Foreign financing

Estonia uses, apart its own state revenues, foreign financing from different sources to implement important developments, reforms and investments.
 

For example, Estonia uses the European Union Structural Funds, Norwegian and the European Economic Area and Swiss financial mechanism, funds gained from the sales of CO2 quota and miscellaneous financial mechanisms. The aim of the Ministry of Economic Affairs and Communications is to use the available foreign financing as efficiently as possible to allow the Estonian economy to gain maximum benefits.  

European Union Structural Funds  
 

The aim of the European Union regional policy or cohesion policy is to harmonise the development of the member states and improve the competiveness of the European Union all over the world. For that purpose, the Structural Funds or euro financing are used via three funds: European Regional Development Fund, European Social Fund and Cohesion Fund.

Foreign financing

Areas

The following foreign financing areas belong to the administrative area of the Ministry of Economic Affairs and Communications:

EU Structural Funds 

The aim of the European Union regional policy or cohesion policy is to harmonise the development of the member states and improve the competiveness of the economic area all over the world; the Structural Funds or euro financing are used for that purpose. In 2014, a new seven year budget period started in the EU. Over that period, in total, 3.5 billion euros will be channelled to Estonia from the EU Structural Funds; the administrative area of the Ministry of Economic Affairs and Communications will be responsible for the use of 1.3 billion euros. 
Further information »

EU territorial co-operation 

European territorial co-operation programmes support cross-border co-operation projects that are aimed at promotion the integration of economy and social life and balanced and sustainable development in the EU. In Estonia, such co-operation programmes are co-ordinated by the Ministry of Internal Affairs. The Ministry of Economic Affairs and Communications participants, in the functions of expert evaluator, in the preparation of the programmes, monitoring committees and project selection committees.
Further information »

Estonian-Swiss co-operation programme   

Eight large-scale projects are financed from the funds of the Estonian-Swiss co-operation programme; in addition, allocations are made to third sector organisations and as research grants. In 2007–2012, the Swiss Confederation supported socio-economic development of Estonia with approximately 370 million Estonian kroons (23.6 million euros). Energy performance programme of public buildings is financed with the Swiss funds (4.5 million euros) within the administrative area of the Ministry.
Further information
 »

 

Norwegian and the EEA financial mechanisms  

Estonia also gets assistance from the Norwegian and the European Economic Area (EEA) financial mechanism, which aims at reducing the social and economic disparities in enlarged EEA and strengthening of co-operation between Estonia and Norway. The Ministry uses Norwegian funding to implement an EE programme, Development of Environmentally Sound Innovation with Information and Communication Technology (6.2 million euros). 
Further information»

Green investment schemes 

Green investment scheme means that the revenues, gained from trading the permissible emission allowance, as provided by Article 17 of the Kyoto Protocol, will be channelled into environmentally sound projects or programmes. In Estonia, the Ministry of Environment is responsible for the co-ordination and implementation of CO2 quota sales agreements. The Minister of Economic Affairs and Communications is responsible for the performance of the contracts.
Further information
 »

 

State aid
 

According to the Treaty on the Functioning of the European Union, any aid granted by a member state or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, insofar as it affects trade between member states, be incompatible with the internal market.
 

However, the prohibition on granting state aid is not absolute and there are certain exemptions. If the state aid devised has an effect, which is favourable for the economy of the European Union in general and it will not distort competition and trade between the member states to an extent that would conflict common interests, the granting of state aid will be allowed or won’t be construed as state aid in the first place (e.g. de minimis aid). 

State aid has four features: 

  • Aid is granted through or by the state, town or rural municipality resources
  • The measures is aimed at certain undertaking, group of undertakings or to manufacture some specific goods

  • The measure gives the recipient an advantage

  • The measure distorts or threatens to distort competition or affects trade between member states

To be state aid, a measure needs to have these features.

The European Commission conducts surveillance of state aid measures and all the member states must notify the Commission in advance of any planned schemes for granting state aid.

It should be always kept on mind that the state aid rules only apply to measures that include state resources (incl. support given by the state or local government unit and by state-owned foundations).

State aid isn’t necessarily granted by the state itself; the respective functions may be assigned to a private or public sector agency, appointed by the state. Also, state aid doesn’t only take the form or monetary support (allocation, subsidy), but may be granted as an interest support, loan security, capital injection or tax incentive.

State aid issues are co-ordinated by the Ministry of Finance. 

 

Last updated: 2 June 2014