ligi said salaries and pensions in Greece, now in its fifth year of recession, must be cut further. "If their incomes have been cut by 20%, by Estonian standards it is nothing very special," he said, referring to the huge shifts experienced by Estonia's economy in the 1990s after its independence from the Soviet Union.
Estonia suffered a deep recession in 2008 and 2009. Its government cut public-sector salaries and reformed welfare and pensions to keep spending in check. Salaries in the private sector fell, keeping businesses relatively competitive. The turnaround drew praise from bodies such as the International Monetary Fund.
Austerity has been insufficient across Europe, not just in Greece, Mr. Ligi said. "There is a lot of talk about austerity but at the same time there is so much unnecessary spending by governments. There are social transfers that can't be explained rationally. They are just buying votes," he said.
Greece's relatively small export sector "makes recovery more difficult for sure," he said. "You have to change your economy, it is clear."
Estonia's economy grew 0.4% in the second quarter of 2012 from the first three months of the year, one of the best performances in the euro zone. The country's exports sometimes amount to nearly 100% of its gross domestic product, Mr. Ligi said.
Mr. Ligi declined to speculate on the likelihood of a full sovereign bailout for Spain, but said the government of Prime Minister Mariano Rajoy is taking steps to avoid such an outcome. The government this week set out new austerity measures to meet its deficit-reduction goals. Among European leaders, resistance to a full Spanish bailout is growing, Mr. Ligi said.
Mr. Ligi said growth in Estonia's economic growth should accelerate next year despite the prospect of rising energy prices, which are likely to depress consumer spending. Europe's economic growth should also increase, he said, but he declined to join French counterpart Pierre Moscovici in saying there is now "light at the end of the tunnel" with respect to the euro-zone debt crisis.