Keit Pentus-Rosimannus: Focus needs to be on using European subsidies

Minister of Finance Keit Pentus-Rosimannus. Photo: Madis Veltman

Minister of Finance Keit Pentus-Rosimannus (Reform Party) has the difficult task of plotting a course for fiscal balance in the healthcare crisis.

The post of finance minister comes with great responsibility. Are you ready?

I’m ready to do my best. Kaja Kallas’ proposal was based on my experience working in the Riigikogu Finance Committee.

Did the proposal come as a surprise?

I set myself the goal of concentrating on negotiations and doing my best for this government to be formed. I had no time to think about roles and whether I should be a member of the government.

For this government to be formed? In other words, Reform did everything it could to come to power?

We wanted Estonia to have a government that would not be forced to apologize on average once a week, whether to allies or social groups inside the country that a member of the government had insulted. That was indeed our goal.

Many still remember the Autorollo scandal and were quite surprised to see you appointed finance minister.

I suppose they do…

You resigned from the post of foreign minister over that scandal.

Yes, back in 2015. I still believe it was the right decision at the time.

When you were forming the government, we heard that the fiscal situation is much worse than ever before. We had your colleague [Minister of Economic Affairs and Infrastructure] Taavi Aas here last week and he said that things aren’t all that bad. Looking at last year’s forecasts, the economy is doing better than we feared.

Taavi Aas is right in that last year’s forecasts were rather hectic and unpredictable. It was difficult to forecast the virus’ progression. That said, the fiscal situation is nevertheless very complicated. Problems did not start with the crisis.

Costs have been growing very quickly for some years now. One cannot look only at the immediate situation when planning a budget. We are losing working-age people every year, while fixed costs keep mounting. Eventually, we need to ask how to cover such expenses. It saddens me that fiscal discipline and a solid fiscal policy that used to be hallmarks of Estonia have been lost.

The new coalition has been most critical of former Minister of Finance Martin Helme (EKRE). Would you say he is responsible?

The finance minister presents the budget to the government and a lot depends on their backbone and level of discipline. Martin Helme sports a different kind of fiscal philosophy.

Among Martin Helme’s most famous moves was signing a contract with Freeh Sporkin & Sullivan. Could it be of use or are you looking to terminate the contract?

It requires analysis, while the question we need to be asking is indeed whether the contract can somehow benefit Estonian agencies tasked with combating and investigating money laundering. Whether it can improve Estonia’s position.

It has been suggested that the early termination penalty is €60,000. Is that true?

That is the preliminary estimate.

It has been said for years how the text of the state budget bill no longer makes it possible to understand where money is coming from and where it’s going. Do you plan to do something to render it clearer?

We have already held the first meetings on this topic. The explanatory memorandum of the budget bill should allow anyone to make sense of sections they are interested in. To get a feel for top priorities for the coming years.

The new government aims to move toward fiscal balance, while you have also promised not to change taxes. How will the budget be balanced?

Every taxpayer euro in the state budget needs to be carefully weighed. Both in terms of whether we can get more for that euro, make more effective use of it and in terms of whether we need to spend it at all. Estonia is a single country and ministers should be able to see beyond the confines of their administrative areas.

One way to generate revenue is privatization of state companies. Do you have such plans for the coming years?

I want to present to the cabinet a memorandum including proposals on state holdings inside the government’s first 100 days. The time is also right for listing certain business entities.

You said when forming the government that the healthcare crisis won’t wait and that urgent action is needed. Sounds a little like an excuse.

But does it seem to you that we have time to wait? Diverting attention somewhere else and having confusion on the government level in a situation where recent virus data is anything but encouraging is not something Estonia deserves. Our main focus needs to be on overcoming the virus and coming out the other side – both in terms of public health and the economy.

At the same time, you said concerning forming a coalition with Center on the “Esimene stuudio” talk show a few weeks ago: “Of course, neither we nor anyone else likes it.” Those are harsh words with which to start an alliance.

The question concerned Center’s problems. And I can repeat my answer today. The situation is also troubling the Center Party and nobody likes it, including the Reform Party.

Do you think you can hold out until the next elections going in with such an attitude?

The government was formed knowing that it must last until Riigikogu elections in 2023. It requires daily efforts. Challenges are there to be overcome.

How well has Estonia fared in the coronavirus crisis in terms of the economy?

Figures and facts suggest that the fall was not as bad as we initially feared last year. We owe it largely to our entrepreneurs who managed to adjust very quickly in what is a complicated situation. The effects of the crisis differ greatly from sector to sector.

Accommodation, tourism and entertainment have been hit the hardest, while they have not been given prompt and sufficiently well-aimed support.

The Riigikogu gave the government a mandate to borrow up to €5 billion over two years. What will be decided there?

The only question here is how to use loan money. Loans cannot be used to cover fixed costs in the long run. Talking about temporary precision crisis measures that are not investments in the traditional sense, they are possible.

And must be pursued in a crisis. If we can make use of low-interest loans to invest in areas where we can boost Estonia’s competitive ability, it is definitely something we need to consider. The focus needs to be on making use of European subsidies in the near future, making sure these billions upon billions of euros reach the Estonian economy as soon as possible.