State budget deficit of first half-year remained under 2 percent

Ministry of Finance.
Ministry of Finance. Source: Siim Lõvi/ERR

In the first six months of the year, the general government deficit had accumulated for €559 million, which was 1.96 percent of the expected annual gross domestic product (GDP).

Compared with the end of June 2020, the budget deficit is 1.2 percentage points of GDP or €292 million lower, which is mainly the result of increased tax revenues and lower supplementary budget expenditures compared to the previous year, the Ministry of Finance announced.

The position of the state budget was also improved by the suspension of state payments to the second pension pillar. Revenues from the sale of goods and services and revenues from the sale of assets have also increased.

The increase in expenditures affecting the state budget position reached 7.5 percent, or €288.2 million, by the end of June.

By the end of June, the budget deficit of the Unemployment Insurance Fund (Töötukassa) was €35.2 million due to increased expenses for unemployment insurance benefits and the wage support measure. However, compared with the first six months of 2020, the deficit was smaller by €218.2 million due to the smaller volume of the wage support measure planned in the supplementary budget this year and also covering part of the expenditure from the supplementary budget to the unemployment fund.

The unemployment fund's budget surplus has increased by €34.1 million compared to the previous year due to operating support provided by the state budget. The support was provided to compensate for lower social tax receipts than before the crisis.

The local government budget surplus decreased by €19.4 million to €84.6 million in June. Compared to the previous year, the surplus was €104.4 million lower due to the fact that last year local governments received support from the state budget with a supplementary budget to cope with the crisis, the higher use of which was postponed to the second half of the year.

The total expenses of state budget institutions increased in June 2021 compared to June of the previous year by €70.8 million or 6.9 percent, more precisely from €1.028 billion to €1.099 billion. Compared to June of the previous year, the main reasons for the increase in total expenditure were an increase in domestic subsidies of €62 million or 12.5 percent, labor costs of €9.2 million or 11.3 percent and management costs of €5.6 million or 9.2 percent. Of the increase in labor costs, the increase in pension provisions is €1.4 million.

Investments increased by 9.2 percent or €4.8 million in June 2021. In six months, investments have been made €25.2 million more than in the previous year. The largest investments in June were the construction of the Tallinn Music and Ballet School, the arrangement of the high school network, the acquisition of vehicles of the Rescue Board (Päästeamet) and the construction of the Estonian-Russian eastern border.

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Editor: Roberta Vaino

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