Estonia agrees to repay emergency Swedbank loan
AFP/The Local · 29 Oct 2009, 14:18
Published: 29 Oct 2009 14:18 GMT+01:00
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"The Estonian finance ministry decided on Thursday that due to the improved economic situation, Estonia will return to Swedbank the €50 million Estonia borrowed in May 2009," ministry spokeswoman Piret Seeman told AFP.
"We are convinced now that we can manage without the loan," she said.
The loan will be repaid in full on November 12, she added.
Swedbank is a key player in the financial market of Estonia and fellow Baltic states Latvia and Lithuania. The trio have been among Europe's hardest-hit nations in the deepest global economic slump since the 1930s.
Sweden has been at the forefront of efforts to shore up their floundering economies, given the heavy exposure of Swedish investors.
When it tapped Swedbank for the loan in May, Estonia said one goal was to increase the state's liquid assets in the face of slumping revenues.
"There is simply no need to keep that money on our account any more. We can make all the necessary payments from the state budget this year without needing to use that loan," said Seeman.
"Paying it back now and not in June 2010 -- as was agreed in May -- will help us save 45 million kroons ($4.25 million)" in interest, she added.
Estonia, which shifted rapidly from a communist command economy to the free market after independence from the Soviet bloc in 1991, had enjoyed a reputation as a "tiger" in the European Union, which it joined in 2004.
This country of 1.3 million people boasted growth of 10.4 percent in 2006 and 6.3 percent in 2007.
But Estonia slid into recession last year, with its economy shrinking by 3.6 percent. Tallinn has warned that output could contract by up to 15.3 percent this year.
However, data indicate that the recession is easing.
Output shrank by a seasonally-adjusted 3.4 percent in the second quarter of this year compared with January to March, after having contracted by 6.0 percent in the first quarter.
Estonia is due to issue third-quarter figures on November 13.