Estonia's state budget to be more detailed, budget process simpler

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The Reform Party unveiled its election program for Tallinn local elections on May 22. Source: Ken Mürk/ERR

The government wants to make the budget more "understandable" and transparent from 2022, Minister of Justice Maris Lauri has said.

The bill presented by the Mministry of Finance would make the state budget seven times more detailed compared with the present and make changes to the process of preparing the budget.

Specifically, where at present time-consuming budget negotiations are held twice every year, in the future details would be decided about only in the fall.   

"We want to make the budget more understandable already from next year. The budget will be much more detailed and clearer. But these are only the first steps -- we will look at what we can make better still during the budget talks in autumn," said Lauri, who is standing in for the minister of finance. 

"It must already be clear from the budget table where public money is going. This will increase transparency and both decision-makers and ordinary people will have a better understanding of what the content of budgetary decisions is," the minister said. 

The level of detail of the state budget will increase by two steps, with the number of budget lines increasing sevenfold. While the state budget currently reflects 38 programs, in the future the document will also set out their breakdown into around 250 program activities. During the budget process, the names of the program activities will also be revised so that their content can be easily understood.

The planned legislative amendments would, in addition to transparency, also increase the decision-making power of the Riigikogu, which will in future approve the budget at the level of program activities, meaning at a more detailed level.

The draft State Budget Act, put by the ministry on the coordination round, also calls for abandoning the time-consuming two-step budget drafting system that means duplication of effort.

"The budget process currently consists of two steps -- pursuant to law, extensive talks are held in both spring and autumn, when the new summer economic forecast has been completed. The political and economic situation changes a lot in half a year, which is why discussions are essentially always reopened," said Lauri, adding that the ministry's desire is to change the process in such way that the discussion in spring would focus on major strategic choices and one would go into detail in September.

This means that the spring budget debate will in the future focus on the big choices, such as the fiscal position, the overall level of public spending and the debt forecast. The stability program to be submitted to the European Commission will also be prepared as part of this process.

Both the four-year national budget strategy and the state budget for the following year would be agreed in September, after the publication of the Ministry of Finance's summer economic forecast. At present, the first discussions on these documents take place in the spring, on the basis of the spring economic forecast of the Ministry of Finance, meaning the knowledge at the beginning of the year.

Since the long-term development vision titled Estonia 2035 was endorsed by the Riigikogu in May, the necessary reference to taking into account development strategies of this kind with a longer-term view in the preparation of the state budget will also be included in the amended law.

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Editor: Helen Wright

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