National Debt Rises Significantly
The national debt grew dramatically in the third quarter of last year - up by around 400 million euros to a total of 1.6 billion euros, according to data released yesterday by Eurostat, the EU's statistics office.
The increased debt came from loans from the European Investment Bank (EIB). They will be used to provide matching funds for projects co-financed with foreign capital, including EU funding.
A 385 million euro loan came from the EIB as the remainder of a 550-million-euro loan agreement signed in 2009. A 160-million-euro chunk of the 550 million will go toward - or has already been used for - road work, Eesti Päevaleht reported in December.
Estonia did not have an obligation to take the remaining 385 million euros. Prime Minister Andrus Ansip explained, “We have used it for very important investments into Estonia. It is meant as co-financing with funding from various EU funds and the interest rate is very low. If I recall correctly, the interest rate for the first part of the loan was 0.56 percent. We earn considerably more from our reserves than we pay as interest,” reported Äripäev.
Estonia's debt-to-GDP ratio still lowest in the EU
Estonia's debt increased from 7.3 percent to 9.6 percent of GDP in the third quarter but the nation's government is still the least indebted in the EU. Bulgaria comes a distant second with an 18.7 percent debt-to-GDP ratio, according to Eurostat.
Greece, with a debt of 152.6 percent of GDP, has the largest debt-to-GDP ratio in the union. Italy, Portugal and Ireland follow with ratios of 127.3, 120.3 and 117.0 respectively.
Compared with the second quarter of 2012, Ireland's debt-to-GDP ratio increased the most, by 5.9 percent, followed by Greece (3.4 percent) and Portugal (2.9 percent) with Estonia taking fourth place with a 2.3 percent increase. Latvia (2.6 percent), Malta (2.5 percent) and Austria (1.3 percent) registered the biggest declines in the ratio.