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Estonian government looks for ways to ease distribution of unused EU funds

Tiit Riisalo..
Tiit Riisalo.. Source: Ken Mürk/ERR

Around 60 percent of the European Union's investment grants for Estonia were used last year. According to Minister of Economic Affairs Tiit Riisalo (Eesti 200), an analysis is now being conducted to determine whether the requirements for distributing the money are too strict. The government is set to discuss the issue next week.

At a government press conference in early January, Prime Minister Kaja Kallas (Reform) said that only around 60 percent of the EU funds earmarked for investment had been used last year and that the rest needed to be absorbed quickly by the Estonian economy.

Minister of Economic Affairs Tiit Riisalo (Eesti 200) told ERR radio that the government will discuss the issue next week and is currently analyzing ways to improve the situation. In his view, it would be wise to review the measures and then make changes in order to attain optimal results.  

"The simplest thing would be to say that the money is here and whoever arrives first can come and take it, but we want to achieve a goal," he said.

According to Riisalo, the big problem for the ministry is productivity, which in Estonia falls well below the EU average.

"The goal is to reach 110 percent of the EU's average productivity by 2035. This is important because productivity generates more added value, which in turn generates profits that are taxed. A lot of the focus is on provide support through business measures so that added value increases," Riisalo explained. "It's about finding the right balance."

Riisalo added that the conditions for distributing funds always aim to be graded on a scale of strictness in order to achieve maximum impact.

There are always two sides to every coin when it comes to the use of structural funds, Riisalo said. One example is the Just Transition Fund, which should aim to support companies in the regions most affected by the transition to climate neutrality - in Estonia's case, Ida-Viru County.

"It would be easy to take the money to those in Tallinn, Harju County or Tartu who can do something clever with it, but this is a targeted measure. As we know, there have been a number of crises in the meantime, which are making their own corrections and, for example, at the end of last year, we made the rules for the Just Transition Fund much less strict," he said.

Similar analyses are planned for other areas, he said, to assess how the subsidies have been used and whether there is scope for change.

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Editor: Michael Cole

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