The Nordic Investment Bank (NIB) and Estonia have signed a 15-year loan agreement of €750 million to help finance the measures taken to curb the immediate impact of the coronavirus (COVID-19) pandemic on the economy and society.
The loan will cover part of Estonia's increased costs, such as additional direct spending on health care and civil protection, compensation of employees for unpaid leave, and loss of earnings due to self-quarantine.
It also covers support measures for the business sectors most affected by the crisis, such as small and medium-sized enterprises, tourism and transport. It will compensate businesses for loss of revenue.
In addition, the loan covers additional costs stemming from government restrictions on the spread of Covid-19, such as, the closure of sports clubs, theaters, museums, quarantine in certain geographical areas and the closing of national borders.
Henrik Normann, President & CEO of NIB said: "The current crisis causes significant disruptions in the labour markets and restraints to healthcare services, and will have detrimental effects on the availability of financial resources in the private sector, in particular for small and medium-sized enterprises. The purpose of this loan is to provide countercyclical financing, and to alleviate the immediate socio-economic consequences caused by the Covid-19 pandemic in one of our member countries."
The loan has an interest rate of the six month average of Euribor and an additional 0.32%. Depending on Euribor, the compound interest may be negative, Siiri Suutre, a spokesman for the Ministry of Finance, told the ERR.
Six-month Euribor average rose 0.024 percentage points to -0.274 percent on Thursday.
As the international financial institution of the Nordic and Baltic countries, NIB finances projects that improve the productivity and benefit the environment of the region. The Bank also has a stabilising role during economic crisis.
NIB is an international financial institution owned by eight member countries: Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway and Sweden. The Bank finances private and public projects in and outside the member countries. NIB has the highest possible credit rating, AAA/Aaa, with the leading rating agencies Standard & Poor's and Moody's.
Editor: Helen Wright