Government approves state budget, spending €17 billion

Kaja Kallas.
Kaja Kallas. Source: Ken Mürk/ERR

At its Thursday morning session, the cabinet approved the draft state budget for next year, which includes 17 billion euros in spending, an increase of 18 percent compared to this year.

In 2023, state budget income will total €15.57 billion, an increase of €2.19 billion or 16.4 percent from the budget approved in autumn 2021.

In 2023, spending will total €16.79 billion, up €2.59 billion or 18 percent from 2022 figures.

The nominal state budget deficit is 3.9 percent, which the government views as an additional economic stimulus. It also means that the debt burden will increase.

The tax burden in 2023 will be 33.3 percent of GDP, an increase of 0.6 percent over 2022.

"When drafting the budget, we had two obvious priorities: ensuring the country's and people's security and keeping our people safe," PM Kaja Kallas said. "National defense and human life protection are the only real priorities at a time when security is tougher than it has been for generations."

In the new budget, defense expenditures will surpass one billion euros for the first time.

Another critical issue is investing in people, which includes pay raises, subsidies, and education funding.

"I can proudly and honestly confirm that the state budget proposal for next year has been developed responsibly. The budget deficit left by the penultimate government that was in office in peacetime has been drastically reduced. Improving our financial discipline is the financial shot in the arm we need if circumstances continue to worsen," Kallas said.

In the new budget, defense expenditures will surpass one billion euros for the first time.

To fund the rising costs in next year's budget, the state will have to take out a €250 million loan. As spending will remain constant over the next four years, the same amount of borrowing will be needed each year.

Compared to the size of the state budget in 2022, the biggest increases will be in social benefits (€765.9 million), other benefits (€607.7 million) and transferable taxes (€526.3 million).

The debt will increase by €780 million, or to 19.8 percent of GDP due to a significant increase in security and social protection expenditure.

In the national budget for next year, expenditures will clearly exceed income. The prime minister confirmed a structural deficit of 2.6 percent.

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Editor: Kristina Kersa

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