Analytics, Economics, Estonia, GDP

 Bank of Estonia says in its fresh report “Monetary policy and economy” that the fall of incomes and sales turnover left a part of companies into trouble with fulfilling their loan obligations and forced them to negotiate with banks. Reduction of companies’ debt burden can take place in several ways: new projects can be launched that enable to reduce the debts from older less profitable projects or costs can be cut so that poor cash flows from old projects could cover the loan obligations connected to them.

“There are signs currently of the realisation of the second way,” Bank of Estonia writes. “This however means that the economic fall can continue in 2010 and the near-recession situation last in 2011 too.”

A poll by the central bank indicated that last year, nearly 40% of Estonian companies estimated that the difficulties in financing economic activities via ordinary channels were high or extremely high. “This indicator is much higher than in other EU states observed,” Bank of Estonia notes.