Finance minister: Supplementary budget can be prepared if necessary
Estonia is prepared to introduce a supplementary budget this year if necessary to deal with the fallout from the war in Ukraine, Minister of Finance Keit Pentus-Rosimannus (Center) said on Tuesday.
While Estonia has moved closer to once again having a balanced budget, additional spending may be needed this year.
One reason is Russia's invasion of Ukraine which means defense spending has been increased by €380 million, taking it well over 2 percent of GDP, but this may also need to be topped up.
"If this need arises, we must be prepared for it. Our security situation is such that there is no military threat to us, Estonia, but there are, of course, tensions in the entire region that have not been there for decades," Pentus-Rosimannus said.
If quick financial decisions are needed they will be covered by the government's reserve fund and potential a loan.
"This year, too, we are in a situation where the economic momentum has been very good, but since the budget is not in surplus, a loan will be the source with which the additional costs must be covered now," the minister said.
The most pressing expenditure is currently supporting Ukrainians displaced by war and €1.3 million was allocated yesterday, but additional funds may need to be assigned in the coming months.
According to a preliminary estimate by the Ministry of Finance, last year's budget deficit was 2.7 percent of GDP.
Pentus-Rosimannus said growth was "very good" although slightly less than the 9.5 percent forecast. Inflation "ate up part of the real growth" the minister said.
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Editor: Helen Wright