Expert: The government cannot swallow the cost of price advance

Host Indrek Kiisler and Aivar Sõerd on
Host Indrek Kiisler and Aivar Sõerd on "Otse uudistemajast" Source: ERR

Member of the Riigikogu Finance Committee, former Finance Minister Aivar Sõerd (Reform) told ERR's "Otse uudistemajast" webcast that the government cannot simply pay for general price advance, commenting on Estonia's supplementary state budget.

The government on Tuesday approved Estonia's €802.9 million supplementary state budget to cover urgent costs associated with national defense, Ukrainian refugees and people's subsistence.

Asked by host Indrek Kiisler whether he would have liked to see cuts in the budget, Sõerd said that austerity should not be a campaign and that, rather, Estonia should work on reforming the state budget process where saving can be found. The expert also criticized the so-called activities-based budgeting model that has failed to yield promised clarity.

The supplementary budget includes a home loan payments subsistence benefit as a first-time measure Sõerd described as ambivalent. He said it certainly is a novel mechanism that also sparked a lot of questions from Reform MPs.

Sõerd pointed to the fact that people who have purchased property would be supported using taxpayer money, whereas plenty of taxpayers do not own property. He said that potential recipients do not number many at approximately 2,000.

He added that Reform MPs were concerned looking at the substantial deficit of the budget. "Tax revenue fails to cover 12 percent of the budget. One cannot live on debt for too long. We cannot pay for the price advance out of the state budget," he admitted.

Sõerd added that Estonia's public debt is growing rapidly and the supplementary budget will only add fuel to the fire. The European Central Bank is expected to hike interest rates that would make it even more expensive to service public debt.


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Editor: Marcus Turovski

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