Kaja Kallas: Estonian budget has to be reduced

Prime Minister Kaja Kallas (Reform).
Prime Minister Kaja Kallas (Reform). Source: Ken Mürk/ERR

Worse than hoped for economic indicators won't yet require the passing of a negative supplementary budget this year, however every minister in the new Estonian government will have to take certain cuts in their area into account when drawing up next year's budget, Prime Minister Kaja Kallas, chair of the Riigikogu elections-winning Reform Party, said Tuesday.

"Does the budget have to be reduced? I personally think that yes, that is what that means," Kallas said in an appearance on Vikerraadio's "Stuudios on peaminister" on Tuesday. "That all the ministers in the new government will look within their area [of government] regarding what we are going to do and what we aren't. Some things are carried with us by inertia, and when new things come along, no one considers that we could rethink things instead."

She admitted that the latest economic indicators will certainly impact state revenues, and that the three parties launching coalition talks — announced on Tuesday morning to be Reform, Eesti 200 and the Social Democratic Party (SDE) — will be provided an overview on Wednesday already of the state's financial situation.

"I haven't said that there will be a negative supplementary budget in 2023," Kallas specified. "I meant the 2024 budget. If your revenues and expenditures don't add up, then you have to either increase your revenues or reduce your expenditures."

She said that the Reform Party hasn't given up its goal of balancing the state budget within four years, but they have to take into account that the elections are over and a coalition must be formed in which everyone has to compromise on their wants.

"Which is why my proposal was to start tomorrow with an overview of the state of public finances, so that participants would have a clear framework on the state in which we're even operating," she added.

Asked whether this could lead to tax increases, which the SDE, for example, has wanted, Kallas replied that she didn't want to answer that until they had sat down together with their partners.

Planned for a four-party coalition

Kallas likewise admitted Tuesday that as recently as last week she had counted on having to form a new government coalition between four parties.

"I have to admit that when I did an analysis of [potential] coalitions based on last week's [party] ratings, my most preferred option was a four-party coalition," she said. "The election result turned everything upside down, though, and doing it with four parties now would be clearly overdoing it."

The party chair added that she figured based on recent ratings that the Reform Party would earn 32-34 seats and that Eesti 200's results would be much lower, which is why, in addition to the potential trio announced today, plans last week still included Isamaa as a fourth party as well.

According to valimised.ee, Reform won 37 seats, Eesti 200 14 seats, the SDE 9 seats and Isamaa 8 seats in the Riigikogu elections that concluded Sunday night. A Reform-Eesti 200-SDE coalition would command a combined 60 seats in the 101-seat Riigikogu; the addition of Isamaa would bring that total up to 68.


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Editor: Aili Vahtla

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