Audit office: Covid crisis loans being repaid ahead of schedule
The risks associated with loans issued to mitigate the effects of the coronavirus crisis have not materialized, according to an overview by the National Audit Office, which examined the implementation of coronavirus crisis measures facilitated by the Estonian Business and Innovation Agency (EIS).
Some of the loans have been repaid to the state budget ahead of schedule and interest and service fees have generated an additional €25 million in revenue. A final assessment of the repayment of crisis loans can only be made after all loan agreements expire in 2026, the National Audit Office noted.
At the onset of the crisis caused by the spread of the coronavirus, large-scale measures were developed to support businesses through the Estonian Business and Innovation Agency. The state issued loans totaling €224 million and guaranteed loans taken out by companies from banks to the value of €102 million.
"In general, the crisis loans have been repaid better and faster than initially feared. Larger loans, such as those issued to Tallink and Porto Franco, have been paid back in full, according to EIS. Moreover, banks have not had to enforce guarantees on a large scale," said Senior Auditor Märt Loite.
The pessimistic risk forecast at the time of issuing these loans — based on the uncertainty surrounding the course of the crisis — was that losses could amount to as much as 50 percent of the loan value. However, this has not occurred, the audit office pointed out.
As of the end of the first half of 2024, a total of €133 million had been repaid under the crisis loan agreements. Additionally, €22 million in interest and €1.1 million in service fees had been collected. Of the 155 companies that received loans, 69 had fully repaid their loans by mid-year. The total amount of bank loans guaranteed by the state stood at €166 million, with €102 million covered by guarantees. The state collected €2.3 million in guarantee fees and €0.3 million in service fees, while enforced guarantees totaled €0.3 million.
The volume of loans that have been in default for more than 60 days amounts to €4 million and €2 million worth of loans have been written off.
In 2020, the government allocated €850 million for crisis measures, with €550 million earmarked for loans and €300 million for guarantees. The funds were allocated with a safety margin to signal that the state was ready to step in and assist businesses. However, it later became clear that such large-scale crisis measures, which were hastily implemented to save the economy amid the unpredictable pandemic, were not fully needed.
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Editor: Marko Tooming, Marcus Turovski
