European Commission endorses Estonia’s €969.3 million recovery and resilience plan

The European Commission has today adopted a positive assessment of Estonia’s recovery and resilience plan. This is an important step towards the EU disbursing €969.3 million in grants under the Recovery and Resilience Facility (RRF). The financing provided by the RRF will support the implementation of the crucial investment and reform measures outlined in Estonia’s recovery and resilience plan. It will play a significant role in enabling Estonia to emerge stronger from the COVID-19 pandemic.

The RRF is the key instrument at the heart of NextGenerationEU which will provide up to €800 billion (in current prices) to support investments and reforms across the EU. The Estonian plan forms part of an unprecedented coordinated EU response to the COVID-19 crisis, to address common European challenges by embracing the green and digital transitions, to strengthen economic and social resilience and the cohesion of the Single Market.

The Commission assessed Estonia’s plan based on the criteria set out in the RRF Regulation. The Commission’s analysis considered, in particular, whether the investments and reforms contained in Estonia’s plan support the green and digital transitions; contribute to effectively addressing challenges identified in the European Semester; and strengthen its growth potential, job creation and economic and social resilience.

Securing Estonia’s green and digital transitions

The Commission’s assessment finds that Estonia’s plan devotes 42% of the plan’s total allocation on measures that support climate objectives. This includes investments in the development of innovative green technologies such as green hydrogen, upgrading green skills, facilitating the green transition for businesses and improving access to green finance for SMEs. The plan sets out measures to improve the energy efficiency of buildings and to a clear pathway with targets and actions for phasing out oil shale in the energy sector to be set in the National Development Plan for the Energy Sector. Measures in the transport sector that support the green transition include developing a common public transport system for the Tallinn capital region, electrifying railways and developing the cross-border Rail Baltic project to connect the capital cities of Estonia, Latvia and Lithuania to Poland and the rest of the EU.

The Commission’s assessment finds that Estonia’s plan devotes 22% of its total allocation on measures that support the digital transition. The plan includes measures that will support the digital transformation of small, medium-sized and microenterprises and the acceleration of the take-up of digital tools in construction and road freight transport. The plan will also help to further modernise public administration, building on the successful deployment of digital technologies for the delivery of public services in Estonia over the last years. Investments will also speed up the deployment of very-high capacity internet networks in rural areas.

Reinforcing Estonia’s economic and social resilience

The Commission considers that Estonia’s plan includes a set of mutually reinforcing reforms and investments that contribute to effectively addressing the economic and social challenges outlined in the country-specific recommendations addressed to Estonia in recent years.

The implementation of reforms and investments in renewable energy, sustainable mobility and further digitalisation of public services is expected to bolster sustainable growth and employment over the medium to long term. With a view to helping address the long-standing challenge of unmet medical needs, the plan also provides for measures to strengthen primary health care, increase the size of the healthcare workforce, improve health infrastructure and the e-health system as well as to improve access to health care. The measures addressing youth unemployment aim at supporting young people to gain work experience, improve their skills and enhance the growth potential of the country. Social cohesion is expected to be strengthened by the measures on long-term care, gender pay gap and the unemployment insurance benefit. The plan also includes a measure aiming at establishing a strategic analysis centre within the Financial Intelligence Unit to help prevent and respond to money laundering risks.

The plan represents a comprehensive and balanced response to the economic and social situation of Estonia, thereby contributing appropriately to all six pillars referred to in the RRF Regulation.

Supporting flagship investment and reform projects

Estonia’s plan proposes projects in six European flagship areas. These are specific investment projects that address issues that are common to all Member States in areas that create jobs and growth and are needed for the green and digital transition. For instance, the investments to support to renewable energy, sustainable transport, and upgrading digital public services contribute to the ‘Power-up’, ‘Recharge and refuel’, ‘Modernise’ and ‘Reskill and upskill’ flagship areas.

The Commission’s assessment finds that none of the measures included in the plan significantly harm the environment, in line with the requirements laid out in the RRF Regulation.

The Commission considers that the control systems put in place by Estonia are adequate to protect the financial interests of the Union. The plan provides sufficient details on how national authorities will prevent, detect and correct instances of conflict of interest, corruption and fraud relating to the use of funds.

Members of the College said:

President Ursula von der Leyen said: “I am delighted to present the European Commission’s positive assessment of Estonia’s €969.3 million recovery and resilience plan. Our experience of battling the COVID-19 pandemic has underlined the importance of building resilient healthcare systems. I am proud that NextGenerationEU will help Estonia to achieve this objective. The plan will also enable Estonia to further digitalise its economy and society. Investments in energy efficiency and sustainable mobility will help accelerate Estonia’s green transition. We will stand with Estonia in the years ahead to ensure that the plan is fully implemented.”

Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People, said: “Today, the Commission endorsed Estonia’s recovery and resilience plan to boost its economic growth in the post-crisis recovery phase. Along with promoting sustainable transport, it aims to incentivise the uptake of renewable energy, improve the energy efficiency of buildings and commits to phasing out oil shale in the energy sector. Estonia plans to build on its position as a frontrunner in digitalisation of public services, with more support for digital skills and measures for reducing the digital divide. It will invest in speeding up the deployment of very-high capacity networks in rural areas and make more use of digital technologies in the construction and road freight sectors. On social issues, Estonia’s plan aims to improve accessibility of its healthcare system and social services, assist young people entering the workforce and help to reduce the gender pay gap. Now it is time to put it into effect.”

Paolo Gentiloni, Commissioner for Economy, said: “The reforms and investments set out in Estonia’s recovery and resilience plan will make a real difference to the lives of citizens and the competitiveness of businesses. The plan includes important measures to support the take-up of renewables and decarbonise energy sector, improve the health system, address the skills gap, and reduce the gender pay gap. Lastly, Tallinn will benefit from a harmonised public transport system and the construction of the Rail Baltica terminal, helping to further boost the capital’s attractiveness.”

Next steps

The Commission has today adopted a proposal for a decision to provide €969.3 million in grants to Estonia under the RRF. The Council will now have, as a rule, four weeks to adopt the Commission’s proposal.

The Council’s approval of the plan would allow for the disbursement of €126 million to Estonia in pre-financing. This represents 13% of the total allocated amount for Estonia.

The Commission will authorise further disbursements based on the satisfactory fulfilment of the milestones and targets outlined in the recovery and resilience plan, reflecting progress on the implementation of the investments and reforms.

 

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