Estonia considering new loans

TALLINN - In order to deal with the budget deficit, as well as for financing major investments, the Estonian government may take up to nearly 700 million euros, or ten billion kroons, in loans next year, reports Postimees. Ministry of Finance state finance department adviser Sven Kirsipuu commented on the plans saying that the taking of the loans will depend on actual necessities by the end of the year, but that the government has already planned in the budget a loan from the European Investment Bank. This would mean the increase of the 2011 loan level would be nearly 700 million euros.

The fresh economic forecast of the Ministry of Finance states that the state aims to maintain liquid reserves as much as possible during the coming years. Almost a half of the stabilization reserve was spent last year to cover spending of the state. Besides the direct deficit, the government will next year have to finance also the aggressive expansion plans of Eesti Energia. Kirsipuu said that the need for share capital enlargement of Estonia’s state-owned energy giant was nearly 7 billion kroons when the government made the corresponding decision, but that is distributed over several years and the real sum needed depends also on the company’s business results.

The gap between Estonian state budget income and expenditure for the next year is, according to initial data, 5 billion kroons.

At the end of 2009, the government sector’s debt burden in Estonia reached 15.5 billion kroons, or 7.2 per cent of GDP. According to forecasts, the debt burden of the government sector in 2014 will be 52 billion kroons, or 19 percent of GDP.