Estonia concludes recovery facility talks with European Commission

TALLINN - Estonia's negotiations with the European Commission over the use of funds from the Recovery and Resilience Facility (RRF), which began at the start of this year, were concluded this weekend when an agreement in principle was reached on a recovery plan regulating the use of said funds.

Final procedures for formalizing the documents are underway and the plan should be officially approved within the next few weeks, spokespeople for the Estonian Ministry of Finance said.

The recovery plan has a volume of some one billion euros; the size of actual funding to be made available for Estonia will be announced in June 2022 when the European Commission will calculate exact support volumes for each member state based on their GDP data.

"The final support sum will depend on how our economy has fared in recent years compared with other European states," Triin Tomingas, adviser at the Finance Ministry's state budget department, said. Estonia currently has certainty with regard to 759.7 million euros.

When the plan is officially approved by the European Commission in the coming few weeks, it also needs a final approval by the Council of the European Union, after which the planned reforms and investments can be launched and the implementation of projects can begin. The resources in the Recovery and Resilience Facility are estimated to become available at the end of the year.

Key investments in Estonia's recovery plan concern the green and digital turnaround, for which over 600 million euros are planned to be allocated. At the proposal of the Estonian Ministry of Finance, over 24 million euros are planned to be used for ensuring the last mile of internet, 73 million euros for a digital turnaround among businesses and 206 million euros for introducing innovative and environmentally friendly technologies.

Investments in the green turnaround in the recovery plan are largely geared at entrepreneurs. The turnaround will be supported through a separate foundation with funds to be made available for pilot projects using hydrogen technology as well as for the development and implementation of innovative and resource-efficient green technologies and for adding value to bio-resources.

Estonian Minister of Finance Keit Pentus-Rosimannus wrote on social media on Monday that according to the agreement, a total of 221 million euros will be allocated for the green transition of businesses. Said amount includes a 100-million-euro so-called green fund for the development of innovative and resource-efficient technologies and 50 million euros for supporting an environmentally friendly comprehensive hydrogen solution.

In addition, 47 million euros has been earmarked for making buildings more energy efficient and 45 million euros for creating environmentally friendly energy solutions.

In the area of transport, Estonia wants to use RRF funding for investments in railway and tram traffic. For instance, the plan includes the construction of the Ulemiste joint terminal of Rail Baltic and the allocation of 26 million euros for the construction of the Tallinn Old City Harbor tram line. 34 million euros will go towards the construction of the Risti-Turba railway section and five million euros for local governments' investments in bicycle and pedestrian lanes.

Another 200 million euros will go towards a plan to digitize and automate business processes to increase productivity, according to Pentus-Rosimannus. Public digital services for entrepreneurs and citizens should be taken to a new level of development, public data is to become more accessible, the quality of data in key registers is to be improved and the sustainability of the digital state's cloud infrastructure guaranteed.

The objective of investments in Tallinn Hospital in the recovery plan is making better use of the medical staff and technological capability, creation of modern treatment conditions for residents of Harju and other counties and improved resilience in health care crises.

As a result of the negotiations, 280 million euros can be used for the design and construction of Tallinn Hospital, according to the finance minister.