According to the explanatory statement accompanying the state budget, the state will be borrowing €1.5 billion this year, €1 billion of which should be the current €1 billion issuance of 10-year bonds. The first half of the year also saw two issuances of short-term bonds, with maturities of one year and half a year. The half-year bonds were redeemed in September, Sõerd wrote in a post on social media.

The MP continued his analysis of the state budget, noting that current info for next year indicates that Estonia's state debt will increase by €784 million. A total of €418 million in loan repayments are due next year.

"The previous loan will have to be repaid with the new, more expensive loan," he highlighted. "Next year's borrowing needs total €1.2 billion. I couldn't find this number in the bill's explanatory statement, but did get a response to it in the [Riigikogu's] Finance Committee yesterday. Next year's borrowing needs are also impacted by the fact that apparently not all of the money received from the current €1 billion bond issue will be used this year."

Regarding interest costs, the former finance minister made a point to reiterate his previously stated position that over the next ten years, annual interest costs may spike to €400-500 million a year, adding that, in light of recent developments, this estimate is on the modest side.

He added that, according to figures included in the 2023 state budget's explanatory letter, Estonia's interest costs are projected to exceed €90 million next year.

"But this interest cost was projected based on the assumption that the interest rate on long-term bonds would be 2.4 percent," Sõerd stressed. "The current €1 billion bond issuance demonstrates that the situation is a whole lot harsher. At the same time, the state is also earning higher interest than before on its own assets, such as on the deposits of assets from the stabilization reserve."

The Ministry of Finance announced Thursday that the coupon rate on the Estonian government's €1 billion bond issuance was set at 4 percent. According to Sõerd, this illustrates how abruptly the situation had changed on the government bond market.

"As recently as this summer, the expectation was that the interest rate on Estonia's long-term bonds might be equivalent to that of Germany's, i.e. around 2 percent," he said. "The reality is an interest rate of more than double Germany's, which is approaching Italian bonds already."

Sõerd served as Estonia's minister of finance from 2005-2007 in Andrus Ansip's first government.

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