Finance minister: Coronavirus crisis will cost state €1.2 billion in 2020 ({{contentCtrl.commentsTotal}})

Finance minister Martin Helme (EKRE) on Wednesday's
Finance minister Martin Helme (EKRE) on Wednesday's "Esimene stuudio". Source: ERR

Finance Minister Martin Helme (EKRE) says the coronavirus pandemic and economic aftershocks will cost the state € 1.2 billion this year. At the same time, he confirmed that this year's budget would not be cut. Longer term economic recovery would depend largely on how long the crisis lasted, he added.

Speaking on ETV politics discussion show "Esimene stuudio", Helme said that Estonia has a budget deficit of €80 million at present. 

"That's the difference between this year's budget and tax revenue," he explained.

"Our forecast says that the state budget will be around €800 million in the red this year, plus unemployment fund and health insurance payouts, and various other financing transactions. This makes a total hole of about €1.2 billion," he said.

He also noted that no budget cuts were imminent.

"We certainly will not cut this year's budget," the minister said.

Coronavirus costs

The government is reimbursing hospitals, ambulances and family doctors with extraordinary, coronavirus-related costs to the tune of €221 million, over three months. 

This figure may still change, Helme said. "I have seen how various public authorities view the crisis as an excellent opportunity to put in for additional requests. This does not quite sit well with me right now. I want to look at these figures before I actually sign off on them."

A supplementary state budget relating to the coronavirus pandemic will be sent off next week, Helme said.

Prognosis post-virus

Helme said that the prognosis for economic recovery depended to a large extent on how long the current coronavirus pandemic lasted, echoing comments made by the Bank of Estonia on Wednesday.

"If we get the disease clearly under control by the beginning of the summer and can then start to relax and return to normal life, the recession will be in the order of three to five percent, which means a six to seven percent decline overall," Helme said.

If the crisis drags on for a longer period, a greater decline must be taken into account, he added, noting this was a much more open book. 

"The range is very large, up to 25 percent."

These forecasts additionally do not currently take into account the impact of economic aid packages, he added, stressing their unprecedented nature in terms of volume.

The Bank of Estonia, the central bank, put the economic downturn forecast at at least six per cent, assuming that the emergency situation is over by May (it has been set by the government to last until the end of April-ed.).Helme said the Ministry of Finance's figures do not differ much from the central bank's forecast.

'Citizen's salary' and unemployment increase

According to Helme, even the idea of ​​ a "citizen's salary" has been on the table at the crisis discussions. 

"We don't want to advertise it this way right now, because our main goal is to maintain employment," Helme said.

Employment figures of an estimated 40,000 on top of the existing 30,000 could be expected, he said, bringing unemployment to 9 percent.

Immediate crisis outgoings and restrictions

Prime Minister Jüri Ratas announced on Wednesday that 150 breathing apparatuses, and 100,000 tests will be ordered. Helme confirmed that the money was there.

Presenter Andres Kuusk asked why the government had made the decision to close down shopping centers, while leaving key stores like supermarkets and pharmacies (including those inside shopping malls) open, rather than biting the bullet in a total closure.

"Wouldn't it be more sensible for us all to suffer this month, and then maybe we can continue our normal lives?" Kuusk asked.

Helme responded that the coalition has a different vision

"My vision is that quickly, plenty, as strictly as possible, makes the fallout less."

"The question is what is effective and what is enforceable. After all, people have to eat. Certain community jobs have to be done. Electricity and food production have to keep going," Helme continued, noting that the date for closing shopping malls (Friday-ed.) was set a few days after its announcement to give people time to prepare.

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Editor: Andrew Whyte

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