Funding the mitigation measures of the electricity crisis agreed upon by the government on Thursday would be right to use from the government's reserves as it is a bad time to make a supplementary budget, Riigikogu's finance committee member Aivar Sõerd (Reform) said. Finance minister Keit Pentus-Rosimannus had already said that a supplementary budget, like the two issued in response to the Covid pandemic, would not be forthcoming.
"When we look at the general situation, then it's not a good time to make a supplementary budget, the general picture is confusing. Several prerequisities are no longer valid in the economic forecast, which is the presumption for the state budget," Sõerd said.
Sõerd brought out as an example that the inflation prediction 3.7 percent has been taken as the basis of the budget. "But in the meantime, the Bank of Estonia's forecast came where the inflation prediction has increased by 8 percent. The Ministry of Finance is preparing the economic forecast for spring, which will probably give a completely different picture of compared to the current situation, it also effects the state's economy," he noted.
"Composing a supplementary budget before the forecast isn't optimal time-wise. It's probably one consideration to not to the supplementary budget before the forecast," Sõerd said.
Minister of Finance Keit Pentus-Rosimannus (Reform) said on Thursday that the new measure package, which will be around €80-90 will be funded from the state's reserves and there is no need for a supplementary budget.
Korobeinik: There's no time
Andrei Korobeinik (Center Party), Chairman of the Finance Committee of the Riigikogu, told the ERR that discussions on the new support package took a long time in the coalition and therefore it is reasonable to move forward as soon as possible.
"And some details are still unresolved. So the implementation of the solution is very fast, there will be no special benefit if the support measures do not start until the autumn," he stated.
Korobeinik said that the idea of a supplementary budget is supported at the same time. "We support the idea of an additional budget, but it does not depend on support measures for the energy market. The peculiarity of today's situation is that there are signs of both a crisis and a boom, and it is difficult to make an accurate forecast even a few months in advance," he said.
Takes a large part of the government's reserve
This year, €120 million were allocated to the government budget reserve fund, of which two million are for ownership reform. Of the remaining €118 million, up to €90 million will go to consumers to ease energy prices.
"The State Budget Act does not prescribe what the government reserve is used for. The only general rule is that the money allocated to the reserve is used for unforeseen expenses. This is the government's decision on how to use this reserve fund in unforeseen cases," Sõerd said.
The Ministry of Finance was told by ERR that it is not yet clear what the final volume of the reserve will be, as the balances are still to be determined.
"However, it is certain that together with the transfers, the reserve will exceed €100 million and will be enough to finance a new support measure, estimated at €80-90 million, the exact amount depending on electricity prices and consumer behavior," Märt Belkin of the ministry's communications department said.
Belkin added that each year, the balance of the special-purpose reserve not used last year is transferred to the special-purpose reserve.
Sõerd stated that a large part of the government's reserve will go to support measures.
"Yes, in fact there are known costs to be covered by the reserve, certainly not yet. I do not have a complete picture of what movements have taken place, it is possible that some funds were transferred from last year. This is the direct responsibility of the Minister of Finance," he said.
Other costs should also be considered in the supplementary budget
If the additional budget had been made only to compensate for energy prices, the procedure would have gone quickly and smoothly, but there would probably have been pressure to add expenses from other areas as well, Sõerd noted.
"There will certainly be pressure to add new topics; topics that are topical. Let's take higher education funding, of course energy issues are also important, but funding for higher education is also very important. There is definitely a desire to add all topics good," said Sõerd.
Riina Sikkut (SDE), a member of the finance committee, told ERR that she would still have preferred a supplementary budget, especially if the Prime Minister had spoken before the Riigikogu about new investments in national defense.
"There are more decisions that change and affect the state budget, and we could do it right. Undoubtedly, the reserve is for extraordinary expenses and the government can decide that. However, the reserve is not bottomless. If possible, additional tax revenues, which take place in an inflationary environment, could be used in the supplementary budget," Sikkut said.
At the same time, Sikkut agreed that the processing of the supplementary budget in the Riigikogu would take more time than the financing of subsidies from the government reserve, which can later be restored from the state budget.
"I agree, this implementation is urgently needed so that people do not have to take their January bills to a local government. If the money is initially taken from the government reserve, it can be restored. With an additional budget, it is possible to restore reserves," he said.
Editor: Roberta Vaino