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Government agrees on the outline of the state budget strategy

13. April 2018 - 23:27

Sagadi, 13 April 2018 – The government laid down the outline of the state budget strategy for 2019–2022, which will form a basis for the financial plans in the years to come. The government foresees a nominal budgetary surplus and structural balance in the next four years.

Prime Minister Jüri Ratas noted that the current economic growth surpasses the earlier estimations, which in turn requires a more balanced budgetary policy. “Rapid economic growth means, of course, good news to our people and enterprises, as people have work and their income is growing. For the state, however, it means thoroughly weighed decisions in terms of investments to prevent the economy from overheating,” he said, adding that the national budgetary policy is and will remain responsible.

“I would like to thank all ministers and officials for their thorough preparations and substantial discussions and I applaud the teamwork that brought us to the good result. Decisions made by the government ensure calmness in the area of taxes in 2019, budgetary surplus planned for the next year and structural balance,” he added.

As a result of the discussions the government coalition decided to call off the increase in the excise duties on alcohol planned for 2019. There are also no plans to levy a tax on sweetened drinks either.

“I’m glad that we have arrived at an agreement where the budget is structurally balanced and in a nominal surplus. This means that our small public debt will decrease even further. We are not planning to implement new taxes as the state revenue is growing sufficiently well along with our economy and incomes,” said Toomas Tõniste, the Minister of Finance. “We found new ways to direct the resources planned in our current budgetary strategy to cover new costs. All together, these decisions mean that the state’s finances are also going to be managed well in the next four years.

Jevgeni Ossinovski, the Minister of Health and Labour, stressed that the new budgetary strategy makes a strong contribution to a smarter, safer and fairer society in Estonia. “We have managed to agree on a historic salary increase in the field of internal security, which helps us to maintain the professionalism of the service. We are also allocating an additional sum of more than 20 million euros to research and innovation next year,” stressed Ossinovski. “I also consider it important that, in the next few years, we are going to invest more than 100 million euros in the development of e-state services. The government will also continue fulfilling the earlier priority, making it possible to raise the minimum salary of both teachers as well as cultural professionals with higher education by a hundred euros, to 1,250 euros. Access to both social and healthcare services will increase significantly.”

In compiling this year’s state budget strategy and the conclusion of the coalition agreement, the government follows the ambitious goals of promoting a sustainable economic environment, supporting population growth, strengthening security and increasing social welfare and cohesion.

“Among others, the government supports the growth of the salary fund of rescue workers, police officers, teachers, cultural professionals with higher education and social workers, and will finance the reliability of the e-state services in a larger volume than before,” said Prime Minister Jüri Ratas. “Very important is the decision to finance Estonia’s candidature for the non-permanent member of the UN Security Council for the years 2020–2021. Essential topics in regional policies include the supplementary funding of the Ida-Viru programme, initiation of the Southeast Estonia programme, leasing a fifth ferry and improving the flight connection to Saaremaa,” he stressed.

The aim of the government’s budgetary policy is to support balanced economic growth. For this, the government is going to postpone some of the planned investments, updating the long-term plan for using the aid from the EU, redirecting the aid allocated to Estonia during the current multi-year budgetary period in a manner that it may be used more efficiently. Social cohesion will also be improved by the stimulation of the economy of Ida-Viru County and South-eastern Estonia, by directing more EU resources and other grants there than planned before. In order to ensure security, the government will continue to allocate at least 2 percent of the GDP for the development of Estonia’s national defence.

In next week’s cabinet meeting, the government will receive an overview of the more detailed financial plans of the ministries. The state budget strategy document will be drafted soon and before its approval, the government is going to hear the opinion of the independent fiscal council. The approval of the state budget strategy document is planned to take place at the government meeting held on 26 April.

Photos from the seminar in Sagadi: