ERR: Has the crisis already arrived, as Minister of Finance Martin Helme (EKRE) said on "Esimene stuudio" on Tuesday?

Raul Eamets: A crisis can only be judged once we have quarterly figures in hand. A crisis isn't judged on the basis of one or two weeks' worth of figures. Signs pointing in the direction of things going south in the economy were there already beginning at the end of last year.  When we considered expectations for the future, then these expectations were more on the negative side in terms of the future.

Everything going on surrounding the coronavirus and oil prices, it's all exacerbating it and speeding it up. No one likely foresaw such repercussions.

ERR: Not all the effects related to the coronavirus are known yet either.

RE: Definitely not. We are only just seeing the beginning right now. We don't know yet what countries could end up in quarantine, or when, or how, because this thing is only just spreading in Europe. It's certainly too early right now to say anything about this.

ERR: How much could the European economy be hit by this?

RE: No one can say. Everyone is already adjusting growth forecasts downward. There may not be any growth at all. This is pure speculation right now. Everything depends on how long this thing will last. Supply chains have already been hit due to the fact that China shut down production at their factories, but we don't know yet what impact there may be via Italy or France's economies. There have been no shutdowns to a major degree there yet.

I definitely won't be the one to say by how many percent the economy will fall this year. Nobody can say as much right now, because we don't know yet what is even going on.

ERR: Mechanically — five weeks of economic standstill equals 10 percent of the economy.

RE: Well yes, but then there are seasonal effects and all kinds of other factors, such as companies' positions in the value chain, dependence on imported raw materials, etc. What order something occurs in. Everything arrives in Estonia with a certain delay. Our economy is largely dependent on the Scandinavian economy. The Scandinavian economy in turn on Germany's economy. There are long chains here. When and how great a deficit in economic growth is coming, that we always find out after the fact, to be quite honest.

ERR: When might these economic impacts reach regular people in Estonia?

RE: I believe that we'll only see the real picture by fall. It depends on what summer will be like, and how long this virus thing has gone on for. Currently, nothing has changed for the average Estonian. So long as businesses operate, so long as people have jobs, everything is fine. I don't think regular people will perceive anything in the near future other than the fact that they can't travel everywhere. But that is only my opinion.

ERR: So this fall we can expect layoffs or bankruptcies from companies who have been hit by the crisis?

RE: Everything depends on when the impacts currently impacting Europe arrive in Scandinavia. I am keeping a sharp eye on what is going on in Sweden and Finland's economies. This is the picture that will illustrate what will start to happen in Estonia.

ERR: Will these impacts reaching Estonia bring with them the need to start reviewing the state's finances? Allow the budget fall into a steep deficit, for example?

RE: That is possible. This will also depend on what position the European Commission takes. How the European Union as a whole will start assessing state budget policy and the situation with budget rules. Europe's budget policy already contains clauses indicating that if things go very poorly in the economy, then all kinds of exceptions will start to be made. These opportunities exist today too. We also can't rule out that the EU might also make additional decisions regarding some kind of financial aid packages in certain countries if things get really bad. There's also the World Bank, the IMF, etc.

ERR: What would be reasonable behavior on the state's part upon the arrival of the crisis in Estonia?

RE: I can't say anything concrete, because we don't know what direction the blow will come from. Right now we have to prepare for a crisis. Estonia's advantage over most European countries is that our loan burden is currently nearly nonexistent. This gives us a relatively good buffer, as if things get very bad, then we'll be able to take out a loan. Assuming that the finance sector doesn't freeze up and simply doesn't give out any loans. This right now isn't a financial crisis in the traditional sense as we saw in 2009.

We have the opportunity to take out a loan. It can then be directed toward the relevant sectors or into infrastructure. As needed. State investments is one area that would help enliven the economy and provide jobs and wages to businesses and people.

ERR: You believe, then, that the state should make bigger investments in infrastructure to relieve the crisis?

RE: That is one opportunity to compensate for the crisis. Then we'd need to find financing schemes to do so. Whether that is [purchasing power parity, PPP] or loaning. We don't know how much the regulatory environment may change. The crisis is currently reaching Europe, and people are only just considering what will start to be done.

ERR: Time will tell where and when we will end up.

RE: Point number one — right now there is no need for panic on the personal level. Point two — we don't know how Europe's current rules may change. What is realistic is a change to or relaxing of EU rules, which will make borrowing simpler and allow for public sector investments to be increased.

We also cannot rule out additional EU financial aid measures. Internally, we cannot rule out tax breaks, as well as direct state subsidies for sectors hit by the crisis.

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