The Estonian state needs an estimated EUR 3.87 billion for 2020 and a further EUR 1.2 billion for 2021, the treasury (Riigikassa) has announced, following an outline of changes on how the state’s cash-flow will be managed going forward and in the wake of the coronavirus pandemic and its economic fallout.
The debt requirements of EUR 5.07 billion for 2020-2021 exceed the liquidity reserve substantially, making current principles redundant a requiring a re-think.
New principles to be introduced will manage the interest rate of the government’s debt portfolio differently and will include measures such as the state potentially setting up a European Central Bank (ECB) account and doubling the stabilization market reserve to EUR 200 million.
The current rules include a requirement for the treasury to exchange the fixed interest rate of 0.125% on recently issued 10-year bonds for a variable six-month Euribor rate, which is not economically viable in the current low interest rates environment.
The treasury is part of the Ministry of Finance. (ERR/Business World Magazine)