Supplementary budget passes its first Riigikogu reading

A Riigikogu sitting in progress.
A Riigikogu sitting in progress. Source: Siim Lõvi/ERR

The government's supplementary budget aimed at mitigating the effects of the coronavirus pandemic passed its first Riigikogu reading late on Monday evening. The package includes infrastructure investments in road construction and the building sector, as well as excise duty cuts and heightened options for state support for companies and employees.

The supplementary budget puts general government nominal deficit at around €2.62 billion, inclusive of the cost of the economic support measures sparked by the crisis. The negative impact of mitigating measures on the budgetary position will be €1.15 billion, or 4.4 percent of GDP. 

The supplementary budget will reportedly reduce the receipts of the main 2020 state budget due in autumn by €1.63 billion, compared with the current budget. The impact of the supplementary budget measures on the expenditures of the current state budget is €513 million, complemented by the mobilization of reserves.

The bill's second reading is scheduled for Monday April 13, and the third reading on 15 or 16 April.

Finance minister: covers unforeseen expenditure

Finance minister Martin Helme (EKRE) said the supplementary budget aims to cover unforeseen expenses caused by the coronavirus pandemic and to stimulate entrepreneurship and the labor market during the ensuing economic and public health crisis. 

Kersti Sarapuu, chairman of the coalition Center Party's Riigikogu grouping, also said that the supplementary budget and its package of measures would help mitigate the effects of the crisis. 

"The main focus is on keeping people in jobs and with incomes, and hopefully avoid companies closing down due to short-term disruptions," she said.

Sarapuu highlighted cuts in excise duties on electricity, diesel fuel and natural gas, which would reduce the fixed costs of both individuals and businesses.

"The supplementary budget provides support for employees and employers who are particularly hard hit by the current crisis. The state will reimburse workers for 70 percent of thire average gross salary over the past 12 months, helping to preserve jobs and avoid lay-offs," she said.

SDE MP: Non-essential expenditures should be cut

Opposition MP and former health minister Riina Sikkut (SDE), who spoke at the Riigikogu late on Monday, said the supplementary budget should eliminate those expenditures which do not contribute to resolving the crisis, and alleviate concerns of the public and business sector amid the pandemic.

"The costs of preventing and controlling the spread of the infection and treating the disease are certainly essential. These include personal protective equipment and testing, as well as emergency health and safety costs," Sikkut said.

"Expenditure which ensures the livelihood of people in emergency situations, plus the liquidity of companies, is also extremely necessary. The conditions of the Unemployment Insurance Fund (Töötukassa) and [credit provider] KredEx measures can be discussed, but in the interests of all of us, their implementation should take place as soon as possible," she added. 

Sikkut noted the budget distributes grants, guarantees and loans to almost all areas, and over a broad extent. However, the conditions for applyication, Sikkut said, is not clear and her party is calling for transparency on the issue, which would reduce the risk of corruption, ensure equal treatment and build public confidence. 

"It is extremely important that the conditions and recipients of the grants are made public. Equal treatment between parties and the sectors helps to ensure that no one is left out, and that no one else gets the generous use of grants from several fields," said Sikkut. 

The Social Democratic Party (SDE) considers correct that expenditure not aimed at resolving the crisis should be excluded from further supplementary budget procedures. 

Sikkut pointed to the suspension of payments to the second pillar of the pension scheme (referring to employee contributions and already subject to reforms which will make membership of it optional-ed.) and cuts in excise duties. 

This can be further discussed in autumn, when a second supplementary budget for 2020 will likely have to be made, alongside the regular 2021 budget, she added. 

Kersti Sarapuu: Planned investments need to go ahead immediately

Center Party Riigikogu group leader Kersti Sarapuu said it was highly necessary for the state to go ahead with planned investments immediately - excessive cuts would deepen the economic downturn and the length of recovery from it, she said.

"The construction of Eesti Energia's new oil shale plant has already begun, and this sends a clear message that the current government is investing in the oil shale sector. €145 million [in investments] is earmarked for the construction sector, of which €100 million is planned to co-finance the construction and reconstruction of apartments and small houses. Forty million euros is allocated to roadworks, of which the most important part will go towards resurfacing," she added.

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Editor: Andrew Whyte

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