Budget council chair on state borrowing: We want to avoid Greece situation
University of Tartu economics professor and chair of the budget council Raul Eamets says that while a budget deficit was a normal thing during the peak of the coronavirus pandemic, that for next year and the year after may be smaller, even though more difficult times may come, to avoid a situation where the cost of running the state is covered via loan money long-term.
"We may [otherwise] find ourselves in a situation Greece and Portugal found themselves, where we find that we are bearing social security and health care costs via loan money," Eamets told ETV news show "Aktuaalne kaamera" Tuesday night.
Eamets said he didn't see over-borrowing as a big risk at present, and if negative interest rates emerged, that would normalize the state taking out loans.
However, this would only be a short-a and mid-term strategy, he said, noting that he and others were not convinced of its wisdom in the longer time-frame.
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Editor: Andrew Whyte