Former PM Ansip: Estonia could consider borrowing once EU support dries up (8)
Estonia could consider borrowing when the European Union subsidies for the country begin to dry up, European Commissioner for the Digital Single Market and former Estonian prime minister Andrus Ansip said.
In an interview with daily Eesti Päevaleht published on Thursday, Ansip said he wouldn’t rule out borrowing, but that these decisions depended on the situation.
The topic came up after both Latvia and Lithuania issued government bonds to raise capital. Estonia is somewhat famous for its balanced budget, its low public debt, and its continued preference of other ways to raise capital over issuing bonds. Prime Minister Taavi Rõivas stated on Wednesday this week that he didn’t see the need to gain access to capital this way.
Ansip said these decisions depended on what a government intended to spend the money on. “Speaking of Estonia, we have to remember that we continue to receive a big amount of funding from EU taxpayers. If we take a loan, it could happen once this abundant support no longer arrives,” Ansip told Päevaleht.
He added that while this would not happen suddenly, Estonia stood to get significantly less money already in the next EU budgetary period than it had been getting so far. Even though borrowing would be cheap now, one would need to first think where to invest the borrowed money, and how the loan could be repaid.
“Basically, it isn’t right to borrow from your own children and grandchildren to make your life comfortable. Every generation should pay for their needs themselves,” Ansip, who was Estonia’s prime minister from 2005 to 2014, said.
Ansip was a strict champion of fiscal balance during his tenure as head of government, but admits that fiscal balance alone is not enough to solve the problems of all countries.
“I don’t think I’m a balanced budget fundamentalist. The crises that countries find themselves in are different, and the solutions for different countries have to be different as well.” He added that austerity wasn’t always the right way to go.