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International Internet Magazine. Baltic States news & analytics Friday, 22.10.2021, 04:26

Estonian central bank recommends focusing on immediate mitigation of crisis impact

BC, Tallinn, 31.03.2020.Print version
Bank of Estonia governor Madis Muller, who on Tuesday attended a sitting of the finance committee of the Riigikogu, said that it is currently important to focus on supporting the economy with steps that will directly support people and businesses in coping with the coronavirus crisis.

According to Muller, it is important to focus on granting short-term and most urgent support. "In theory, the economy can be supported in very different ways. But the checkpoint when making choices is, will it help right away and right now? At present, the be-all and the end-all is supporting people and businesses in coping with the crisis," the central bank governor said in a press release.

"We do not know how long restrictions may last, but we know that a lot of people and businesses have been hit hard. Therefore, it is of the utmost importance now to focus on economic support measures that can be implemented quickly and have a quick impact," Muller added.

However, he said that the need for and content of additional government support for post-crisis economic recovery is already dependent on the duration of the restrictions, which we do not know at present. "Therefore, it is not wise to currently make long-term decisions in a hurry," Muller added.

The central bank governor said that the criterion for granting aid could be that the support is well-targeted and temporary, so that when the crisis recedes, the economy can return to normal. He also said it would be appropriate for grants of the crisis period to have the widest possible public support.

Muller's recommendations are based on economic scenarios presented by the Bank of Estonia on March 25. For example, if the emergency situation eases in early May, the Estonian economy may shrink by 6 percent. If the situation eases in early August, however, the Estonian economy may contract by 14%.

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