"This situation has developed throughout the years. Before the pandemic, when the economy was doing well, we were already running a budget deficit, i.e. in 2017, 2018 and 2019. For the Eurozone as a whole, however, debt and deficits declined on average, as even debt ridden nations took attempts to minimize their deficits that began to climb again during the pandemic," Sõerd said, and continued: "In the given circumstances, we cannot discuss fiscal balance for the year 2023 without accounting for the cost of the coalition agreement, the cost of hosting refugees, and the cost of additional salary increases; a 2 percent deficit is expected."

"What balance can we be talking about? Of course, I advocate for a conservative approach, a sound economic strategy and living within our means, but the reality is quite different," Sõerd added.

Sõerd also emphasized that fiscal policy is the government's primary tool for containing inflation.

"Ultimately, we must finance this budget deficit with borrowed funds, which enter the country via the state budget in the form of foreign bonds or loans. When the budget is in deficit, fiscal policy exacerbates rather than mitigates inflation."

Sõerd said that fiscal balance is mainly important for three reasons: the reintroduction of fiscal rules, the rise in interest rates, as well as the use of the budget to control inflation.

The coalition agreement anticipated certain additional costs, including salary hikes and refugee expenditures.

"Those who advocate for increased spending should consider the country's debt burden, which, while still modest in comparison to other nations, is rising," Sõerd said.

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