'Samost ja Sildam': State budget strategy only interim document

Toomas Sildam and Anvar Samost
Toomas Sildam and Anvar Samost Source: ERR

While the state budget strategy for 2022-2025, which austerity measures totaling cuts of €61 million in a year, may have passed government approval this week, the document is interim in nature and unlikely to form a solid basis for government activities going forward, senior ERR journalists Anvar Samost and Toomas Sildam say.

"For these cuts to total €61 million in a year seems artificial and pointless in the extreme," Anvar Samost said Sunday afternoon, appearing on regular head-to-head politics radio talk show "Samost ja Sildam".

"The whole effort undertaken in order to demonstrate how swingeing the cuts are is a type of self-delusion, regardless of which side of things the government looks at. As former long-term prime minister and former Reform Party chair Andrus Ansip told ERR yesterday, this €60 million in cuts will not affect the bigger picture, and there is no point talking about a balanced budget," he went on.

When the state budget strategy, known as the RES from its Estonian abbreviation (riigieelarve strateegia), was announced earlier this week, the cuts figure was put at €60 million, but this seems to have been revised upwards by one million since then.

"It's difficult to assess the RES more precisely than that," Samost added, noting that next year's budget expenditures will come to €13.8 billion, and will not fall, and neither will the volume of government loans.

"These cuts are an example of virtual policy-making which has failed very badly. I don't think either side of the coalition (made up of Reform and Center – ed.) is very happy about a four-day debate whereby the home loan interest rate tax exemption will be phased out, to save € 6.1 million a year or so, or this reduction in recreational activities [spending], saving € 7 million a year or the Ministry of the Interior 's cost - cutting plan," Samost enumerated.

Toomas Sildam referred to the latter as being "particularly stupid", since the ministry has to cut €12 million, will see €6 million come back to it, but from this must come a 3 percent rise in salaries for internal security staff.

"This situation is particularly crazy. It is pretty difficult to come up with a salary increase of minus six million," Sildam said.

Samost concurred, saying: "If I were [interior minister] Kristian Jaani, I would not be in a hurry to implement the cuts."

Sildam added he had heard from sources at several ministries how the corresponding minister had instructed his or her subordinates to carry out minor calculations and plans on a theoretical basis, but not to take any real steps, since the RES is only an interim document whose veracity will become clear in the fall.

Concrete examples of this include the component in the RES entailing the potential sale of the Mine Harbor (Miinisadam) in Tallinn, home of the Estonian Navy, in support of the defense investment program.

However, if this goes ahead, the navy will need a new base, one whose infrastructure does not yet exist and would have to be built from scratch.

Sildam added that after talking to Reform and Center politicians, they had said that there was no need to get excited now, again because it is an interim document which follows the government's obligation to draw the RES up.

Center MP Erkki Savisaar, chair of the Riigikogu's finance committee, had said that the RES is an internal government document, and the parliament will intervene more vigorously in autumn, when next year's state budget reaches the chamber, Toomas Sildam said.

"This means that the Center Party faction is still greatly alarmed and is keeping the date of the local elections on 17 October in mind, since they feel they currently do not have many positive messages to broadcast to their voters," Sildam said.

In the autumn, when the economic forecast is reviewed and which should be more optimistic than the current figures, the real budgetary figures can be set, he said.

At the same time, Samost noted that both Reform and Isamaa had in the past come to terms with the fact that following the dogma of structural budget balance to the letter is not a requirement, something he said both Ansip and Isamaa chair Helir-Valdor Seeder have recently acknowledged.


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Editor: Andrew Whyte

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