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Focus areas

The scale of the economic recession has resulted in a rapid increase in the fiscal deficit, unemployment and deterioration in credit quality. Further efforts are required to ensure fiscal sustainability, while financial stability can be improved by intensifying cooperation with foreign financial regulatory authorities. Progress has been made in securing future energy supply with the agreement between the Baltic states on the creation of a common electricity market by 2013. Decisive steps to carry out these plans will be needed, while there also needs to be more emphasis on developing renewables and improving energy efficiency. Measures to increase innovation, develop human capital and support investor confidence will be crucial to Estonia’s effort to promote the tradeable sector in the coming years when domestic demand is expected to be more subdued.

Business environment and competition

Business environment in Estonia is considered to be well advanced, with low levels of corruption. However employment regulations, investor protection and closing of a business are still challenging aspects of doing business in the country.  

Infrastructure

Securing sustainable supplies of energy and developing sources of renewable energy are becoming increasingly pressing in Estonia. This reflects the growing reliance on fossil fuels, the high energy intensity of production and the closure of the Ignalina nuclear power plant in Lithuania. Eesti Energia’s Aulepa wind park development began operations in 2009 and is expected to supply 1.3 per cent of Estonia’s electricity consumption.

In April 2009 the three Baltic states agreed on the creation of a common electricity market.

Liberalisation of the energy sector remains difficult, however private sector participation in energy generation and distribution is growing. Effective competition is limited by the dominant position of Eesti Energia and the small size of the market.

Financial sector

As the recession has deepened, there has been a rapid deterioration in credit quality and growth. Foreign banks remain committed to operating in the Baltic region supported by the government measures to alleviate the impact of the financial crisis.

Last updated 21 April 2010

Publications

  • Estonia factsheet

    Estonia factsheet

    This document provides an overview of the EBRD's work in Estonia.

© European Bank for Reconstruction and Development 2012