Investor Presentaiton
Ministry of Finance funding strategy
Conservative debt and financial risk management policies
Debt management strategy
⚫ Balanced budget policies kept debt at very low levels up to the start
of the Covid-19 pandemic in 2020. Financial reserves exceeded debt
• Since 2020, most funding needs have been met with Eurobonds and
IFI loans, with some T-bill and ECP issuances. Going forward, the
share of short-term debt is expected to increase somewhat, with
Eurobond issuance meeting the majority of requirements
• In 2023, gross borrowing amounted to EUR 1.54bn (4.0% of GDP),
including EUR 826m issuance of short-term debt, EUR 210m IFI loan
drawdowns, and Eurobond issue of EUR 500m.¹ In 2024, gross
borrowing is projected at EUR 2.0bn
• The MoF's financial reserves of EUR 2.55bn (6.6% of GDP) consist of
(i) Liquidity Reserve for daily cash management (EUR 2.1bn) and (ii)
Stabilisation Reserve Fund for crisis situations (EUR 0.4bn) as at end-
December 2023.¹ Reserves decreased during 2023 in line with
expectations from EUR 3bn in December 2022
Financial risk management
Composition of the MoF's debt portfolio (December 2023)³
T-bills and ECP
10%
IFI loans
Eurobond
34%
56%
Source: Ministry of Finance of Estonia
MoF's financial reserves and debt portfolio (EURm)³
6,000
The Liquidity Reserve was around EUR 1.8bn on average in 2023,
with the level modelled to withstand a similar shock to the 2008-2009
crisis¹
5,000
4,000
• The average term to maturity of Estonia's debt was 7.1 years as at
Q3 2023²
3,000
• As regards interest rate risk, the MoF debt portfolio's average time to
refixing was 4.9 years in December 2023, while the weighted
average interest rate of the debt portfolio was 2.8% p.a¹
2,000
1,000
27
• The MoF's interest risk management policy follows ALM*-principles,
where part (EUR 700m) of the debt portfolio maintains a similar
duration to the Liquidity Reserve and the remainder of the
outstanding debt has to be fixed for at least 3 years
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
■Financial reserves
■MoF debt
Source: Ministry of Finance of Estonia
Note: (1) The Ministry of Finance of Estonia; (2) European Commission; (3) As of 29 December 2023; (*) ALM: Asset and Liability Management
REPUBLIC OF ESTONIA
MINISTRY OF FINANCEView entire presentation