"It constitutes a massive hike, what more can I say. Rising interest rates caused by inflation is a fact. While the hike was to be expected, its extent was not. I believe it has come as an unfortunate surprise for everyone," she said.

The PM said that new budgets will have to consider the new rates. "We counted on loans, all manner of credit becoming more expensive last time around. This will be a major additional expense," Kallas said.

She saw both inflation and Russia's war behind the high rates. "It speaks of the situation we are in. That we find ourselves in the most difficult security situation since Estonia regained its independence and there is a lot of uncertainty over energy and the behavior of our aggressive neighbor."

It turned out on Thursday that Estonia's ten-year bonds sport a coupon rate of 4 percent, up from 0.125 percent when Estonia issued €1.5 billion worth of bonds two years ago.

Minister of Finance Keit Pentus-Rosimannus did not find the time to comment.

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