Investor and businessman Risto Rossar told daily Eesti Päevaleht (link in Estonian) last week that in his estimation, restrictions on every working individual in Estonia cost the state €712 per month, taking into account Gross Domestic Product (GDP), borrowing and also, with reservations (since Estonia is part of the eurozone and so not in full control of money supply) the printing of money.

When totaled, the restrictions cost the state €19 million per day, Rossar said.

Naturally this was just an estimate; concrete figures Rossar took into account in his calculations included the combination of a GDP fall of €1.57 million last year, together with €2.47 million government borrowing and Estonia's €2.9 billion share of the euro money supply.

Of the latter, Rossar said: "With printing money, there is an interesting trick which makes it really a sort of tax on savers and wage earners. It [also] entails a massive withdrawal of money from people who don't own property, and is directed towards those that do."

Finance ministry analyst: Factoring in boost to money supply doesn't give accurate picture

Madis Aben, economist at the Ministry of Finance, puts the figure at a little over a third of this level, however, at €7 million per day. He also excludes the printing of money from consideration as a cost.

"Printing money was an essential measure, and was designed to stimulate economic activity as much as possible in this precarious situation," Aben said; moreover GDP should not be compared with 2019's level, but rather, with what it would have been in 2020, had the coronavirus pandemic not struck.

By this estimate, GDP decline was even higher, at €2 billion for 2020, while this figure looks set to be repeated in 2021, Aben said, with no end in sight for the crisis.

Changes in the salary fund are another important indicator, he said.

"In 2020, people earned about €500 million less in net wages [than in 2019]. It is likely that we will lose the same amount this year as well, compared with what net earnings would have been without the corona crisis," Aben said.

This translates to a year-long income per employee of €1,000 less than in 2019, he said, adding that the government's relief measures need to be offset against this.

In short, public debt needs to be taken into account, according to Aben, who noted that last year's government loan taken out by the previous Center/EKRE/Isamaa coalition was not spent in its entirety on current expenses – some was allocated to reserves.

Moreover, the €1.7 billion net increase in the government's debt burden softened the economic downturn, which would have been greater without it, Aben said.

Coronavirus costs looked at differently from other health issues

Another factor is the effectiveness of the restrictions vis-a-vis health costs for those hospitalized. Deaths which would have been avoided without the pandemic, and loss to the economy by those quarantining, suffering from the virus at home or being in hospital also need consideration.

However, Risto Rossar said that this presupposed that the restrictions have reduced the number of deaths and the burden on hospital.

"There is one very strong assumption in your sentence - that these restrictions reduced the number of deaths and the burden on hospitals," Rossar said, adding that a higher value has been placed on saving a life than was the case in pre-pandemic days.

"Take another situation; if an individual has cancer or another serious illness, for example, then at some point the Health Insurance Fund will say 'stop, treating that individual is no longer viable'."

"Today it is simply the case that saving a person who has COVID-19 is priceless. Even if the restrictions save lives, the cost is clearly higher than we had previously agreed to pay to save an individual," Rossar argued.

Nonetheless, the original round of restrictions imposed this time last year were justifiable, since everything was uncharted waters.

However, other than for mass events, they are not required, Rossar said, while the economic gains resulting could be better invested in strengthening the hospital system, he said.

With that in mind, Rossar said he was surprised by the relative level of public support for the restrictions, while the government itself has also been misled, he says.

"When the new coalition entered office (in late January – ed.), [new prime minister] Kaja Kallas made some quite reasonable statements on the matter [of restrictions] at first (at a time when the viral spread was picking up again – ed.), but a few weeks went by, and by then she likely saw that she could not resist public opinion and went back on the same [restriction-imposing] track."

Businessman: Restrictions could be lifted on one fell swoop

Rossar also said that he thought a piecemeal lifting of restrictions was not needed and, given that temperatures are finally warming up, people are getting vaccinated and indicators show a fall in viral spread, this could be done wholesale.

Madis Aben said that lifting the restrictions was not a panacea of the economy, however, pointing to the reliance of the economy on foreign tourism. Full recovery of this is needed for full economic recovery, he added

Ultimately, it is the virus that dictates the pace of economic recovery, he said.

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