Government Reaches Agreement in Budget Talks ({{commentsTotal}})

Finance Minister Jürgen Ligi (left) and Prime Minister Andrus Ansip
Finance Minister Jürgen Ligi (left) and Prime Minister Andrus Ansip Source: Photo: Postimees/Scanpix

Government ministers reached an agreement on the 2014 state budget during a Cabinet meeting today.

The draft foresees costs growing by 400 million euros - 5 percent - compared with this year's budget, reaching 8.1 billion euros, while revenues will amount to 8 billion euros. The resulting budget deficit will be around 0.4 percent of GDP.

A major share of the increase in costs will be allocated to social programs, with funds for state pension payments rising by 35 million euros and health insurance by 62 million euros next year.

Additionally, the subsistence benefit will rise to 90 euros and the government aims to reduce queues for special care homes by nearly half, by about 200 persons.

A higher-than-expected rise in the average salary and declining unemployment will allow an average increase of 5.8 percent for pensions.

Next year the average pension will remain tax-free. Pensioners' tax free income will rise by 18 euros to 354 euros.

The wages and salary fund for all governing areas will rise by 5.1 percent next year. The ministers are tasked with distributing those extra funds on a needs basis.

The Cabinet plans to confirm the budget on September 24 and hand it over to Parliament on September 25.