Coalition reaches agreement during 2023 budget negotiations

The government meeting at Vihula Manor.
The government meeting at Vihula Manor. Source: Raigo Pajula

The universal electricity service will be extended to small businesses and teachers, rescuers and policemen will receive at least a 15 percent pay rise, the coalition agreed during budget negotiations on Friday.

Prime Minister Kaja Kallas (Reform) told ETV's "Aktuaalne kaamera" (AK) priority groups will receive a 15 percent raise and non-priority groups a 5 percent increase. She said ministries are still calculating specific amounts.

"We have had exceptionally large tax receipts due to inflation, which gives us the opportunity to return this tax receipt to the people. We will do this through the increase of various benefits that we have agreed on in the coalition agreement," she said.

As well as pay rises, Kallas said there will be increases in family benefits, such as child benefits and the minimum tax-free income limit and pensions will be raised. More money will also be allocated for the transition to Estonian-language education and care reforms.

Chairman of the Social Democratic Party, Minister of the Interior Lauri Läänemets, said welfare reforms will be implemented from June 2023.

Additionally, Kallas said taxes will not rise this year.

The government has also agreed to buy medium-range air defenses. "Financially, it will be spread over four years because this is a long process," the prime minister explained.

On the subject of taking out a loan for national defense, the parties still disagree.

Kallas said it is not necessary to take out a new loan due to increased money from taxes and highlighted Estonia's debt burden is 23 percent.

However, Läänemets believes additional contributions to natural defense are still needed. "I think it is reasonable, considering that it guarantees and affects all of our security," he told AK.

Speaking on the subject of the universal electricity service, Isamaa Chairman Helir-Valdor Seeder said the Riigikogu will allow it to be extended to micro and small businesses, not just domestic consumers.

He said the agreement is a compromise between the three ruling parties as well as between ideals and reality.

"I think that this is the best possible solution that we could come up with and agree on at this time and it really allows the development of different areas in this difficult situation," Seeder said.

"And everything that we had agreed on in the coalition agreement is financially covered in the budget. And some more additional necessities."


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Editor: Helen Wright

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