The Reform Party-Social Democrat coaltion in the Estonian Parliament has reached an agreement over the size of next year's state budget, which is predicted to increase by 0.5 billion euros to 8.5 billion.
Prime Minister Taavi Rõivas called the budget a conservative one that should boost economic growth.
Defense, border security, speeding up court procedures, and ambulance service reform were the priorities in the negotiations. Defense got budgetary expenditures above and beyond 2 percent of GDP, which is the standard set by the country's NATO membership, although Estonia is one of only four countries in the organization which reaches that threshold..
The additional funds for defense were allocated for hosting allied troops in the near term. Currently there are members of the US 173rd airborne in the country, engaged in training exercises with Estonian defense units. Members of the US 1st Brigade, 1st Cavalry Division, will rotate to the Baltic states and Poland in October, as part of the training exercise, "Operation Atlantic Resolve."
The income tax will decrease by 1 percentage point to 20 percent under the plan, as will unemployment tax, while the child allowance will increase. A first or second child will qualify parents for 45 euros a month, while a third child would qualify a family for 100 euros.
The budget will be presented to the full parliament in two weeks.