Speaking at an economics conference on Friday, former Prime Minister and current Vice-President of the European Commission Andrus Ansip (Reform/ALDE) said that while the governments led by him prepared for the 2008 crisis by accumulating reserves, the current government is not doing the same.
According to Ansip, nobody could say in advance that the economic crisis would begin on 15 September 2008, when Lehman Brothers went bankrupt in the US. Similarly, he continued, nobody can say now when the next crisis may erupt.
"Of course, Estonia would have to act differently in a new crisis than it did during the last one," he said. "Indeed, we don't know what the new crisis will be like, and even if it were the same as the previous one, the solution to the crisis cannot be the same as our crisis preparedness is different. Governments led by me prepared for a crisis, but the current one is not doing so."
Ansip said that although his government was accused in 2008 of looking at things through rose-coloured glasses, they in fact did prepare for crisis.
"Finances were in very good shape, and we didn't have to borrow because the state had reserves," he noted. As a result of having reserves, he recalled, Estonia was offered loans at extremely favourable rates, which the state then loaned in turns to other European countries at a higher interest rate, earning €1 million in interest for the state budget in 2009.
According to Ansip, the state needs reserves in order to also be able to borrow on favourable terms in difficult times.
"The current government is spending the reserves that we accumulated in 2006 and 2007, and this reserve has been all but squandered by now — there's nothing more to spend," he said. In 2006, the government sector's liquid assets amounted to nearly 18% of the GDP, he recalled. Now, this ratio is slightly over 6%.
Ansip: Current government doesn't value reserves
According to Ansip, the current government attaches no value to accumulating reserves. "When it comes to accumulating reserves, the current government's message is that we are paying back previously taken loans — servicing loans is now considered the accumulation of reserves. The bar is that low now."
The former prime minister pointed out that the Estonian economy has recovered rapidly following economic crises — Estonia's GDP has grown by as much over the past eight years as the GDP of the EU's 28 economies combined in the past 18 years.
"While we haven't yet cracked the top five richest countries in Europe yet, we have always been among the five fastest growers," he highlighted, recalling a slogan of the Reform Party from a period when he served as prime minister and head of the ruling party.
Ansip was a speaker at the Rimi Economic Conference in Tallinn on Friday, where other speakers included Ministry of Finance Deputy Secretary-General for Financial Policy and External Relations Märten Ross and Tere and Farmi dairy co-board member Valdis Noppel.
Andrus Ansip served three terms as prime minister, from April 2005 to March 2014.
Editor: Aili Vahtla