Estonia contributes €56 million to European Stability Mechanism

European Union flag.
European Union flag. Source: ERR

This year, Estonia's transition period ends, which means it will have to put more money into the European Stability Mechanism (ESM) established a decade ago to help nations in the euro area in the sovereign debt crisis. Until now, Estonia's contribution has been €148.8 million which will now increase by €55.9 million.

The European Stability Mechanism (ESM) was established in October 2012 to aid countries in the euro zone in the wake of the major financial crisis.

The initial committed capital of the ESM was €704.8 billion, of which Estonia contributed 0.1847 percent, or €1.3 billion. In accordance with the Treaty establishing the ESM, Estonia was given a ten-year transition period, which ends this year. 

Next year, Estonia's share will grow to 0.2541 percent, or €1.8 billion, or €487.7 million. Most of this is callable capital.

This means that the paid-in share increases by €55.9 million, from €148.8 to €204.7 million. This money must be transferred from Estonia to the ESM, meaning that other countries will receive their contributions back.

There are transition period stipulating clauses also for Croatia, Latvia and Lithuania. Also these countries will have to increase the amount of their ESM contributions.

The ESM has a total credit ceiling of €500 billion, with €89.9 billion outstanding.

The European Financial Stability Facility (EFSF) is the forerunner to the European Stability Mechanism (ESM); it provided financial assistance to Ireland, Portugal and Greece in the sum of €172,6 billion. The EFSF and ESM together have issued a total of €295 billion in support loans.

The ESM is responsible for stabilizing the economy of euro area members and the euro area as a whole in times of crisis. All nations in the eurozone are members.

At the moment, the ESM does not have any active support programs.

In total, there have been three ESM support programs provided to Spain, Cyprus and Greece. All of these nations are once again able to finance themselves independently through the markets and have begun repaying their loans or are in the process of doing so.

Last year, the ESM made a net profit of €311 million. Of this, €106 million is spent on the new building and €205 million is allocated to fund's reserves.


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Editor: Kristina Kersa

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