Estonian economy receives EUR 850 million from EU structural funds

TALLINN - Estonia has met the government's target of channeling at least 25 percent of the European Union's structural funds for the current period into the economy by the end of 2025. A total of nearly EUR 850 million has been injected into the Estonian economy, placing the country among the fastest implementers of these funds in the EU.

In 2025 alone, EUR 541 million in structural fund support was disbursed. This performance ranks Estonia fifth among European Union member states. Over the entire funding period, a total of EUR 3.4 billion from EU structural funds will be invested in Estonia.

At the start of the new budgetary period, the government set clear targets for the pace of fund implementation to ensure that the allocated resources reach the Estonian economy in a timely and effective manner.

Triin Tomingas, head of the foreign funds department at the Ministry of Finance, noted that while the start of the funding period was delayed across the European Union due to the COVID-19 crisis and the rapid launch of the recovery fund, Estonia has now achieved an excellent pace.

"Already, 82 percent of the total support sum has been allocated to projects, meaning projects worth EUR 2.8 billion are underway across Estonia. The interim target for 2025-to reach the 25 percent disbursement level-was successfully met at the end of last year," Tomingas added.

Tiina Sams, head of the support implementation department at the State Shared Service Centre, stressed the importance of cooperation. "At the end of the year, ministries, implementing bodies, and beneficiaries operated as a unified team-decisions were made quickly and efficiently. The proactive efforts and implementation of activities by the beneficiaries have been, and will continue to be, crucial for ensuring that the funds genuinely reach the Estonian economy," Sams said.

Disbursements have been directed towards strategically important sectors for Estonia, particularly infrastructure development. Of the EUR 342 million allocated for rail transport development, over 53 percent, or approximately EUR 182 million, had been disbursed by the end of 2025. These investments include the electrification of the Tallinn-Tapa-Narva and Tapa-Tartu railway lines.

A significant contribution has also been made to road transport development. Of the EUR 159 million allocated, nearly EUR 60 million, or 38 percent, has been disbursed for projects including the construction of 2+2 lane sections of the Via Baltica highway. These investments enhance connectivity, improve traffic safety, and bolster economic competitiveness.

The wider adoption of performance-based financing (FNLC - financing not linked to costs) significantly contributed to meeting the interim target. This model allows for faster disbursements with a reduced administrative burden, as it focuses on achieved results rather than traditional cost-based verification.

For instance, the use of funds is evaluated based on whether an agreed-upon objective, such as the completion of new kindergartens, has been met, rather than by examining individual invoices. This approach reduces bureaucracy and simplifies the process for beneficiaries.

Currently, 28 percent of the entire support portfolio is implemented through simplified financing methods, with Estonia setting an example for other member states. The plan is to transition entirely to performance-based financing in the next funding period, from 2028 to 2034.

Meeting the interim target is an important milestone, but the work of implementing structural funds continues. With the second half of the funding period still ahead, the utilization of support will continue in 2026 to achieve the next set of objectives.

The focus will be on investments supporting infrastructure and economic development, initiatives in the social and education sectors, and new defense projects aimed at strengthening Estonia's security and resilience. The objective is to maintain a high disbursement rate and ensure that EU support provides maximum backing for Estonia's strategic priorities and economic growth.