EUThe EU set up a recovery and resilience fund aimed at alleviating the Covid crisis and which Estonia approved in 2021, obtaining support from that source. While a loan was also offered as part of the facility, Estonia did not take up this offer.

Reform's Aivar Sõerd, a member of the Riigikogu's finance committee, said loan money could be obtained from the market at a cheaper rate, at that time.

"Estonia was able borrow very cheaply at that time, at very low rates of interest, in practical terms. Short-term bonds were available right away, while long-term loans were also very cheap. A joint [EU] loan would, however, have been a bit more expensive," Sõerd said.

Lithuania made a similar decision to Estonia at that time, only to change its mind at the last moment, and recently announced that it would still request a loan of €1.8 billion from the EU. Estonia, on the other hand, has remained steadfast.

Sõerd added that: "The situation has changed in the meantime. The joint loan from the recovery fund might now be cheaper than the current price of a loan which has to be paid by borrowing from the financial markets. When put this way, perhaps we have missed an opportunity after all."

Janno Luurmees, head of the treasury department at the Ministry of Finance, noted that instead of going down the EU loan route, Estonia took out a loan of €300 million from the European Investment Bank (EIB) – though this is also owned by the EU's member states.

Luurmees said: "In terms of interest rates, this EIB loan is relatively similar. This difference is minimal, if any. The EIB are generally more flexible. This entails less bureaucracy on our side. Loan disbursements are more flexible in this way, and reporting requirements are less extensive."

The purpose for which both Baltic states are taking the loans are in any case similar. Lithuania plans to invest the loan money in economic revival and the green transition. Estonia would utilize the loan money to cover its own share of EU subsidies – in essence, the money is also being used to support innovation and the green revolution.

While the types of loans outlined above are certainly different and not mutually exclusive, loans from the Estonian Recovery and Resilience Factility can no longer be applied for.

Luurmees added that: "It seems that the train has left the station as of today. In order to get a loan from the European Commission, the Estonian recovery plan should be supplemented. This would be quite a major project. The deadline for submitting this loan application, if I'm not mistaken, was August 31. Certainly by that time the recovery plan should be supplemented, and can't be renewed."

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