European Commission, Estonian government disagree on deficit (1)
In the assessment of the European Commission, Estonia’s budget for 2017 corresponds to the European Union’s rules, but is at a 0.2% structural deficit. The Estonian government does not agree, and expects Estonia to be at a 0.2% structural surplus in 2017.
The European Commission’s Estonian representation told ERR on Wednesday that the structural deficit of Estonia’s government sector was expected to be 0.2% of GDP. This was within permitted limits, but exceeded the limit of the balanced budget.
An important factor contributing to the deficit had been the decision to move investments to be made with money out of EU structural funds from this year to the next, which increased investment spending in the 2017 budget.
The European Commission sees the assumption that the lasting growth of salaries as well as the positive developments in the labor market will continue as a potential risk to the balanced budget.
Of the revenue in the Estonian budget, 45% depended on labor taxes. If the positive developments in the labor market slowed, or if there was an unexpected slump in employment, this would affect revenue substantially, and knock the budget off balance, the Commission argues.
According to the 2017 state budget bill, the government expects the budget to be nearly €9.5bn. They expect the state to be at a 0.2% surplus in 2017.
Estonia is one of five members of the eurozone whose 2017 budget corresponds to EU budget rules. The other countries are Germany, Luxembourg, Slovakia, and the Netherlands.