General government deficit significantly reduced, debt level stable in 2021

Euro bills.
Euro bills. Source: Siim Lõvi/ERR

According to preliminary data, Estonia's general government deficit stood at 2.4 percent and the debt level at 18 percent of the GDP in 2021. At the end of last year, total expenditures of the general government exceeded revenues by €721 million, Statistics Estonia said in a press release on Friday.

In Estonia, the general government sector consists of three subsectors: the central government, local governments, and social security funds. Evelin Ahermaa, a leading analyst at Statistics Estonia, said that both the central government and local governments ended 2021 in deficit, with deficits of €742 million and €115 million, respectively.

"Still, the central government budget was in a much better state than the year before," Ahermaa continued. "In 2020, its deficit was €1.2 billion, due mainly to measures related to COVID-19. On the other hand, for social security funds, revenues exceeded expenditures, resulting in a budget surplus of €136 million."

The general government consolidated debt increased slightly, totaling €5.5 billion by the end of 2021. Last year also saw an increase in the debt of both the central government and the local government subsectors. Liabilities toward social security funds stood at €909 million, while long-term loan liabilities increased by 15 percent on year. The general government debt to GDP ratio remained stable on year, however, as the GDP also increased.

General government surplus or deficit by subsector from 2012-2021. Source: Statistics Estonia

The central government subsector includes state budget units and extra-budgetary funds, foundations and legal persons in public law. The total debt of the central government increased by 10 percent compared with 2020, amounting to €5.6 billion by the end of 2021. Long-term loan liabilities increased by 17 percent. The volume of long-term securities in the central government subsector had risen dramatically in 2020, but remained steady last year at €1.5 billion. Foreign debt, i.e. liabilities toward the rest of the world, accounted for 64 percent of the central government's loan liabilities.

The local government subsector, meanwhile, includes city and municipal governments along with their subsidiary units, and foundations. The local government consolidated debt stood at €908 million by the end of 2021. Long-term loan liabilities increased by 7 percent, but the volume of long-term securities continued a downward trend and decreased by nearly one third on year. The share of foreign debt dropped to a quarter of the total local government debt.

Social security funds — i.e. the Estonian Health Insurance Fund and the Estonian Unemployment Insurance Fund — did not contribute to general government debt.


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Editor: Aili Vahtla

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