Two thirds of €3 billion state loan still left unused

The 'super-ministry' building in Tallinn, home of the finance ministry and several others.
The 'super-ministry' building in Tallinn, home of the finance ministry and several others. Source: Siim Lõvi /ERR

Due to the coronavirus pandemic, Estonia's debt burden has been increased. Minister of Economic Affairs and Infrastructure Taavi Aas (Center) said the borrowed money will be used for investments starting next year. However, opposition politicians believe the government has no ideas on how to do so.

As planned, the state budget was increased by loans during the coronavirus pandemic. On March 27, the Nordic Investment Bank (NIB) and Estonia signed a 15-year loan agreement of €750 million, an additional €200 million was acquired with the help of the European Fiscal Board (EFB). Another €1.5 billion has been acquired via the issuance of long-term bonds, with an additional €575 million in short-duration bonds.

The borrowed amount totals over €3 billion but so far only €900 million has been used, meaning more than two thirds of borrowed money is currently set aside.

Deputy chairman of the Riigikogu finance committee and former finance minister Maris Lauri (Reform) said a majority of the additional funding has been left standing because the coalition has no ideas on how to use it. "It is not used because there are no ideas for what it could be used for. There are some strange allocations, that have been discussed in public, and that is more or less it," she noted.

Lauri said the crisis is exactly the opportunity to bring forth changes - to direct money for science development and to make investments into the future, perhaps even for a greener future.

The former finance minister said: "I think the government has no understanding of what they want to do. What changes do they want to see? Just sharing the wealth around for pretty eyes and good words is not what we need right now."

Economic affairs minister Taavi Aas (Center) said the use of the funding will be decided on, taking into account developments in the next year.

Aas said: "It has not been used for a specific reason - we did not develop an additional budget for this year. Because the end of the year is so close already, it is reasonable to look into next year's budget and then contemplate on the use of the loan. Then, European Union measures will be available as well."

He said there is a plan tabled to bring forward state procurements in construction in order to maintain employment in the sector, in case private clients fall off. But state loans should generally be used to solve issues as they come up.

The minister noted: "Investments, before all, in sectors where there will be deficits - to support the economy. We do not actually know if and how the crisis will end."

Aivar Kokk (Isamaa), chairman of the finance committee of the Riigikogu, said the loan was not taken to immediately spend it. He said the state must assess which investments should be made to support the economy.

Kokk said: "We should look at investment opportunities, where the state and private investors can invest together - through public-private partnerships (PPE), whether that be road constructions or different municipality building developments, there are many options."


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Editor: Kristjan Kallaste

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