Supplementary budget bill passes first Riigikogu reading

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The Riigikogu session hall. Source: Erik Peinar/Riigikogu chancellery

On Wednesday evening, the Riigikogu finished the first reading of the €641 million supplementary budget drafted by the government to help mitigate the impacts of the coronavirus crisis.

The lion's share of the supplementary budget, that is 87 percent, is support for the private sector and other government sector agencies. It includes remuneration support, investment support for local governments as well as other forms of support for the public and the private sector. Operational costs, which mainly concern health care, account for close to 13 percent of the total size of the budget.

The total volume of expenditures and support in the supplementary budget amounts to €641 million. Together with expected tax receipts, the negative impact on the government sector's nominal budgetary position will be smaller at €453 million, 1.6 percent of GDP. The overall budgetary position of the government sector will be determined on April 5 when the Ministry of Finance is to publish its spring economic prognosis.

Over €150 million will be earmarked for health care for overcoming the health crisis. €52 million will be allocated for covering COVID-19-related additional costs of hospitals, ambulance services and other health care establishments. Over €20 million will go for coronavirus testing and over €30 million for the purchase of vaccines and the organization of vaccination. €26.5 million will be allocated to the Health Insurance Board for restoring the reserve required by law.

A full overview of the supplementary budget's distribution is available here.

A supplementary budget was also created during the first wave of the coronavirus in April of 2020. It was installed specifically to deal with the arrival of the pandemic and its economic effects, but was supposed to expire at year-end 2020.

Finance committee member: This year's supplementary budget better targeted than previous

"When drawing up the support measures, it has been taken into consideration that they should be related to the crisis, limited in time and temporary by nature, and entail rapid impact without permanently expanding expenditures in the state budget," said Aivar Sõerd (Reform), member of the Riigikogu's finance committee.

"Presumably, this money will be spent this year on extraordinary needs. The supplementary budget drawn up by the previous finance minister was announced as having a total volume of €2.3 billion, only half of which was used, thus it cannot be said that the resources were precisely targeted," the finance committee member said.

Sõerd noted that in 2019, altogether 17 EU member states saw a budget surplus. "Estonia did not create the necessary budgetary buffers during the good times, and a structural deficit caused by living beyond our means, intensified. Last year, debt finance was also used for repaying loans that had been taken out during the good times to cover running costs," he added.

"Estonia now had to draw up a supplementary budget for crisis measures, which comprises additional allocations to the health care system, labor market services and support as well as support for mitigating losses caused by restrictions to areas that have been directly affected by them," Sõerd said.

"In order to overcome the crisis, we need to ensure the functionality of the medical system, bring down the infection curve, ensure extensive vaccinations and mitigate the effects of lockdown on people and businesses," he added.

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Editor: Kristjan Kallaste

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