The central bank recommends focusing on easing the immediate impact of the crisis
Governor of Eesti Pank Madis Müller, who attended the meeting of the finance committee of the Riigikogu on Tuesday, said it was important right now to focus on steps to support the economy that would give immediate help to people and companies in coping with the crisis.
He explained it was important to focus on giving the most urgent assistance in the short term. “In theory the economy can be supported in very different ways, but the key question in making choices has to be whether they will help right now, at this moment. Right now the only thing that matters is to support people so that they can get through this crisis period”.
“We do not know how long these restrictions will remain, but we do know that very many people and companies have suffered a serious blow. This makes it absolutely vital to focus right now on measures to support the economy that can be taken quickly and will have an immediate impact. The need for additional government efforts to help the economy recover after the crisis and what those measures will be depends on how long the restrictions remain in place, which we just do not know at this moment. For this reason it is not sensible to rush right now to take long-term decisions”, he stated.
He added that a key criterion for giving support could be that it should be well aimed and temporary, so that the economy can again function normally in the recovery from the crisis. He also considered it appropriate that the measures taken during the crisis period have as broad a support as possible across society.
Mr Müller’s recommendations were based on the economic scenarios that Eesti Pank published on 25 March. If the restrictions imposed by the emergency situation are eased by the start of May, the Estonian economy could shrink by 6%. If the situation eases at the start of August, the Estonian economy could shrink by 14%.