New State Budget Act Approved by Cabinet
The government has approved a bill that would require the state budget to be balanced, with a long-term goal of expanding the requirement to state-owned companies and organizations.
“The new State Budget Act would build a foundation to continue with the conservative budget policy. The European Commission and the OECD have praised the current financial situation of the state, but have indicated that the current practice should be written into law to guarantee the goal of a lengthy balanced budget,” Finance Minister Jürgen Ligi said in a press release today.
If passed, the act would allow the Cabinet to submit a state budget for approval by the Parliament only if forecasts for income and expenditure are structurally balanced.
If during the budget year those forecasts shift towards a deficit, the state must compensate for the deficit in the budgets for the following years.
Every budget submitted to Parliament since the 2009 budget - including the one for next year - has come with a forecast deficit, though in 2009 and 2010 the state end the year in surplus.