Diplomatic Economic Club^{® Since 1997}

The COVID-19 crisis has reached Europe and also the Baltic States. As Estonia, Latvia and Lithuania are taking measures to minimize the spread of the virus, I want to take a brief look at the measures these governments consider to support the economy. This crisis will end some day, and many agree that massive support schemes will be a necessity to re-lance business.

Thomas Castrel

On the European level, the Commission proposes that the member states should not pay back unspent prefinancing, which amounts to EUR 8 billion. This will result in additional investments and battling the COVID-19 virus, as under the EU Cohesion policy 2014-2020 now EUR 37 billion stands unallocated. For more information read here

Estonia, the smallest of the Baltic States in terms of population, has been hit by the most cases of CORONA infections. The minister of foreign trade and IT has declared that a rapid support package of EUR 1,5-2 billion has to protect in the first place employees from losing their jobs. With a focus on sectors such as HoReCa and tourism, the Estonian government plans to support both employees and employers. The former by partially paying wages, the latter by providing support and offering tax relief.

The prime minister of Latvia announced a EUR 1 billion support package with special attention to the sectors mentioned above and does not draw parallels with the financial crisis in 2008 which has striken the Baltic country heavily. Latvian government stresses that it wants to support entrepreneurs not by means of grants, but by eg loan extensions and short-term financing. Development Finance Institution Altum will be the main vehicle for distribution, as well as banks.

The biggest economy in the Baltic’s is that of Lithuania and its government endorsed a package of EUR 5 billion supporting measures. The Lithuanian government will support businesses for 3 month job preservation by guaranteeing a minimum wage. Apart from that, the liquidity of companies will be safeguarded by temporary tax relief with interest. Also Lithuanian tax payers can count on postponing tax payments without fines or interests. EUR 500 million will be invested in the healthcare system and the Agricultural Credit Guarantee Fund and the state-owned credit guarantee agency INVEGA will receive similar extra funds.

Thomas Castrel
Trade Counselor for Flanders, Belgium in the Baltic states
President Diplomatic Economic Club