Finance minister Keit Pentus-Rosimannus (Reform) says that the coalition is tackling the issue of budgetary deficit exacerbated, but not solely caused by, the coronavirus pandemic and its economic effects. This was exemplified by a nearly-balanced state budget planned for 2022.
“We are now seeing a growth, whereas before the economy had been in a hole,” Pentus-Rosimannus said.
“We are now reaching the same level we were at in 2019, before the crisis. That reference point must always be borne in mind,” the finance minister went on.
The government has approved the 2022 state budget and has projected revenues of over EUR 13 billion, with expenditures of ER 13.5-13.6 billion forecast, she said.
The finance minister said that the budget had been in deficit even before the coronavirus arrived, adding that this was not sustainable in the long-run.
“You can’t buy things endlessly with a credit card at the expense of future wages. It’s the same with the state,” she said.
The pandemic arrived when the Reform Party, an avowedly budget-balancing-focused party, was in opposition, while the Center Party was in coalition with the Conservative People’s Party of Estonia (EKRE) and Isamaa.
Center is still in office, with Reform alone.
Pentus-Rosimannus said that rolling back this deficit would not be possible in just a year, though it had already been significantly reduced.
“Whereas the planned deficit has been more than a billion euros in recent years, we will cut it by more than EUR 400 million,” she said.
“What has enabled us to do that is that tax receipts are not something that can eliminate a deficit via some sort of “Houdini trick”. The deficit will be reduced if expenditures are not growing fast, but we are able to retain the use of tax money in place,” she added, noting that while Estonia was not alone in tackling a major deficit, some other, neighboring countries were doing so purely as a result of the pandemic, whereas this wasn’t the case with Estonia.
The budget draft now goes to the Riigikogu for debating and voting, with a view to passing until year-end. (ERR/Business World Magazine)
