Siim Kallas: Loan money does not last forever

The current coalition’s tendency to borrow its way out of crisis will come at a price later on, said former European Commissioner and Reform MP Siim Kallas, as is its tendency to bestow gifts on private sector favorites.

Kallas viewed the significant increase in the country’s debt burden under the current coalition of Center, EKRE and Isamaa, and in the wake of the COVID-19 pandemic, as a drastic change of mindset in the management of the Estonian state, with balancing income and expenses being rendered irrelevant and in the heat of the large-scale borrowing.

“I can’t give up the old-fashioned, orthodox approach that debt is alien, loaned bread and chips don’t last for long,” Kallas said on ERR politics discussion show “Otse uudistemajast” Wednesday. 

“I believe in the principle of budget balance and that someone has to pay off a loan in the end. I have a question about what happens next. There can be a situation where you no longer worry about having to balance your pocket book. For whatever reason, I can take out a loan and cover my expenses,” Kallas went on. 

“This brings with it an illusion that you will then be able to meet all their needs. But you will not be able to – new expenses will arise immediately, many people will be dissatisfied, there will be areas where there is still a lack of money,” he added, giving the example of Niccolo Machiavelli’s idea that a ruler must not be a gift-giver, since in so doing they do good to a few, but bad to many. 

“After all, when you share money, no one will thank you for it, everyone asks what will happen next and why was I given so little,” said Kallas, citing the case of the Porto Franco real estate development, which received a large state loan recently. 

Read more: ERR.EE

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