In the emergency situation, the government supports Estonian workers and the economy with at least EUR 2 Billion

19.03.2020 | 14:51

    • Share

Tallinn, Stenbock House, March 19, 2020 – The spread of coronavirus and its prevention measures will have a very significant impact on the economy, taking this into account the government approved today a package of economic measures to mitigate the situation for workers and businesses in Estonia. The planned package of measures will amount to at least EUR 2 billion. In addition, the Minister of Finance was instructed to develop the supplementary budget for current year.

“The Members of the Government gave their approval to a package of measures of EUR 2 Billion, which represents nearly 7% of GDP. The aim of the measures is to mitigate the most difficult initial stage of the crisis in order to support and protect Estonian working people and businesses,” said Prime Minister Mr Jüri Ratas. “The State will do everything in its power to ensure the functioning of the Estonian economy in exceptional circumstances.”

State resources are directed to support companies through KredEx Foundation and the Estonian Rural Development Foundation. The package also includes labour market support of the Estonian Unemployment Insurance Fund, sickness benefits, tax incentives. The package allows for deferral of tax debt for 18 months, temporary suspension of second pillar pension scheme payments, as well as partial compensation for direct costs of cancelled events.

KredEx Foundation measures:

Loan collateral amounting to EUR 1 Billion for bank loans already issued in order to allow for repayment schedule adjustments (maximum EUR 600 Million for the surety collection), under the following conditions:

1) if the bank relaxes the repayment schedule of the existing bank loan which has not been secured by KredEx Foundation, then KredEx foundation will secure the loan;
2)the maximum guaranteed amount is EUR 5 Million per company,
2)if possible, fixed guarantee will be restored or the guarantee rate will be increased to cover more than 80% of the guaranteed liability.

KredEx Foundation business loan – amounting to EUR 500 Million, subject to the following conditions:
1) KredEx Foundation issues a revolving business loan to a company in order to overcome liquidity problems caused by the coronavirus, including, where necessary, the payment of bank loans,
2) the maximum loan amount is EUR 5 million per company,
3) the interest rate is approximately 4% per year.

KredEx Foundation investment loan – amounting to EUR 50 million, under the following conditions:
1) KredEx Foundation grants an investment loan to the company so it would be possible to take advantages of the business opportunities created by the coronavirus, and other new business opportunities.
2) the maximum loan amount is EUR 5 Million per company,
3) the interest rate is approximately 4% per year.

The labour market service provided by the Estonian Unemployment Insurance Fund to cover for wage reduction – amounting to EUR 250 Million, under the following conditions:
1) the benefit can be used by a compliant employer to cover the period of two months from March to May 2020;
2) the benefit of no more than EUR 1000 per month per employee in need of the support is paid as gross amount.
3) the benefit is calculated based on the gross wages of the employee over the period of the previous 12 months, plus remuneration payable by the employer to the employee which is no less than EUR 150 in gross amount. The Unemployment Insurance Fund and the employer will pay all labour taxes on wages and benefits.

For the period of March to May, the state will compensate the first three days of sick leave for all incapacity leave applications.

Rural companies can apply to the Rural Development Foundation for guarantees (up to EUR 50 million), business loans (up to EUR 100 million) or land capital financing (up to EUR 50 million).

Self-employed workers are subject to an advance social tax support measure.

Payments into the II pillar of the pension fund are temporarily suspended.

The State compensates for the direct costs of cultural and sporting events cancelled due to coronavirus in March-April, up to EUR 3 million.

The Members of the Government supported the proposal of the Minister of Finance to suspend the tax interest calculation for a period of two months and to allow tax debt to be rescheduled at lower interest rates than are currently in force.

The Minister of Finance was instructed to develop and submit the draft supplementary budget for discussion and decision at the latest on 16 April 2020.

Government Communication Unit