Stenbock House, 26 September 2018 – at today’s meeting, the government approved the 2019 draft state budget with a focus on people, public services, and a more balanced development.
The government focused on four major objectives in preparing the draft state budget: to promote economic growth, increase the population, strengthen the security, and improve prosperity and societal cohesion.
Figures in general
The expenses and investments of next year’s draft state budget amount to 11.31 billion euros with an expected revenue of 11.06 billion euros. The country’s finances are in a good state – the nominal surplus of the budget is 133 million euros and the budget is structurally balanced. The tax burden will remain the same in the following years. The government debt will be reduced from the current 8.2 per cent to 7.4 per cent in 2019, and to 5.4 per cent by 2022.
Investing into public services
The state budget allocates approximately 13 million euros for increasing the salaries of the employees of the Police and Border Guard and eight million euros for increasing the wage fund of the Estonian Rescue Board. Additional funding from the state budget will increase the average wage of teachers of general education to 1,500 euros next year. The wages of pre-school teachers, social welfare officials, culture workers, and specialists of other fields will also increase.
Additional finances will be used for improving the availability of healthcare. The reimbursement of pharmaceuticals will continue for people requiring more health care. The Health Insurance Fund will receive an additional funding of approximately 180 million euros. This will help shorten health care waiting times and improve the availability of health care services as well as the coherency and quality of treatment. Social services will become more available – special welfare services will receive almost 37 million and social rehabilitation 12.7 million euros in funding. The budget for child allowance will increase to 299 million euros. As of next year, the allowance for the first and second child will be 60 euros.
Public transport subsidies will increase to 101 million euros, compared to this year’s 92 million euros. The subsidies for bus lines will increase from 34.8 million to 43.3 million euros. As of July 2018, most regional bus connections will be free of charge for passengers.
The government is planning to invest an additional 21 million euros (118.4 million euros over the next four years) to maintain, update, and develop the information systems and devices of the Estonian e-state.
An increase in the national defence budget
According to current estimations, the defence budget for next year will be over 2.1 per cent of GDP. The Defence Forces will receive a wage increase and the state will strengthen its military capabilities with major defence procurements constituting almost 40 per cent of the Estonian defence budget.
The efficiency of local governments will increase
The income of local governments will increase approximately 5 per cent in 2019, amounting to approx. 2.2 billion euros. The income of local governments has increased with the financing reform. The budget allocates 3.8 million and 800,000 euros plus external financing a year, respectively, for the regional support programmes of Ida-Virumaa and South-Eastern Estonia until 2020.
Investments
More than 360 million euros will be invested into necessary transport and infrastructure projects, rural development, and culture and sports projects. This includes the construction of the planned four-lane Kose–Mäo section of the Tallinn–Tartu highway and Tehvandi Sports Centre, a new film production complex for Estonian Public Broadcasting, a project for renovating the National Library, and many more. The Minister of Foreign Affairs will open three new agencies and provide support to its current agencies in the largest capitals of Europe. The state budget allocates approximately 1.8 million euros for that purpose.
The government will also continue with direct payments in the agricultural sector, contributing to the competitiveness of our farmers. The direct payments constitute a total of 143.9 million euros in 2019.
See press conference slides at https://drive.google.com/open?id=1VOLBEg0RsYzPjXXq0Wi-gDvAmiXKDI2y