Bank of Estonia 2024 Report
Session: 15th Estonian Parliament, 6th sitting, plenary session.
Date: 2025-09-18 13:01
Total Speeches: 137
Membership: 15
Agenda Duration: 1h 44m
AI Summaries: 137/137 Speeches (100.0%)
Analysis: Structured Analysis
Politicians Speaking Time
Politicians
Analysis
Summary
The Riigikogu (Estonian Parliament) session discussed the Bank of Estonia’s 2024 annual report, which was presented by central bank governor Madis Müller. Müller provided a comprehensive overview of the Bank of Estonia’s activities, emphasizing the assurance of price stability and the implementation of monetary policy within the euro area. He highlighted that euro area interest rates have begun to fall, which has eased the debt burden, and that the Estonian economy is showing signs of revival, although the recovery remains difficult. The central bank's profit last year was 74 million euros, of which 18.5 million will be directed to the state budget. The presentation also stressed the importance of improving crisis resilience in cash circulation and payment services, as well as preparations for the digital euro project. During the question and debate round, the focus was primarily on the sustainability of public finances and the growing debt load, regarding which Müller warned that a persistent budget deficit would fuel inflation in Estonia and lead to higher interest costs. Parliamentary factions broadly supported the proposals put forward by the Bank of Estonia and the Financial Supervisory Authority to simplify the refinancing of housing loans (including the abolition of notarial certification and early termination fees), seeing this as an opportunity to increase competition in the banking market and improve housing affordability.
Decisions Made 1
No decisions were made
Most Active Speaker
Mart Võrklaev (Estonian Reform Party faction, right-wing) was active both in posing questions and in negotiations, focusing on the state of public finances, the permanent funding of defense expenditures, and supporting the proposals put forward by the Bank of Estonia.
Aseesimees Arvo Aller
AI Summary
Today's Riigikogu session is dedicated to one crucial item on the agenda: the discussion of the Bank of Estonia’s 2024 annual report. Before the substantive debate began, the rules of procedure were thoroughly introduced to the members of parliament to ensure the smooth and structured conduct of the sitting. The procedure stipulates that the President of the Bank of Estonia, Madis Müller, will first deliver his address, which is limited to 30 minutes. Following the President’s address, every member of the Riigikogu will have the opportunity to ask one oral question. It is important to emphasize that further discussions are reserved exclusively for the parliamentary groups, thereby limiting the participation of individual members in the later phase of the debate. After the procedural steps were explained, the President of the Bank of Estonia, Madis Müller, was asked to begin his presentation.
Aseesimees Arvo Aller
AI Summary
Arvo Aller informed that today the Bank of Estonia's 2024 annual report will be discussed, and he explained the procedure: Madis Müller, the President of the Bank of Estonia, will give a presentation lasting up to 30 minutes, after which every member of the Riigikogu may ask one oral question, and subsequently, discussions will take place only between the parliamentary factions.
Eesti Panga president Madis Müller
AI Summary
In his 2024 overview, Madis Müller highlighted that the Bank of Estonia fulfilled all its core mandates in ensuring price stability and securing the functioning of payment and cash circulation. He described the lowering of euro area interest rates within the context of economic recovery and the uncertain external environment. He emphasized the strengthening of crisis resilience and the need to develop backup solutions and the digital euro. Furthermore, he underscored the importance of public finance, competitiveness, and international cooperation, along with issues related to the IMF, and the objectives of securing banks' capital buffers and profits, and state financing.
Eesti Panga president Madis Müller
AI Summary
The overview of the Bank of Estonia’s (EP) activities in 2024 emphasized that the central bank successfully fulfilled its main tasks, especially ensuring price stability in the euro area. The slowdown in price increases gave the European Central Bank (ECB) the confidence to start lowering interest rates, resulting in both the ECB base rate and the six-month EURIBOR falling by nearly half from their peak. The Estonian economy is showing signs of revival, although recovery is arduous and the external environment remains uncertain. Although the labor market has remained strong, the continued rapid price growth is worrying. The EP expects 5–6% price growth in Estonia this year, one-third of which stems from tax increases. Consequently, people's real income will not grow this year but will only recover next year. To ensure financial stability, the EP considers it important to maintain the countercyclical capital buffer at 1.5%, as loan growth in Estonia (nearly 10%) is among the fastest in the euro area and risks have increased. Due to geopolitical tensions, the central bank is focusing on the crisis resilience of vital services, especially the continuity of cash circulation and payment systems. To this end, backup solutions are being developed, such as offline card payments in crisis stores, and support is being provided for the digital euro project, which also offers payment options without an internet connection. In the field of public finance, the EP emphasizes the importance of a sound budget as the cornerstone of economic growth, warning that permanently increased expenditures must be matched by a larger revenue base. To improve competition in the housing loan market, the EP proposed simplifying refinancing, for example, by eliminating the requirement for notarized confirmation and a new collateral valuation report. Finally, the central bank announced that its 2023 profit was 74 million euros, of which 18.5 million euros will be allocated to the state budget.
Aseesimees Arvo Aller
AI Summary
Vice-Chairman Arvo Aller thanked the presenter for the report and opened the floor for questions, addressing Urmas Kruuse.
Urmas Kruuse
Profiling Eesti Reformierakonna fraktsioonAI Summary
Urmas Kruuse posed the question of whether the Estonian economy's higher debt burden compared to its neighbors, along with the resulting interest costs, might provide a better impetus in the future, and whether the current economic situation is leveling out the excessive acceleration of wage and economic growth experienced during the crisis periods.
Urmas Kruuse
Profiling Eesti Reformierakonna fraktsioonAI Summary
The questioner addressed the presenter, recalling previous references to the Estonian economy’s relatively high debt burden compared to Latvia and Lithuania. It was acknowledged that this factor had a negative impact during the period of rising interest rates. The core of the question was whether this previously higher burden and the resulting negative effect might now create the preconditions for the Estonian economy to receive a stronger and better impetus in the future, aiding its exit from the crisis. A second significant topic concerned the dynamics of Estonian economic growth, particularly during crisis periods. Citing earlier rapid wage growth and, at times, very high economic growth, the hypothesis was put forward that the current economic slowdown is actually a balancing process. Essentially, the question was whether the economy is currently correcting for having previously "run ahead of the limits" (i.e., being overstimulated or overleveraged), thereby compensating for the excessively rapid development seen earlier.
Eesti Panga president Madis Müller
AI Summary
Madis Müller points out that while the private sector has slowed down interest rate increases due to its high debt burden, the decline in interest rates could once again give the Estonian economy a slight edge. Furthermore, the economy is showing strong wage growth and a recovery in consumption following COVID, influenced by savings and changes to the pension system, even though the recovery remains slow and differs when compared to Latvia and Lithuania.
Eesti Panga president Madis Müller
AI Summary
Focusing on the impact of interest rates, the speaker highlighted that the Estonian private sector's debt load is higher than that of Latvia and Lithuania. Consequently, the sharp increase in interest rates during the earlier period slowed Estonia's development and investments down relatively more, figuratively speaking, throttling the economy. However, this factor should now, during the phase of falling interest rates, once again give Estonia a slight advantage in economic development compared to its neighbors, even though this advantage has not yet fully materialized. In previous years, the Estonian economy surged ahead of its usual trend, driven by a short-term but very powerful impetus. This dynamic was linked to consumption growth, which was simultaneously fueled by two factors: savings accumulated during the COVID pandemic and funds released from the second pension pillar. These two factors provided the economy with a strong, temporary impulse for a short period, which was followed by an expected downturn. The economy has been recovering from this slump for a long time, but recently it has become increasingly clear that recovery is underway. And, in hindsight, that unusual dynamic from a couple of years ago wasn't so unexpected after all.
Aseesimees Arvo Aller
AI Summary
Aivar Sõerd is requested.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
Aivar Sõerd asks why the Bank of Estonia's investment portfolio consists primarily of high-quality bonds and index funds, with a very small allocation to gold. He notes that gold yielded 40% last year and has been widely purchased by global central banks, and he proposes considering an increase in the gold allocation to mitigate risks.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
The speaker raised the issue of the Bank of Estonia's investment asset allocation, noting that the central bank's assets are predominantly directed toward high-quality bonds and index funds. Historically and currently, the proportion of gold held as a reserve asset has remained negligible. However, the speaker stressed that gold alone delivered an exceptionally high 40 percent return last year, significantly outperforming the results of all other asset classes. Despite this success—which forecasts suggest may continue—the presenter questioned why the Bank of Estonia seems to disregard gold as an investment asset. He pointed to the global trend of central banks actively accumulating gold, often to hedge against risks associated with dollar-denominated assets. The speaker concluded that the Bank of Estonia should also consider increasing the share of gold in its reserves, citing the actions of the Polish central bank as a prime example.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller says that it is your time.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
The speaker, during their presentation, highlighted an extremely noteworthy fact concerning financial stability, specifically emphasizing the extraordinary volume of the central bank's gold reserves and their standing in the international context. This focus was intended to underscore the nation's financial strength and its asset management strategy. Specifically, it was noted that the gold reserves in question are nearly comparable in size to the consolidated reserves of the entire Eurosystem (meaning the central banks of all member states plus the European Central Bank). This comparison highlights the unusually large share these reserves represent and serves as evidence of the country's robust financial position—a position which, in the speaker's estimation, is a crucial indicator of stability and credibility.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
Aivar Sõerd claims that the gold reserves are nearly as large as the entire Eurosystem combined.
Eesti Panga president Madis Müller
AI Summary
Madis Müller noted that the gold reserves of the Bank of Estonia are small; they are not considered an investment portfolio and are kept for historical reasons. Furthermore, they are not sold because the goal is long-term return on assets (about 10% of the portfolio is in stocks). Euro area central banks have not typically bought gold, and a large portion of the reserves is invested in US bonds, where the risks are hedged.
Eesti Panga president Madis Müller
AI Summary
The Bank of Estonia's gold reserves are quite small compared to those of other central banks, and they are held more for historical reasons than as an active investment. The central bank's investment philosophy favors assets that generate ongoing interest or dividend income. Consequently, gold, whose return depends solely on price appreciation, does not meet this criterion. When investing reserves with a long-term perspective, the goal is to see a real return every year. For this reason, a small portion (about 10%) of the portfolio, which currently totals about two billion euros, is also allocated to stocks that offer dividend income. The central bank considers the active accumulation of gold undesirable, as it could indirectly signal a lack of confidence in the euro as a reserve currency and in the success of the central bank's core activities. Gold investments are often driven by a lack of confidence in conventional currencies, which is why central banks in the euro area are generally not active buyers of gold. Regarding the portfolio's risk level, a significant portion of the reserves is invested in dollar-denominated bonds, but the central bank has systematically hedged the currency risk. Thus, a sharp weakening of the dollar has not caused damage to the Bank of Estonia's investments.
Pipi-Liis Siemann
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
The speaker commended the rapporteur's work concerning the scope of statistical reports and the development of statistical infrastructure, focusing particularly on statistics related to payment orders and card payment fraud. While it is clear that collecting such data helps identify important trends and patterns, the speaker raised the question of whether society can take steps that go beyond simply increasing financial awareness in order to curb fraud more effectively. The primary concern related to the fact that a large portion of financial fraud involves cross-border transactions. The speaker wanted to know what additional opportunities exist for preventing or avoiding such international fraud schemes. Finally, the direct question was posed: do the collected statistics provide specific tools or visibility for identifying and combating these particular cross-border issues?
Aseesimees Arvo Aller
AI Summary
The speech includes a request to invite Pipi-Liis Siemann.
Pipi-Liis Siemann
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
The presenter emphasized that the report shows a high volume of various statistical reports, and that the statistics concerning payment order and card payment fraud help identify trends. However, the presenter questioned whether it is possible to prevent fraud, especially in cross-border transactions, after increasing financial awareness, and whether statistics can be helpful in this effort.
Eesti Panga president Madis Müller
AI Summary
Madis Müller said that the problem of payment fraud in Estonia is significant, and the primary solution lies in raising people's awareness. He added that the Payment Environment Forum and other institutions are collaborating on recommendations regarding what can be done better, details of which will be available soon.
Eesti Panga president Madis Müller
AI Summary
The speaker stressed that statistical data confirms the significant extent of the payment fraud problem within Estonian society. While specific immediate steps to resolve the situation have not yet been proposed, raising public awareness is considered the primary and most crucial preventative measure. This is necessary to reduce the risk of people falling victim to these scams. The issue of payment fraud has been brought into focus at the Payment Environment Forum, which is headed by the Bank of Estonia. Several key institutions and organizations actively participate in this forum, including the Ministry of Finance, the Financial Supervision Authority, and commercial banks. The goal of this cooperation is to jointly analyze the situation and develop recommendations and best practices to make the payment environment even safer. It is hoped that these joint efforts will soon yield concrete results and new measures, which can then be discussed in more detail with the public.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller calls upon Helmen Kütt.
Helmen Kütt
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
The speaker thanked the President of the Bank of Estonia for the overview presented, expressing particular satisfaction that the bank has started to emphasize the importance of the availability and necessity of cash more strongly than previously. It was stressed that everyone should keep cash in reserve in case of potential disruptions or barriers, a stance which contradicts earlier bank advertisements that advised keeping money exclusively in the bank. The representative then turned to tax policy, acknowledging that this was a political issue that might place the central bank president in an awkward position. Given the projected 5 percent rise in food prices, the speaker wanted to know which course of action the government and the Riigikogu (Estonian Parliament) should prioritize. Specifically, the question was whether it would be wiser to refrain from raising income tax or, alternatively, to lower the VAT specifically on foodstuffs to ease inflationary pressure.
Helmen Kütt
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Helmen Kütt stresses the importance of guaranteeing access to cash and asks what tax policy would be sensible in the event of a 5% rise in food prices—should they raise the VAT or income tax, or perhaps lower the VAT instead.
Eesti Panga president Madis Müller
AI Summary
The representative from the Bank of Estonia began his response with a slight air of confusion regarding the way the question was presented, humorously noting that he wasn't sure if the question had actually been asked in the end. The speaker immediately stressed the Bank of Estonia's desire to remain neutral regarding fiscal policy and political choices more broadly. Consequently, he refrained from taking a direct stance on specific issues concerning political choices, thereby confirming the bank's traditional apolitical position.
Eesti Panga president Madis Müller
AI Summary
Madis Müller stated on behalf of the Bank of Estonia that they would remain neutral regarding tax policy and questions of political choices, and would not express their official position.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller calls Jaak Aab to the floor.
AI Summary
According to the initial conclusions of the Competitiveness Expert Council, Estonian companies have worse access to capital than those in neighboring countries, and banks' risk margins are about twice as high in Finland. The reasons for this are being sought, and the question is being asked whether the state could assist investors and entrepreneurs with financial instruments, collateral, or guarantees.
AI Summary
The speaker addressed the President of the Bank of Estonia, recognizing the work of the Competitiveness Expert Council, which was established in the autumn of 2023 through the initiative of the Riigikogu Economic Affairs Committee and the Foresight Centre. The Council’s first year of work highlighted a serious concern: the availability of capital for Estonian companies is significantly poorer compared to neighboring countries. This issue is particularly acute in the banking sector, where risk margins—excluding interest rates tied to Euribor—are approximately twice as high in Estonia compared to corresponding figures in Finland. In light of this, two main questions were posed. First, what is the root cause of this significant disparity, and is it possible to remedy the situation? Second, the question of the state's potential role was raised. Specifically, they inquired whether the state might consider intervening under certain conditions, offering support to investors and entrepreneurs through financial instruments, collateral, and guarantees to improve capital availability and competitiveness.
Eesti Panga president Madis Müller
AI Summary
Madis Müller pointed out that Estonia's loan margins are above the euro area average, which is due to the profile of riskier companies, banks' financing costs, and a lack of competition. He added that state guarantees should be utilized in a targeted way, favoring guarantees over direct lending.
Eesti Panga president Madis Müller
AI Summary
The representative addressing the Riigikogu acknowledged that loan margins for Estonian businesses have consistently been higher than the Eurozone average, specifically pointing out the significant disparity with Finland. In the search for reasons why Estonian companies aren't getting financing on better terms, several explanations were put forward. Part of this discrepancy can be explained by the smaller average size of Estonian firms and the resulting higher risk perception by banks. Furthermore, the riskiness of Estonia as an investment destination also impacts pricing, increasing the banks' own cost of funding. However, it was stressed that these factors do not fully account for the entire price differential. This suggests a need for stronger competition within the banking market. While increasing competition is challenging at the state level, the recent growth in market share held by local capital and relatively smaller banks is a positive sign, which should strengthen competitive pressure over time. Regarding state intervention measures, the speaker deems it important to continue providing sureties and guarantees through KredEx, emphasizing that they are well-targeted toward the sectors needing support. Reasonable sureties and guarantees are preferred over direct state lending—an approach utilized, for example, during the pandemic—and this strategy is worth considering going forward.
Aseesimees Arvo Aller
AI Summary
Vice-Chairman Arvo Aller calls upon Mait Klaassen to speak.
Mait Klaassen
Profiling Eesti Reformierakonna fraktsioonAI Summary
The Honorable Member of the Riigikogu began his address by thanking the President of the Bank of Estonia and noting that his original two-part question had been partially answered regarding the topic of gold. However, he highlighted another important topic that was not covered in the presentation—cryptocurrencies, or the so-called "parallel world." The MP wanted to know if and how the Bank of Estonia covers this subject in its analyses, and what the impact of cryptocurrencies is on the overall health and stability of the Estonian economy. This question emphasized the necessity of considering new, digital financial phenomena in the central bank's economic overviews.
Mait Klaassen
Profiling Eesti Reformierakonna fraktsioonAI Summary
Mait Klaassen posed a two-part question, noting that the answer regarding gold had already been referenced, and asked whether cryptocurrencies are covered in the Bank of Estonia's analyses and how they affect the health of the Estonian economy.
Eesti Panga president Madis Müller
AI Summary
The speaker begins by explaining that they prefer the term 'crypto assets' over 'cryptocurrency,' as these assets do not fully meet the criteria for money. They note that while the ownership of crypto assets has grown among Estonians, especially among younger people, the average amounts held are small, and their direct impact on the Estonian economy and financial system is currently minimal and mostly indirect. Central banks' attention, however, has shifted to trends in the United States, where the use of dollar-pegged stable crypto assets (stablecoins) has accelerated. Their advantage is lower volatility compared to Bitcoin or other alternatives, which makes them convenient for digital settlements. The primary concern for the European Central Bank and the Bank of Estonia is that if foreign, dollar-linked digital currencies begin to dominate European settlements, it will significantly reduce Europe's control over its monetary and payment systems. Consequently, the central banks' response to this development is the serious undertaking of the digital euro project. The goal of the digital euro is to offer society a superior alternative, giving people the opportunity to hold their money securely in digital form. This is a strategic step to ensure European sovereignty over payment systems and prevent a situation where foreign digital currencies gain excessive influence in the European financial environment.
Eesti Panga president Madis Müller
AI Summary
Madis Müller stated that crypto assets do not meet the criteria for money and their impact on the Estonian economy is limited. However, he stressed the need to monitor the growth of stablecoins in the United States and develop the European digital euro project so that payment systems remain under European control and a superior digital currency solution can be offered.
Aseesimees Arvo Aller
AI Summary
The Deputy Chairman invites Priit Sibul to take the floor.
Priit Sibul
Profiling Isamaa fraktsioonAI Summary
Priit Sibul asks how to ensure price stability in a situation where prices are rising due to tax hikes, wage growth, and other factors, and where the requirements for growing budget revenues are pressing, and how best to cope in this context and protect budget revenues.
Priit Sibul
Profiling Isamaa fraktsioonAI Summary
The question addressed to the honorable Chair focused on the issue of price stability, as mentioned by the President of the Bank of Estonia, and the difficulty of achieving it in the current economic climate. The questioner highlighted a contradiction: on one hand, prices have risen and continue to climb—partially due to tax hikes, which account for roughly one-third of the inflation—while on the other hand, fiscal rules mandate that the state must boost its revenue stream. The President, as a financial expert, was asked to explain how to manage this complex situation—this "fork" or dilemma. Specifically, the inquiry sought to determine what measures should be implemented to better handle price increases, given that rising wages and the necessity of boosting budget revenues are also driving prices upward. The core of the question was finding a solution for ensuring price stability, taking into account both inflation-fueling factors and the state’s fiscal policy obligations.
Eesti Panga president Madis Müller
AI Summary
Madis Müller noted that although inflation in the euro area is approximately 2%, price growth in Estonia is broad-based, which is explained by taxes, food prices, faster wage growth, and labor-intensive services. Furthermore, state budget deficits and their external financing increase economic demand and inflation. Therefore, balancing public finances and avoiding a permanent deficit are necessary.
Eesti Panga president Madis Müller
AI Summary
Although the Euro area central bank has successfully brought price increases close to the 2% target by adjusting interest rates, the inflation problem in Estonia is still more widespread. This is due to several local factors. On the one hand, prices are influenced by tax policy and the rapid increase in food prices. This rise transfers from global commodity prices to consumer prices particularly quickly, as food constitutes a significant portion of our consumer basket. On the other hand, wage growth in Estonia has outpaced the Euro area average, creating persistent upward pressure on prices, particularly in labor-intensive services. This brings us to the topic of public finances, as government expenditures and subsidies are a direct channel through which the state can influence inflation. If the state borrows additional funds to finance the budget deficit and injects that money directly into the local economy, it creates additional demand and accelerates price increases. Therefore, it is stressed that, regarding future inflation, it is vital that public finances remain reasonably balanced and that the state budget is not permanently running a deficit. A budget deficit is acceptable only during a temporary, deep economic recession. Otherwise, if expenditures are not counterbalanced by tax revenues, the state's fiscal policy will continuously and quietly fuel inflation, a situation that must be avoided.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller invited Mati Raidma to come forward and take the floor.
Mati Raidma
Profiling Eesti Reformierakonna fraktsioonAI Summary
The Honorable Member of the Riigikogu began his speech by acknowledging the presentation, and especially the handling of the topic of crisis resilience. He highlighted the draft Civil Crisis and National Defence Act currently under discussion in the Riigikogu, which also includes provisions concerning the central bank. The speaker emphasized that during the preparation of the draft bill, an opinion was also sought from the European Central Bank (ECB), whose response is dated August 4th and should also be known to the presenter. The main question of the speech was directed at whether the presenter, in cooperation with the Riigikogu, is preparing clarifying and amending provisions for the draft bill based on the opinion submitted by the European Central Bank. Although the speaker felt a slight tension between European and Estonian interests, he expressed hope that the necessary proposals would be presented by the presenter. He also recalled the important deadline set for October 10th.
Mati Raidma
Profiling Eesti Reformierakonna fraktsioonAI Summary
Mati Raidma thanked the Chairman and the President, stating that the draft law on civil crisis and national defense currently under discussion in the Riigikogu also includes provisions related to the central bank. He inquired whether and how the opinion of the European Central Bank would be considered in cooperation to refine these stipulations, stressing the need to balance competing interests, and expressed hope that the proposals would be provided to him by the deadline of October 10th.
Eesti Panga president Madis Müller
AI Summary
Madis Müller thanked [them] for the reminder and said that this area is very important to them, and they are taking it seriously and actively contributing ideas to ensure the law is as good as possible.
Eesti Panga president Madis Müller
AI Summary
The speaker began by offering thanks for the reminder and immediately stressed that while they cannot currently disclose all of the faction’s future proposals, the area under discussion is extremely important to them. They affirmed that this is a subject being taken very seriously in parliament. Furthermore, emphasis was placed on active collaboration and contribution to the legislative process. The objective is to ensure that the resulting law is of the highest possible quality and thoroughly considered.
Aseesimees Arvo Aller
AI Summary
Vice-Chairman Arvo Aller asks Peeter Ernits to speak.
Peeter Ernits
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Peeter Ernits points out Estonia's very low national debt ratio (around 24%) in comparison to the average for the EU and the Eurozone, and gives examples of neighboring countries' debt levels, asking why we still face serious problems and poverty and why our approach is the exact opposite of that taken by the rest of the European Union member states.
Peeter Ernits
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Addressing the esteemed Riigikogu (Parliament), emphasis was placed on Estonia’s exceptionally low national debt compared to other European Union and Eurozone countries. The speaker highlighted that the average debt burden in the European Union is 81.8%, whereas for Estonia, this figure is only 24.1%. For comparison, neighboring countries were mentioned: Finland at 83.7%, Poland at 57.4%, and Lithuania at 40.6%. This positions Estonia as one of the EU countries with the smallest debt burden. The main question of the speech was why the Estonian government acts in direct opposition to other Eurozone countries, keeping the debt burden low at a time when serious socioeconomic problems, including poverty, continue to exist in the country. The speaker questioned the logic that, despite the hardships faced by many people and the need to solve significant problems, the state’s financial capabilities are not being utilized in the same way as in other European countries.
Aseesimees Arvo Aller
AI Summary
This is the call: now is your time to act.
Eesti Panga president Madis Müller
AI Summary
While Estonia's debt burden remains relatively low compared to other European countries, Madis Müller stresses that the lending policy must be cautious and balanced: the state budget should be covered by tax revenues, and borrowing must be used judiciously to prevent both accelerating inflation and exhausting the country's borrowing capacity during a potential economic crisis.
Eesti Panga president Madis Müller
AI Summary
Bank of Estonia Governor Madis Müller emphasizes that while the Estonian state's debt burden remains low compared to other European countries, the rapid borrowing dynamic of recent years is concerning. This is because covering current expenditures with borrowed funds would fuel inflation and leave the state without the necessary buffers for the next economic crisis. Consequently, the borrowing policy should be reasonably cautious and aim to cover expenses using tax revenues.
Eesti Panga president Madis Müller
AI Summary
Although Estonia’s state debt burden is fortunately lower compared to many European countries, the dynamics of recent years are cause for concern. Estonia has started borrowing large sums every year to cover state expenditures, keeping the budget deeply in deficit. This indicates that we are not actually behaving more conservatively than other European countries, and next year we will likely be utilizing the maximum borrowing capacity allowed by European frameworks. It is precisely this habit of rapid borrowing to cover current expenses that we should be mindful of. Covering current expenditures with borrowed money leads to two main problems. Firstly, we are constantly fueling faster price increases in Estonia, which is something we want to avoid. Secondly, we are putting ourselves in a difficult position regarding the future. If we cannot cover our expenditures with tax revenues, we deplete the necessary borrowing buffers, which are essential during the next deep economic crisis for paying social benefits and keeping the state apparatus running. In such a situation, we will face much greater difficulties than we otherwise would have. In conclusion, our borrowing policy should be reasonably cautious. The long-term goal should be to cover current expenditures as much as possible with tax revenues and borrow wisely, especially when the economy is weaker, to ensure balanced development. The goal cannot be the rapid increase of the debt burden in the hope that it will suddenly make us wealthier.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller invites Urve Tiidus to speak.
Urve Tiidus
Profiling Eesti Reformierakonna fraktsioonAI Summary
He points to an IMF blog post stating that the global debt burden stands at 235% of the world's total output ($251 trillion), and inquires about the context and impact of this figure on countries attempting to keep their own borrowing levels balanced.
Urve Tiidus
Profiling Eesti Reformierakonna fraktsioonAI Summary
An esteemed member of the Riigikogu addressed the head of the Bank of Estonia, referring to data from the International Monetary Fund (IMF), which indicates that the global debt burden has grown significantly—reaching 235% of the world's total output, or $251 trillion. The purpose of the question was to clarify the impact or backdrop that this enormous worldwide debt burden creates for those countries striving to keep their own debt levels responsibly balanced. The speaker sought to understand how this global financial environment affects nations that have adopted a more conservative fiscal policy and are attempting to avoid excessive debt. Essentially, the inquiry sought an answer to whether and how smaller, balance-oriented economies can protect themselves or adapt to a situation where the overall debt level of the global economy is historically high.
Eesti Panga president Madis Müller
AI Summary
The speaker focused on the growing complexity of keeping public finances balanced, noting that while many countries strive for this, in practice, spending pressures are extremely strong. Particular emphasis was placed on the lack of responsible budgeting, citing the large budget deficits in both European countries and the United States as examples. Such uncontrolled spending complicates economic management, creating additional inflationary pressure in countries with large deficits. Excessive borrowing and the constant need for additional loan capital require a sufficient number of investors willing to continuously lend large sums. This dynamic, however, is dangerous because it creates systemic risk. The critical danger lies in the loss of lender confidence: if bond investors perceive that lending to a particular government is too risky due to high debt burdens or poor debt dynamics, interest costs rise sharply, placing immense additional pressure on the national budget. In addition to domestic problems, the widespread borrowing occurring globally creates competition in the bond market. If the balance between lenders and borrowers is disrupted, it can lead to higher interest rates for everyone, thereby further increasing the costs and difficulties of borrowing. Thus, excessive borrowing is associated with numerous financial and economic risks.
Eesti Panga president Madis Müller
AI Summary
Madis Müller notes that although many are trying to maintain fiscal balance, this is becoming increasingly difficult due to spending pressures and a growing debt burden. Furthermore, if lending becomes too risky for credit providers, interest rates could rise, putting additional strain on government budgets.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller gives the floor to Riina Sikkut.
Riina Sikkut
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
The speaker conveyed to the Riigikogu the Budget Council’s harsh and unequivocal message regarding the state’s fiscal policy, which had been presented to the Finance Committee. The Budget Council emphasized that defense expenditures are permanent costs and that domestic budgetary rules are being violated to an unacceptable degree. Their clear position was that unfunded budget expenditures must not be added, and the agreed-upon tax hikes are unavoidable for balancing the budget. The speaker acknowledged that this sensible discussion found understanding among all members of the committee, regardless of their political affiliation. Despite the Budget Council’s clear warnings, the speaker fears that the government’s decisions are diametrically opposed to these recommendations. The main concern is the government’s short-sighted and irresponsible behavior, which will not lead the country toward fiscal balance but will instead increase the debt burden by an estimated fifty percent over the next four years. The speaker asked what the consequences of such a policy would be, beyond already fueling rapid inflation, pointing specifically to the risk that state borrowing might become more expensive in the future, thereby deepening economic instability.
Riina Sikkut
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Riina Sikkut emphasized the Budget Council’s common message that defense expenditures are fixed costs, adherence to internal budget rules is mandatory, unfunded expenditures must not be added, and all tax increases are necessary. She then asked what the consequences would be if these recommendations are ignored and the debt burden could increase by about half over the next four years.
Aseesimees Arvo Aller
AI Summary
The address stresses that it is your time.
Riina Sikkut
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Riina Sikkut examines the possible societal consequences of France's rating downgrade.
Riina Sikkut
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
The speaker began their address by referencing the recent downgrade of France's credit rating, emphasizing that this was not merely a technical financial news item, but an event carrying widespread geopolitical and economic consequences. This development in the economy of one of the European Union's core nations raises questions about the overall stability and financial discipline of the Eurozone. The speaker focused on the necessity of understanding how such major shifts directly affect the economic confidence and future prospects of smaller states, including Estonia. The main question the speaker brought before Parliament concerned the specific consequences of the rating downgrade for society. This includes both the costs of managing national debt and the impact on funding social programs. When Europe's major economies come under pressure, the risk increases that lending conditions will tighten across the entire Eurozone, which in turn directly affects the daily lives of citizens, for example, through rising mortgage interest rates. The speaker stressed that the French example serves as a warning, demanding extreme vigilance and responsible fiscal policy from Estonia. Finally, the speaker called upon the government to thoroughly analyze changes in the international financial environment and develop strategies that would mitigate potential negative risks to the Estonian economy. It is necessary to ensure that Estonia's budgetary policy is robust enough to withstand potential Eurozone shocks resulting from the weakening financial discipline of major states. The downgrade of France's rating is a sign that economic stability cannot be taken for granted, and it requires a proactive and cautious approach from Estonia.
Aseesimees Arvo Aller
AI Summary
The speech is a brief thank you.
Riina Sikkut
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Riina Sikkut discusses how the external environment reacts.
Eesti Panga president Madis Müller
AI Summary
The speaker warns of several negative consequences stemming from the state budget's excessive reliance on borrowing, the large deficit, and the constantly growing debt burden. Firstly, this creates pressure for government-induced price hikes. Secondly, and particularly concerning, interest costs are rising, consuming an increasingly large share of state expenditures. This problem will become acutely noticeable in the coming years, when the annual interest expense alone reaches hundreds of millions of euros, which must be accommodated within the state budget. This means the state will have to spend less on areas that actually require investment, as growing obligations force more and more funds to be directed toward debt servicing. In addition to the direct burden on the budget, increased government borrowing also indirectly affects the private sector. When the state borrows more, government interest rates may also rise, often serving as a benchmark for lenders and investors. This, in turn, means that borrowing becomes more expensive for Estonian companies, as a risk margin is added. Higher borrowing costs make it difficult for companies to invest and create new jobs, thereby slowing down overall economic growth. The third and long-term risk lies in the state's capacity to respond to future economic crises. If Estonia enters the next economic crisis having already exhausted its borrowing capacity, it will be extremely difficult for the government to respond to the crisis and support the economy to the necessary degree. Thus, the current irresponsible borrowing policy diminishes the state's ability to prepare for and react to future shocks.
Eesti Panga president Madis Müller
AI Summary
Excessive state budget borrowing increases interest expenses, makes borrowing more expensive for both the state and businesses, reduces investment and job creation, and leaves less room to maneuver in the event of a crisis.
Aseesimees Arvo Aller
AI Summary
Deputy Speaker Arvo Aller invited Kristo Enn Vaga to come forward and speak.
Kristo Enn Vaga
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Kristo Enn Vaga thanked the session chair and President Müller and posed two questions: what impact a ceasefire between Russia and Ukraine might have on global stock markets and the Estonian economy, and how to assess the potential effect on the state of foregoing the planned income tax increase, given that the money remaining in people's hands would boost consumption.
Kristo Enn Vaga
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
At the Riigikogu session, President Müller was posed two significant economic questions, in recognition of the substance and depth of his presentations. The first of these addressed the global geopolitical situation and its impact on the markets. The person posing the question emphasized that global stock markets are awaiting a ceasefire between Russia and Ukraine, primarily to restore normal business operations with Russia. Consequently, President Müller was asked to assess the potential impact of a ceasefire on stock markets more broadly, and how this development would specifically influence the trajectory of the Estonian economy. The second question was more grounded and focused on Estonia's domestic economy and tax policy. Reference was made to the stance of Toomas Luman, the outgoing head of the Chamber of Commerce and Industry, who has argued that foregoing the income tax hike might not necessarily harm the state. Luman's argument posits that the money remaining in the hands of the populace would move directly into consumption, thereby offsetting the budget deficit. The questioner sought President Müller's assessment of this consumption-based argument and its realistic viability.
Eesti Panga president Madis Müller
AI Summary
The speaker began by addressing the war in Ukraine and global stock markets, noting that markets have been surprisingly resilient despite the turbulence of recent years, including the war and changes in American trade policy, setting new records, especially in the US. It was emphasized that the economic impact of potential peace critically depends on the terms under which a truce is achieved. The fairer the terms are from Ukraine’s perspective, the greater the confidence investors and entrepreneurs will have in contributing to the country's reconstruction. Such a positive development would also indirectly provide a positive boost to the Estonian economy. A second important topic discussed was the impact of expanding the income tax exemption on economic growth. The legislative amendment taking effect next year, which leaves more money in people's hands for consumption (an estimated 600 million euros), will certainly provide a short-term impetus to both consumption and economic growth. However, this creates a significant hole in state revenue collections. Although stimulating the economy and consumption is positive, the speaker expressed concern that the price paid for this temporary boost is too high due to the need for additional borrowing. It is crucial to find a solution for keeping state revenues and expenditures in the best possible balance.
Eesti Panga president Madis Müller
AI Summary
Madis Müller stated that stock markets have been resilient to turbulence, but the peace unfolding in Ukraine is conditional, and a more equitable peace would boost investor confidence and could also positively impact Estonia. Meanwhile, the expansion of tax-free income increases people's purchasing power and short-term economic growth, but it reduces state revenues, necessitating the balancing of national income and expenditures through a higher debt burden.
Õnne Pillak
Profiling Eesti Reformierakonna fraktsioonAI Summary
During the speech delivered at the Riigikogu session, the rapporteur was thanked for the comprehensive overview and substantive discussion regarding the state of the economy. The speaker focused on the question of what additional measures and steps the state could take to stimulate economic growth. The primary goal was to find solutions that would give the Estonian economy new and stronger momentum. This, in turn, should directly contribute to raising the general well-being and standard of living of the populace. Therefore, the speech focused on the state’s role in stimulating the economy and ensuring long-term prosperity.
Õnne Pillak
Profiling Eesti Reformierakonna fraktsioonAI Summary
Õnne Pillak thanks the manager and the server and asks what state measures can be taken to boost the economy and foster people's well-being.
Aseesimees Arvo Aller
AI Summary
The presenter invites Õnne Pillak to the stage.
Eesti Panga president Madis Müller
AI Summary
The speaker emphasized that there is no single simple solution for quickly getting the economy back on the right track, and recommended paying attention to the longer-term recommendations issued by the Competitiveness Expert Council. These proposals cover both issues related to corporate financing and the balancing of the energy market. The goal is to ensure a better price for Estonian electricity consumers, which is an important factor for the country's overall competitiveness. More generally, the long-term objective is to create a sufficiently robust and stable economic and business environment. This environment must offer both Estonian and foreign investors the confidence required to place capital. The second critical component of economic growth is human capital: it is essential that we have people who can put resources and capital to productive use. This requires the availability of a qualified workforce and a well-thought-out education system—issues that admittedly have a longer-term impact, but are unavoidable for achieving the final outcome.
Eesti Panga president Madis Müller
AI Summary
Madis Müller stressed that there is actually no single quick fix to get the economy back on track. Instead, what is needed is a long-term, stable economic and business environment, combined with the implementation of the recommendations from the Competitiveness Advisory Council, improvements in corporate financing and the balance of the energy market, and the development of a qualified workforce and a well-thought-out education system, all designed to build confidence for both domestic and foreign investors.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller addresses Mart Võrklaev and asks him for something.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
The speaker opened their address by expressing concern over the state of public finances, inflation, and sluggish economic growth. They highlighted the contradiction between the stimulating effect of the income tax exemption on the economy and its consequence of widening the budget deficit. However, the main issue revolved around the planned public sector wage increases, which are slated to be financed by deficit spending. The speaker asked directly whether injecting additional funds into the market for wage hikes is currently justifiable, given that it will increase the state budget shortfall. Specifically, the speaker emphasized the risk that increasing the deficit to finance these pay raises could, in turn, accelerate inflation by introducing excess money into the market. Furthermore, there was concern that the public sector might pull ahead of the private sector in terms of salary levels. Considering the elimination of the tax hump (or tax bracket distortion), the speaker anticipated that private sector wage growth would remain rather modest next year. If the private sector were then forced to play catch-up with the public sector, this would further fuel inflation, creating a dangerous wage-price spiral.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
Mart Võrklaev voices concern regarding the rising inflation and the growing state budget deficit. He questions whether public sector wage hikes, funded by the deficit, are currently justifiable, arguing that such increases could fuel inflation and force private sector wages to follow suit.
Eesti Panga president Madis Müller
AI Summary
Madis Müller stressed that excessive public sector wage hikes, particularly those financed by borrowed money or a budget deficit, must be avoided, as they create general wage pressure and undermine the competitiveness of entrepreneurs and exporters.
Eesti Panga president Madis Müller
AI Summary
Caution is necessary regarding public sector wage hikes, even though historically the state sector—particularly through the salaries of teachers, healthcare workers, and defense personnel—has long been the driver of wage growth in Estonia. Recently, however, this pace of growth has been restrained, and private sector wages might now be increasing even faster. The greatest risk emerges when public sector wage increases are financed using borrowed funds or at the expense of the budget deficit. Since the labor market is shared, wage growth driven by the state creates competition and general wage pressure in the market. This, in turn, complicates the situation for private sector businesses and exporters, whose cost base has already grown very rapidly in recent years. Although the public sector cannot afford to fall significantly behind the national average wage increase, the state must be cautious not to start driving overall wage growth again or increasing the incomes of state employees too aggressively.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller calls upon Valdo Randpere to speak.
Valdo Randpere
Profiling Eesti Reformierakonna fraktsioonAI Summary
The speaker raised the issue of the Bank of Estonia's proprietary profit and its distribution, stressing that previous responses have primarily focused on foreign funds. Referring to Section 30 of the Bank of Estonia Act, he explained that the bank's profit is divided into two parts: half is mandatorily allocated to increase the reserve and core capital, while the bank has considerable discretion in distributing the remaining half between targeted appropriations and the state budget. The speaker criticized the bank's historical practice, noting that it has often been quite reluctant when contributing to the state budget, allocating the smallest possible portion of the profit. He cited as an example that over the last 15 years, only once—presumably in 2020—was 50% of the remaining profit transferred to the state budget. Given Estonia's current difficult times and large defense expenditures, the speaker directly asked about the Bank of Estonia's current mood and intentions. He posed the question of whether the Bank of Estonia is prepared to come to the aid of the state and significantly increase its contribution to the state budget to help ensure the country's economic sustainability.
Valdo Randpere
Profiling Eesti Reformierakonna fraktsioonAI Summary
Valdo Randpere is asking about the distribution of the Bank of Estonia's profit—specifically, how much is allocated as discretionary funds versus how much goes into the state budget, what the current atmosphere is, and whether the Bank of Estonia could provide assistance to the state during difficult times, for instance, to cover defense spending.
Eesti Panga president Madis Müller
AI Summary
Madis Müller emphasized that the Bank of Estonia is not constrained and seeks to balance the strengthening of equity and the distribution of profit into the state budget, traditionally distributing a quarter of the profit to the state and leaving the remainder for increasing equity, which was also done last year, and the distribution of this year's profit will be decided by the council based on near-term trends.
Eesti Panga president Madis Müller
AI Summary
A representative of the Bank of Estonia dismissed accusations of being reluctant to distribute profits, stressing that the bank has always sought to strike a balance between contributing to the state budget and reinforcing the equity capital required to cover financial risks. The primary objective is to ensure an adequate capital buffer, thereby avoiding the necessity of approaching the Riigikogu (Parliament) to cover a capital deficit should financial markets decline and the bank incur losses. The speaker also referenced recent periods during which the bank sustained significant losses, underscoring the necessity of maintaining reserves to cover the expanding balance sheet and its inherent financial risks. The central bank has adhered to a consistent policy: after specific risk provisions are made, one quarter of the distributable profit is transferred to state revenues, based on a decision by the Bank of Estonia Council. The remainder is allocated to strengthening equity capital. This approach was maintained last year, and current trends suggest a positive profit is also anticipated this year, with the Council soon set to decide on its distribution. The bank affirmed that this consistent and prudent approach should not be viewed as parsimony, but rather as essential for ensuring financial stability.
Aseesimees Arvo Aller
AI Summary
The speech is merely a request to Anti Haugas.
Anti Haugas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Anti Haugas wishes to compare the trends of the past year in Latvia, Lithuania, and Finland, and asks what development trends and differences have been observed compared to Estonia, which political decisions have influenced these changes, and whether there is an overview of how the testing or implementation of the solidarity bank tax or the general bank tax in neighboring countries has impacted the past year.
Anti Haugas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
A respected member of the Riigikogu requested a comparison of Estonia’s economic and political situation over the past year with that of its immediate neighbors: Latvia, Lithuania, and Finland. Specifically, the request sought to identify the main trends and differences compared to Estonia, and which political decisions shaped these trends in the neighboring countries. Separately, an overview was requested regarding the impact of the solidarity bank tax or the testing of a bank tax in neighboring countries over the past year. This question points to a desire to understand how political choices concerning the taxation of the financial sector have influenced economic dynamics in Estonia and its neighbors.
Eesti Panga president Madis Müller
AI Summary
Madis Müller noted that the European economic environment is broadly similar for neighboring countries, but national decisions can affect the economy differently. For example, Lithuania has grown better in recent years due to the flow of IT labor and exports directed toward Central Europe. Furthermore, the Estonian economy is seeing a gradual strengthening, a development which neighboring countries also hope to see.
Eesti Panga president Madis Müller
AI Summary
Although the European economic environment is generally similar in neighboring countries, economic performance has differed due to national decisions, for example, in tax policy. The economies of Estonia and Finland have similarly been in a phase of treading water, and their growth forecasts are moderate compared to the Baltic states. Lithuania's better economic performance in recent years is noteworthy, explained by two main factors. Firstly, a large number of qualified workers have arrived in Lithuania, especially IT specialists and companies from Belarus, which has positively impacted the overall economic indicators. Secondly, the distribution of Lithuania's export markets has differed from Estonia's. While Estonia has primarily focused on the Nordic countries, where demand has been challenging, Lithuania has concentrated on the markets of Poland, Germany, and Central Europe, where demand has remained higher. These market differences have unfortunately worked against Estonia in recent years. Despite the current differences and difficulties, it is believed that future trends will be similar for neighboring countries. Gradual economic strengthening is expected in Estonia, and the same positive development is forecasted for our neighboring countries.
Aseesimees Arvo Aller
AI Summary
These remarks are simply a request to invite Madis Timpson to the stage.
Madis Timpson
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Madis Timpson highlighted that the Estonian banking market has high concentration and weak competition, noting that market entry is difficult, and asked whether this is true or how it compares to the European level.
Madis Timpson
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
The esteemed member of the Riigikogu began their address by thanking the President of the Bank of Estonia for the interesting presentation. They highlighted a concern regarding the high concentration within the Estonian banking market and the resulting weaker competition. The speaker noted that although they are not an expert in the field, information has reached them suggesting that it is overly difficult for new players to enter the Estonian banking market, which is precisely the main reason for the weak competition. The speaker then posed a direct question to the President of the Bank of Estonia, asking whether this assertion was true. They requested an assessment of the situation and, if possible, a comparison of the difficulty of entering the Estonian banking market with that of other European countries, in order to clarify whether the barriers to market entry are indeed too significant.
Eesti Panga president Madis Müller
AI Summary
Madis Müller emphasizes that to increase competition, the focus must be on supporting the growth and strengthening of local banks that have been operating for years, while avoiding the addition of new, small-capital banks to the market. This is because size and scale determine competition, and although European rules are uniform and the minimum founding capital can be 5 million euros (or 1 million in some cases for a narrower scope of activity), new banks do not bring a significant impact.
Eesti Panga president Madis Müller
AI Summary
The speaker addressed the question of whether simplifying the market entry for new banks would improve competition in the business and home loan sectors. He emphasized that the rules for granting banking licenses are essentially harmonized across the Eurozone under the supervision of the European Central Bank, meaning operating permits are issued on the same basis in all member states. The main argument, however, is that the banking business is inherently scale-dependent. Achieving success requires sufficient volume, which allows a bank to secure more favorable financing and keep costs low, passing that advantage on to customers. While reducing the minimum capital requirement (typically 5 million euros) for banks with a narrower focus is theoretically possible, almost no country besides Lithuania has utilized this option. The Lithuanian experience, however, does not indicate that this has positively affected competition. In the speaker’s view, financially weaker and smaller banks would objectively be unable to compete with larger, stronger players, especially in major segments like mortgages or large corporate loans. Therefore, the speaker believes the solution does not lie in introducing new banks operating on fragile foundations. Competition is more likely to be enhanced by the fact that local, existing banks have grown their financial muscle over time and are now better equipped to compete with the major institutions. This long-term, organic growth is a more effective path toward stronger competition, given that the banking business inevitably demands scale.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller calls Lauri Laats forward.
Lauri Laats
Profiling Eesti Keskerakonna fraktsioonAI Summary
The speaker raised a critical issue before Parliament concerning Estonia's demographic situation and the affordability of housing for young families, referencing an analysis from the Ministry of Social Affairs which confirms the seriousness of the problem. It was stressed that improving housing accessibility is directly tied to the goal of increasing the birth rate, and urgent measures are therefore needed to alleviate the current situation. As a potential solution, the Bank of Estonia and the Financial Supervisory Authority have repeatedly—allegedly three times—submitted proposals to the government aimed at simplifying and making home loan refinancing more affordable and accessible. Although these proposals have been previously discussed in the chamber and the topic is currently under review by the ministries, the government was criticized for its inaction and failure to implement rapid measures. The speaker demanded clarification in the chamber regarding the exact principles the Bank of Estonia relied upon when formulating its proposals, what the specific contents were, and how these measures would realistically help make home loan refinancing simpler and more affordable.
Lauri Laats
Profiling Eesti Keskerakonna fraktsioonAI Summary
Lauri Laats emphasizes the problem of housing availability for young families, based on the demographic picture, and points out that the Bank of Estonia and the Financial Supervision Authority have made several proposals for simplifying and making home loan refinancing cheaper, which the government has not yet implemented. He calls upon the chamber to discuss the exact content and impact of these proposals and their rapid implementation to increase the birth rate.
Aseesimees Arvo Aller
AI Summary
The address is characterized by the short, direct phrase, "Your time!", which urges the listener to take action.
Eesti Panga president Madis Müller
AI Summary
The speaker emphasizes that although similar proposals for revitalizing the loan market are already under discussion in the Finance Committee, the content of these original proposals is crucial. The main objective is to strengthen competition among banks to lower loan margins and improve lending conditions. This will be achieved by making it easier and cheaper for existing clients to transfer their home loan to another bank—i.e., refinancing. This forces banks to compete not only for new clients but also for existing customers, giving borrowers a better negotiating position. The proposals focus on three main obstacles that currently inhibit refinancing. First, it is suggested that the valuation report should not need to be ordered anew every time, especially in a situation where the property value has likely increased, thereby reducing a significant financial cost. Second, a major time and financial hurdle is the requirement for notarial certification. If the standard loan terms (excluding the interest rate) remain the same when switching banks, the obligation for notarization could be waived. Third, the speaker considers the contract termination fee—which the law allows to be charged up to the extent of three months' interest—a fundamental issue. This fee acts as an additional barrier for clients, and Estonia stands out compared to other countries by imposing overly high obstacles to terminating a loan agreement. The proposal is to either abolish or significantly reduce this fee to make home loan financing cheaper and faster overall. It is hoped that these changes will soon reach the Parliament floor for discussion and gain the force of law.
Eesti Panga president Madis Müller
AI Summary
Madis Müller said that the Bank of Estonia presented three main proposals aimed at making home loan financing cheaper and faster: reducing the need to repeatedly order appraisal reports, waiving the requirement for notarization during refinancing if the loan is a standard loan, and reducing or eliminating contract termination fees, and he hopes that these will soon reach the Riigikogu and be enacted into law.
Aseesimees Arvo Aller
AI Summary
Vice-Chairman Arvo Aller announces that the round of questions is concluding and directs Peeter Ernits to pose a question to the presiding officer.
Peeter Ernits
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
A Member of the Riigikogu raised a technical and procedural question during the session concerning the information system used in the Riigikogu chamber. Specifically, he drew attention to the fact that although the previous day they had discussed the name order problem in the system (surname first and first name last), a second shortcoming is now noticeable. The speaker pointed out that the photo of Madis Müller, the President of the Bank of Estonia, was missing from the new console, where guest photos are usually displayed. Only the name was visible in the system. The MP kindly offered his assistance, stating that he had personally taken a picture of the guest and was ready to send it immediately so that the photo could be added to the console. He emphasized that this opportunity should be utilized.
Peeter Ernits
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Peeter Ernits said that in the list of Riigikogu members, the surname comes first and the given name comes last, and noted that the new control panel is missing the picture of the Governor of the Bank of Estonia, suggesting he could send Madis Müller's photo and have it placed there.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller stated that they are working on developing the use of the control panels and visuals, and that they will be able to implement it better next time. He thanked the speaker for the comment and announced that he was opening the debate for the factions, beginning with Mart Võrklaev speaking on behalf of the Reform Party faction.
Aseesimees Arvo Aller
AI Summary
The Chairman of the session began his address with technical and visual notes, referring to the image being displayed and its potential age, and also mentioning the option of replacing the picture with one of Madis Müller. More importantly, however, he stressed that the development of the consoles—that is, the voting equipment—is currently underway. The Chairman confirmed that things are progressing and the technology should function better next time, while simultaneously expressing gratitude for the remarks that had been made. Following these introductory explanations and the promise to resolve the technical issues, the session chairman officially opened the floor for negotiations among the factions. Mart Võrklaev was the first to be given the floor on behalf of the Estonian Reform Party faction.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
The Bank of Estonia's 2024 annual report confirms the central bank's substantive, independent, and balanced role in the development of Estonian finance and economy, emphasizing the preparation of reliable economic forecasts, the implementation of the rounding rule, the improvement of competition in the home loan market, and the strengthening of financial sector transparency and supervision regarding savings and loan associations.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
The speaker praised the Bank of Estonia's 2024 annual report as a substantive, thorough, and balanced overview of the central bank's work, emphasizing the bank's crucial role in compiling reliable economic forecasts that supported the decisions of both the government and businesses. The central bank was an active participant in economic policy discussions while maintaining the necessary independence. The bank's ability to provide an independent assessment of the macroeconomic and public finance impact of tax policy, without interfering in ideological choices, was particularly valued. The report highlighted several important initiatives that have been implemented or are underway in cooperation with the Riigikogu (Estonian Parliament). One topic with significant impact was the introduction of the rounding rule for one- and two-cent coins starting in January 2025. This change reduces production costs and environmental impact, as the small cents no longer functioned effectively as a means of payment but instead accumulated in people's homes. Furthermore, the Bank of Estonia, together with the Financial Supervisory Authority, has made proposals to improve competition in the home loan market by simplifying the transfer of a loan to another bank—for example, by eliminating the need for notarization when mortgage terms remain unchanged and by limiting the bank's right to demand several months' interest upon early termination. Attention was also paid to increasing the transparency and security of the financial sector. The central bank has proposed stricter regulation and subjection to financial supervision for the activities of credit and savings associations to prevent risks that have led to financial losses for people in recent years. In summary, the speaker affirmed that the Bank of Estonia is a strong and reliable partner whose expertise can be relied upon when making political decisions, and according to Madis Müller, economic growth is gradually picking up.
Aseesimees Arvo Aller
AI Summary
The announcement says that three minutes are to be added.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
Mart Võrklaev stated that despite external influences, growth has begun. This has been aided by fiscal policy, where the deficit has been tightened, and a uniform income tax-free threshold of 700 euros applies to everyone. However, the growing need for defense spending—exceeding 5% of GDP and requiring over two million euros by 2026—is putting pressure on the budget. This pressure must be alleviated by ensuring permanent coverage from the state's current revenues. Simultaneously, a two-euro coin featuring the Sipsik design is being celebrated as a cultural symbol, and good cooperation with the Bank of Estonia is being maintained.
Mart Võrklaev
Profiling Eesti Reformierakonna fraktsioonAI Summary
Despite external factors such as Russia's ongoing aggression and US tariff policy, Estonia's economic growth has begun. The government’s fiscal policy, aimed at reducing the state budget deficit, coupled with the uniform tax-free income threshold of 700 euros coming into effect next year, will support domestic consumption and leave people with more disposable income. However, the complex security situation obligates Estonia to raise defense spending above 5% of GDP, which will exceed two billion euros by 2026. This, in turn, places significant pressure on the state budget. The speaker stressed the need for budgetary discipline, even though the European Union has provided more lenient fiscal rules for covering defense costs. We must adhere to the central bank's recommendation that the fiscal position should not deteriorate in the coming years beyond the amount of additional defense expenditures. Since high defense costs will persist over a longer period, it is essential to find permanent coverage for them from the state’s current revenues. Finally, the speaker highlighted a positive cultural event: the Bank of Estonia will issue a specially designed two-euro coin in 2026 featuring Sipsik, a beloved character from children's literature. The Sipsik coin is not just a means of payment but a cultural symbol that unites generations and pays tribute to Estonian children's literature, symbolizing the friendliness, determination, and cleverness that we also hope to see in Estonian children and youth.
Aseesimees Arvo Aller
AI Summary
It must be noted that the provided text does not contain the content of the speech given by Lauri Laats, representative of the Estonian Centre Party faction, but is merely the introductory part of the Riigikogu session protocol. With this, Laats is given the floor so that he can present his party's positions before the parliament or comment on the draft legislation being discussed. Since the actual content of the presentation delivered by Lauri Laats is missing, it is impossible to compile a summary of his main arguments, positions, or the topics he addressed in his address. To create a summary, it would be necessary to review the full text of the speech delivered by Lauri Laats before the Riigikogu.
Aseesimees Arvo Aller
AI Summary
Lauri Laats will now speak on behalf of the Estonian Centre Party faction.
Lauri Laats
Profiling Eesti Keskerakonna fraktsioonAI Summary
Lauri Laats stressed the importance of the proposals put forth by the Bank of Estonia and the Financial Supervisory Authority for simplifying home loan refinancing and improving housing affordability, and called on the coalition to quickly and thoroughly address these measures so that housing would be cheaper and loans more accessible for young families.
Lauri Laats
Profiling Eesti Keskerakonna fraktsioonAI Summary
Lauri Laats recognized Madis Müller, the President of the Bank of Estonia, and the reliable work of the bank, but primarily focused on criticizing the coalition, which has flippantly rejected the Centre Party’s proposals for simplifying and promoting home loan refinancing (including the abolition of early repayment interest). He emphasized that these measures were actually driven by the recommendations of the Bank of Estonia and the Financial Supervision Authority, and he called upon his colleagues to support these bills aimed at improving housing affordability in the future.
Lauri Laats
Profiling Eesti Keskerakonna fraktsioonAI Summary
The speaker began by commending the Bank of Estonia (Eesti Pank) and its president, Madis Müller, emphasizing the institution's credibility, professionalism, and evidence-based approach. As the main topic, he highlighted the need to make home loan refinancing simpler and more affordable, referring to specific proposals put forward by the Bank of Estonia and the Financial Supervision Authority (FI). These measures are critically important, given the rising cost and inaccessibility of housing, especially for young families, a fact also confirmed by a recent analysis from the Ministry of Social Affairs. Particular focus was placed on the proposal to amend the provision of the Law of Obligations Act governing the requirement for early repayment—specifically, the obligation to pay three months' interest when switching banks. The speaker sharply criticized the coalition parties, who had previously rejected a similar bill proposed by the opposition, claiming it lacked proper analysis. He stressed that this proposal had actually been initiated by the Bank of Estonia and the FI, and urged his colleagues to delve into the matter and not lightly dismiss good ideas from the opposition, especially when they are driven by the recommendations of credible institutions. In addition to the amendment to the Law of Obligations Act, the speaker also emphasized the swift handling of other important measures, such as issues concerning mortgages and property valuation. Finally, the speaker issued a call to the coalition: that when these proposals for making home loans more affordable reach the Riigikogu (Parliament) floor again, they should receive a green light instead of a red one this time, thereby ensuring lower loan costs and improved housing accessibility.
Aseesimees Arvo Aller
AI Summary
The submitted text does not contain the substantive part of the Riigikogu speech; rather, it is a brief introduction announcing the identity of the speaker approaching the podium and the parliamentary group they represent. Specifically, it is announced that Toomas Uibo, representing the Estonia 200 faction in parliament, will take the floor. This is a standard procedure aimed at ensuring transparency and clarity regarding which political force is presenting the viewpoints. The introduction of the speaker is followed by a brief expression of thanks ("Aitäh!") and an invitation ("Palun!"), which indicates that Uibo has received permission to begin his presentation or address. Since the substantive content of the speech—the arguments, topics, political positions, or proposals—is completely absent from the submitted material, it is not possible to provide a summary of the main points or subjects Uibo intends to present to the Riigikogu. The text is limited solely to authorizing the speaker.
Aseesimees Arvo Aller
AI Summary
Thanks are expressed in the address, and Toomas Uibo is invited to speak on behalf of the Eesti 200 faction.
Toomas Uibo
Profiling Eesti 200 fraktsioonAI Summary
Toomas Uibo's remarks highlight that, given the conditions of inflation and geopolitical uncertainty, it is necessary to adhere to the vision of the Bank of Estonia and implement both short-term relief measures and strategies for long-term economic growth by investing in education, science and innovation, green technology, and competitiveness, and by easing the tax burden, in order to ensure Estonia's continued growth and freedom.
Toomas Uibo
Profiling Eesti 200 fraktsioonAI Summary
The speaker thanked the President of the Bank of Estonia for the thorough overview of economic developments, emphasizing the central bank’s crucial role in ensuring knowledge-based decisions. Recent years have been characterized by rapid price growth, which has profoundly impacted people's daily lives. The inflation is attributed both to fluctuations in energy and raw material prices and to structural problems within the economy. Furthermore, the impact of Russia’s war of aggression was highlighted, which has brought uncertainty and necessitated an increase in defense spending—this is the price paid for Estonia’s freedom and independence. Regarding the health of the economy, the speaker supported the Bank of Estonia’s stance on the importance of sound public finances, contrasting it with irresponsible living on debt. The government has taken steps to alleviate the tax burden by eliminating the tax hump (maksuküür) starting next year and canceling the planned income tax increase, which should boost consumer confidence. However, it was stressed that short-term measures are insufficient. Estonia requires a long-term economic growth strategy founded on strengthening competitiveness. In the vision of Eesti 200, investments in education, science, and innovation are key, considering education to be the primary growth engine. Support was expressed for a liberal market economy, a stable business environment, and investment in green technologies and digital solutions that bring smart jobs to Estonia. The speaker commended the Bank of Estonia for its proposals to intensify competition in the banking market, which will benefit borrowers. Specifically, support was given to eliminating notary fees and the requirement for a new collateral valuation act when refinancing home loans. Finally, optimism was expressed regarding Estonia’s future, emphasizing that although the economic difficulties have been significant, smart people, strong institutions, and a flexible economy can overcome challenges if the focus remains on the future, innovation, and improving the business environment.
Aseesimees Arvo Aller
AI Summary
I apologize, but the text provided is only a brief introduction for presenting the Riigikogu speaker ("Thank you! On behalf of the Social Democratic Party faction, Riina Sikkut, please!"). This text does not contain Riina Sikkut's actual speech, arguments, or positions. Therefore, it is not possible to compile a 2–3 paragraph summary of the Riigikogu speech based on the submitted text that would capture the main points and arguments. If you submit the actual content of Riina Sikkut's speech, I can summarize it in the requested manner.
Aseesimees Arvo Aller
AI Summary
The Deputy Speaker thanked [the previous speaker/the assembly] and invited Riina Sikkut to speak on behalf of the Social Democratic Party faction.
Riina Sikkut
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Riina Sikkut emphasizes that the state of the economy must be assessed based on a variety of indicators, and highlights the importance of independent assessment, the role of the Fiscal Council, and consumer protection. At the same time, she stresses the growth of the debt burden, the simplification of housing loans, and the necessity of increasing competition in the banking market.
Riina Sikkut
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
The speaker began by praising the presentation given by the Governor of the Bank of Estonia, emphasizing the need to avoid the black-and-white approach common in politics when assessing the economy, and instead look at a wider range of statistical indicators. He highlighted the Bank of Estonia's role in sharing expert knowledge, mentioning both the seminar on trade restrictions and the upcoming digital euro conference. Separately, the speaker stressed the value of studies on household financial behavior and consumption habits, which provide a deeper picture of people's assets and choices based on microdata. In the context of budget negotiations, the importance of supporting the work of the Fiscal Council was highlighted. The speaker recommended that the Bank of Estonia present the Fiscal Council's recommendations to the wider public to explain why political choices are not always equivalent, despite politicians having great freedom of decision. Concern was expressed about the projected growth of the debt burden, which, according to calculations made in the Finance Committee, could almost double relative to GDP within four years, reaching 34–35%. Such alarming growth requires more informed decisions, supported by better and more easily accessible information. Finally, competition in the banking market and consumer protection were addressed. The speaker supported the easier transfer of housing loans between banks, seeing this as an important step toward increasing competition and better protecting people's interests. This reflects the broader principle of responsible lending, the importance of which has also been emphasized by recent court decisions (e.g., the termination of fast-track proceedings for quick loan debts), ensuring that decisions are not only legally possible but also fair and take the borrower's interests into account.
Aseesimees Arvo Aller
AI Summary
Vice-Chairman Arvo Aller asks if you want more time.
Riina Sikkut
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
This text does not constitute a substantive political speech or the presentation of viewpoints before the Riigikogu; rather, it is purely a procedural appeal. The speaker addressed the presiding officer of the session with the goal of requesting additional time to continue their presentation or responses. Specifically, one additional minute of speaking time was requested. This brief statement underscores the speaker's desire to conclude their thoughts or respond to the questions asked, necessitating an extension beyond the predetermined time limit. Thus, this was a technical, not a political, declaration. Although lacking in content, this brief appeal illustrates the specific nature of the Riigikogu's working procedures, where time regulations are strict and any extension requires explicit permission. In conclusion, this was a formal request for the extension of speaking time, which is common practice during parliamentary sessions.
Riina Sikkut
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Riina Sikkut asks for a minute.
Aseesimees Arvo Aller
AI Summary
The announcement says that three extra minutes will be added.
Aseesimees Arvo Aller
AI Summary
The address, which was exceptionally brief and purely procedural in content, focused solely on amending the schedule of the Riigikogu (Estonian Parliament) sitting. The presenter announced that three minutes of extra time would be added to the current debate, question round, or part of the sitting. This decision was necessary to ensure that all agenda items received sufficient attention, or that the ongoing round of speeches could be concluded in the prescribed manner, granting members of parliament a minimal yet critical extension. Although this was not a substantive political statement, this brief announcement underscored the strict regulation of the Riigikogu's rules of procedure and the simultaneous need for flexibility. The addition of three minutes demonstrates the board’s determination to grant parliamentarians supplementary time to present their views or resolve procedural matters, while simultaneously avoiding excessive prolongation of the sitting. This is an important detail for the smooth and orderly conduct of the session. In summary, the purpose of the address was purely technical and related to time management. The main and sole information conveyed was the necessity to extend the debate time by exactly three minutes, which, in the context of the given sitting, was the only and primary piece of information delivered.
Riina Sikkut
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Riina Sikkut noted that, in cooperation with the Financial Supervisory Authority, consensus has been reached on amending the regulation of savings and loan associations, and it will be possible to move the work forward faster in the September Finance Committee. She also thanked her colleagues and acknowledged the contribution of the President of the Bank of Estonia and his colleagues.
Riina Sikkut
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
The Finance Committee, in cooperation with the Financial Supervision Authority, has finalized a draft bill to amend the regulation of credit unions, which addresses several important and substantive issues. The speaker emphasized that there is complete consensus among the political parties regarding the advancement of this extensive regulation, which creates a favorable environment for swift and effective work. The current political situation, free from pre-election tensions or other major distractions, allows the Riigikogu (Parliament) to thoroughly process extensive regulations and reach agreement on amendments more quickly. The Finance Committee has utilized this opportunity, conducting fast-paced and substantive work throughout September. The speech concluded with thanks to colleagues and an expression of gratitude to the President of the Bank of Estonia and his team for their contribution to the process.
Aseesimees Arvo Aller
AI Summary
The Chairman of the Riigikogu session announced in a brief statement that the ongoing parliamentary debate had reached its final phase. Once no further requests to speak were submitted, the discussions were officially declared closed. This marked the conclusion of the debate on the agenda items and indicated that all procedural steps required before the adjournment of the session had been completed. Finally, the participants were thanked, and the session was confirmed to be over. This was a purely procedural announcement, formally establishing the end of the parliament's working period or that specific session. The official declaration of the session’s termination formalized the cessation of work in the chamber.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller thanked the participants and concluded the discussions, thereby bringing the session to a close.