Estonia takes EEK 6.5 bln loan

Today the government decided to take up to EEK 6.493 bln loan for up to 15 years to finance state budget expenditures and financing transactions, writes. 

The Ministry of Finance is in talks with Swedbank and European Investment Bank to get the loan. They plan to borrow EEK 2.346 bln from Swedbank, with deadline up to 2 years.

The Ministry of Financed filed a loan application for European Investment Bank to get an EEK 8.606 bln loan. The Minister of Finance will sing a framework contract after the loan application has been satisfied.

Read more:  BBN

PM has mounted record tax burden

The PM Andrus Ansip has directed Estonia to last decade’s greatest tax burden before the government will meet today or in the future to discuss tax increases and new taxes, Äripäev reports.

“Fridays tax-free” the tax collector promises in Reform Party’s election campaign and gives taxpayer back his piggy and pants. Couple of years later the same voter has to waive his piggy, but tax collection is on his way to get the pants as well.

Ansip sent Äripäev a throughout commentary of keeping the budget balance, but he ignored questions regarding his earlier promise to lower tax burden.

Several politicians and public figures consider tax increase to be inevitable. The government which promised to lower tax burden has become the government that brings record taxes.

“If there are people who take all campaign promises as gold, it’s more their than policians’ problem. Politicians’ goal is to be elected,” Raul Eamets, the economy professor at the University of Tartu said.

Last year the government increased excise duties to cover the loss that came from lowering the income tax. Currently Ivari Padar, the Minister of Finance gives new proposals to increase taxes.

“Voters can never be sure of anything if politicians are near,” Mart Laar, the chairperson of Pro Patria and Res Publica Union said.

Reform Party’s supporters and members who are entrepreneurs are disappointed in the higher tax burden and don’t believe that costs are cut.

Read more here: BBN

Industrial production decreased by a third

According to Statistics Estonia, in March 2009 compared to March of the previous year, the production of industrial enterprises decreased 30%.

The rapid decrease in industrial production, which had begun in the end of the previous year, continued in March. When in October-November 2008 the decrease in production was around 15% compared to the respective month of the previous year, then in December production decreased 22%, in January of this year 27%, and in February and March 30%.

There were no significant changes in manufacturing during March. The production in manufacturing fell 33% compared to the same month of the previous year, this carried the production back to the level of 2003. The main reason causing the decline in production was the insufficient demand both in domestic and external markets, whereas the sales fell equally 27% in both domestic and external markets. Production decreased in all branches of manufacturing in March. Decline in the branch holding the largest share, i.e. the production of food products, which is predominantly oriented to the internal market consumption, was 13%. Decline in the production of food products was one of the smallest of all branches of manufacturing also in March. Production in the manufacture of computer, electronic and optical products, which is predominantly oriented to the external market, decreased 13%, too. Production in the manufacture of metal products decreased by one fourth. A nearly 35% continuous decline was reported in the production of wood, where the production of sawn timber and all wood products dropped. The biggest fall in March was in the production of chemical products. As a result of the price drop in the world market, the production of basic chemicals was stopped. About 40% less paints and varnishes and 46% less caulking compounds were produced than at the same time a year ago.

Of all industries, production grew only in energy. In March compared to March of the previous year, the production of electricity increased 18%, primarily due to the export of electricity to Finland and Latvia. The production of heat decreased 6%.

In March compared to February, industrial production decreased 3% according to the seasonally adjusted data.

The volume index and trend of production in manufacturing, January 2000 – March 2009
(2005 = 100)

Change in volume index of industrial production, March 2009

Economic activity *change Change compared
to corresponding
month of previous year
according to
unadjusted data
according to
adjusted datab
TOTAL -2.8 -25.7 -29.7
Energy production 2.0 7.3 7.3
Mining -6.8 -8.3 -12.4
Manufacturing -3.0 -28.6 -32.7
manufacture of food products -2.6 -9.7 -12.6
manufacture of wood and wood products -3.6 -31.6 -35.4
man. of fabricated metal products 4.9 -19.0 -25.1
man. of computer, electronic products -6.3 -9.8 -13.0
manufacture of electrical equipment -6.7 -30.4 -35.3
man. of chemicals and chemical products -41.5 -60.7 -63.3
manufacture of furniture 1.6 -16.4 -21.7
repair of machinery and equipment -25.1 -40.8 -43.5
manufacture of building materials 13.5 -55.0 -57.0
manufacture of textiles -4.0 -22.8 -27.9

*first row  – Change compared
to previous month
according to
seasonally adjusted dataa
In case of the seasonally adjusted volume index, the impact of the differing numbers of working days in a month and seasonally recurring factors has been eliminated. It is calculated only in comparison with the previous month



b In case of the working-day adjusted volume index, the impact of the differing number of working days in a month has been eliminated. It is calculated only in comparison with the corresponding month of the previous year.

Source: Statistics Estonia

Decrease in retail sales slowed down a bit

According to Statistics Estonia, in March 2009 compared to March of the previous year the retail sales of goods of retail trade enterprises decreased 13% at constant prices. In March, the decrease in retail sales slowed down a bit and was 5 percentage points smaller than the annual decrease of February.

In March, the retail sales of goods of retail trade enterprises were 4.6 billion kroons. The decrease in the retail sales of goods was most influenced by the stores selling manufactured goods, where the retail sales decreased 18% compared to the same period of the previous year. Compared to March of the previous year, the retail sales of goods decreased in most economic activities. The retail sales of other specialized stores, such as stores selling computers and their accessories, photography supplies, sports equipment, books, games and toys, etc., decreased most or 29%. Compared to previous months, the annual decrease in retail sales of the stores selling household goods and appliances, hardware and building materials slowed down substantially. In these stores the retail sales decreased 19% during the year. The retail sales in stores selling textiles, clothing, footwear and leather goods decreased by one tenth in comparison with the same period a year ago. This was one of the smallest decreases over the last six months.

Retail sales in grocery stores decreased 8% compared to March of the previous year. Consumers are continuously hesitant about the future and restrict their expenditure on food ever more due to that.

Compared to the previous month, the retail sales of goods in retail trade enterprises decreased by one per cent at constant prices according to the seasonally and working-day adjusted data.

In March, the revenues from sales of retail trade enterprises were 5.5 billion kroons, out of which retail sales of goods accounted for 85%. Compared to March of the previous year, the revenues from sales decreased 16% at current prices.

Retail sales volume index of retail trade enterprises and its trend, January 2002 — March 2009
(corresponding month of previous year = 100)

Source: Statistics Estonia

Rating for Estonia unchanged

The international rating agency Moody’s Investors Service today lowered the credit ratings of Latvia and Lithuania but left the Estonian rating unchanged.
Moody’s confirmed the foreign and local currency ratings of the government of Estonia at A1. The long-term foreign currency bank deposit ceiling was also confirmed at A1. The outlook for these ratings was changed to negative.
The upper limit of foreign currency obligations rating for companies operating in Estonia is Aa1 with a stable outlook.
Moody’s has concluded that the Estonian government’s creditworthiness is likely to remain resilient in the face of a deep and potentially prolonged recession.
The government is working to keep the budget deficit under control, liquidity is secure, and the government is relatively well isolated from problems in the banking sector, the agency said in its information.
Disciplined fiscal policy during the boom years, plus an impressive fiscal adjustment in reaction to the current circumstances, means that the budget deficit is likely to remain within the 3% of GDP Maastricht threshold in 2009.
This performance — one of the best in the EU — should permit Estonia to exercise its “exit strategy” and officially adopt the euro in January 2011, Moody’s said. Moody’s views entry into the Euro-zone as positive for Estonia’s creditworthiness.
The negative outlook for the Estonian government’s ratings reflects the high degree of uncertainty for the Estonian and regional economic outlook.
Moody’s believes that the Estonian economy is unlikely to stabilise without some support from external demand.

Source: Estonian Review, BNS

Best Estonian nature photo

Jarek Jõepera's photo received the Grand Prix

Jarek Jõepera's photo received the Grand Prix

The other photos you can see here

Furniture producers join sales force

Estonian furniture manufacturers join their forces to establish an Estonian furnishings department store to Stockholm and Helsinki, Eesti Päevaleht reports.

By this autumn curtain producer Sunorek and sofa producer Berg will create a group of furniture manufacturers. In that group are Aet Piel’s design plc, lamp creator Tõnis Vellama and Tank Indoor Systems, Finnish furniture modules manufacturer.

“We consider whether to start joint sales in Nordic countries through internet and open a bureau in Helsinki. It’s worth enter the market carefully with new conception. If we succeed, it’s worth considering open a salon in size in 200 sq m,” Indrek Pals, the CEO of Sunorek said.

Estonians want to offer new selection of goods besides big furnishing department stores which are common in Nordic countries. Sunorek has been operating on Finnish market for a long time. The companies plan to come out with common name and action plans at interior fare “Habitare” in Helsinki this autumn.

“According to my vision we should concentrate Estonian designers and producers to sell Estonian production in Finland and Helsinki,” Mart Jõhvikas, the CEO of Borg said.

Big furniture producers said that entering Nordic market is the only right decision.

“It’s worth going to Finland and Sweden, because their economy decreased times less than in Estonia. If they get their foot in the door, they may sell some of our sets as well,” Enn Veskimägi, the CEO of Standard said.

The companies don’t plan to merge.

Source: BBN