Estonian PM: Health crisis must not become long-term economic crisis

  • 2020-06-15
  • BNS/TBT Staff

TALLINN – The European Union's plan for economic recovery must help avoid  the health crisis turning into a long-term economic crisis, Estonian Prime Minister Juri Ratas said in a political statement before the parliament on Monday.

Ratas said that the fight against the coronavirus pandemic has brought with it a serious impact on the economy, which has put countries, businesses and individuals in a serious situation, the Riigikogu press service said.

"It has been accompanied by the biggest economic decline in the history of the European Union, which may turn out much deeper than during the crisis ten years ago," the prime minister said.

"It is certain that recovery will be slow. For us it will be influenced of course by the external environment, the situation of our most important trade partners in the nearby region and in the European Union. The European economy in turn is influenced strongly by the global economy," Ratas said.

According to the prime minister, many sectors experienced a very big decline already at the beginning of the crisis, while the impact is to reach others with a delay.

"Europe needs to find a fast and effective way of helping all countries overcome the difficulties caused by the coronavirus crisis," he said.

Ratas pointed out that in accordance with the Commission's proposal, the size of the portion earmarked for Estonia under the EU's economic recovery plan would be over half of the amount available to Estonia during the current EU budgetary period. 

"For the launch of the plan the unanimous support of all member states is necessary, and also the European Parliament must endorse it. It is my clear wish that we discuss these proposals and potential agreements also in front of the Riigikogu today and in the nearest future," the prime minister said.

Ratas emphasized that the implementation of the recovery plan must be based on clear conditions and it definitely cannot be used to repay past loans or cover current costs.

"The long-term budget of the European Union and the economic recovery plan will help to keep the focus on the future and on the political priorities agreed upon together. These include, alongside competitiveness, also turning the digital and green turnaround into a new strategy for economic growth," Ratas said.

The prime minister of Estonia said that future economic growth greatly depends on these investments and reforms. He also highlighted the need to prepare an investment plan already by the fall.

In addition, Ratas observed that when the immediate crisis is over, the focus of Europe must unequivocally be on the reduction of debt and observance of the rules of the Stability and Growth Pact.

"When reviewing the budget rules, it cannot be overlooked how the high debt level of member states endangers the financial sustainability of the whole EU, especially the euro area," the prime minister said, emphasizing the need to raise the ceiling of own funding temporarily from 1.2 percent to two percent for the period of the financing of the recovery plan. 

The prime minister said that the government is about to put the decision on the financing of the recovery plan before the Riigikogu in the second half of this year, after the negotiations on the EU level.

"With a decision as important as this, a different approach would not be thinkable," Ratas said.