State's loan servicing costs to rise by half a billion euros in 2021 ({{contentCtrl.commentsTotal}})

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The "Superministry" complex in Tallinn. Source: Siim Lõvi/ERR

Estonia's loan servicing costs in 2021 will increase to €499 million. Over the past four years, costs will have significantly increased.

The main part of the loan servicing cost is the State Treasury's debt obligations and interest payments.

Ott Heinapuu, chief specialist of the Communication Department of the Ministry of Finance, told ERR the costs of servicing state debt in 2020 are €322 million. In a year, the payments will increase by €177 million or 1.55 times. 

Heinapuu highlighted the comparison between payments for 2018 and 2019. The cost of debt servicing in 2019 was €172 million and in 2018 it was €17 million. The costs have increased more than 29 times in four years. 

Heinapuu explained the state started issuing short-term bonds with a maturity of up to one year in 2019. According to him, the amount also reflects the repayments of short-term liabilities taken during the year. 

Heinapuu said: "The repayments of State Treasury short-term bonds were made in the amount of €100 million in 2019. In 2020, they are planned to make a total of €250 million and €425 million in 2021. Short-term bonds are financed in the current cash flow both in Estonian and other state treasuries." 

The maximum limit of government debt obligations is set by the State Budget Act. By 2020, it will be €5 million. Since the beginning of the emergency situation, the country has borrowed €2.8 million which has been spent mainly on current expenses rather than investments. 

The amount of state budget expenditures in 2020 is €11.7 billion. The Riigikogu adopted a supplementary budget in terms and connection of the pandemic which increased the state budget expenditures by €513 million. 

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Editor: Katriin Eikin Sein

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