Renewed: 27.07.2012, 13:19
Government Communication Unit, 26 July 2012 12:20
Tallinn, 26 July 2012 –The Cabinet has approved the draft ratification instrument for the Treaty Establishing the European Stability Mechanism (ESM) and sent it to the Riigikogu for deliberation.
The ESM is an international financing institution to be created by the countries in the euro area. Its aim is to provide strictly conditional financial assistance to members in financial difficulty in order to ensure the financial stability of the euro area and its members.
For Estonia, taking part in the ESM is a guarantee that euro area countries in economic difficulty will not pose a risk to the security of the euro area as a whole, but it is also possible for Estonia itself to receive assistance from the ESM in case it lands in economic difficulties. ESM provides its members the possibility to enjoy what amounts to pre-approved credit as a buffer in a financial crisis.
The ESM will establish what is essentially an association bank of euro area members, backed by 700 billon euros of capital, 80 billion euros of which is paid-in capital to be contributed by member states. Estonia’s stake in the capital of the stability mechanism during the transition period (12 years since joining the Eurozone) is 0.186 percent, with 148.8 million euros to be contributed. The upper limit on Estonia’s guarantees in the ESM is 1.302 billion euros.
In the state budget, the contribution to the ESM is recognized as a financing transaction. Any changes to Estonia’s stake and the maximum amount in guarantees must be approved by the plenary assembly of the Riigikogu.
According to the draft instrument, the European Union Affairs Committee of the Riigikogu is permanently involved in the process of making decisions on the ESM. The committee is the central parliamentary unit for the EU’s coordination mechanism. The committee can refer all topics in its competence to a plenary assembly of the Riigikogu, if it finds that it is necessary for aid requests to be deliberated in plenary session, taking into account the content of the request and the timetable for the decision-making process.
The Cabinet proposes to the Riigikogu that an extraordinary session be held on August 8 at 11am to discuss the draft ratification act. Should the Riigikogu opt to conclude the first reading, the Cabinet proposed that the second reading would take place on August 30 at 10am, followed by the third reading two hours after the end of the second reading.
We are committed to making this website accessible to as many people as possible.