Kristina Kallas: We need a moratorium on state spending

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

Sides to the incoming coalition have agreed that Estonia needs structural reforms to cut long-term cumulative spending. However, the brakes need to be applied immediately if Estonia has any hope of shaking fiscal deficit in the next decade," Eesti 200 deputy head Kristina Kallas said on the "Esimene stuudio" talk show.

Kallas said earlier on Wednesday that state finances are much worse off than the party knew going into coalition talks, adding that no tax can be hiked before current spending is under control.

"We knew there was no revenue to cover the previous government's expenses. /.../ We also knew there was no way to pay for long-term expenses four years ago. But we didn't know the situation was this bad because we then had an economic crisis to boot," she said on "Esimene stuudio."

The Eesti 200 representative said that coalition talks have arrived at the most difficult questions, adding that the negotiations became much more difficult after the sides got an overview of the Finance Ministry's recent economic forecast. It became clear the state budget simply doesn't have the money to pay for several election promises.

"The talks are a little painful as everything is stuck behind money. Money. Money. Money. That is where the ball stops because we simply don't have enough."

Kallas said the partners are hashing out which promises that the three parties have made cannot be fulfilled. She added that striking out existing things or agreements will be more painful still.

"Because we need a moratorium on state spending. That is the only way we can climb out of the hole. This also means looking some past decisions in the eye, which is another thing we must decide," Kallas said.

"We need a white paper and to do the budget from scratch. But we have agreed to get it done. All partners agree that we need a thorough inventory of the budget. Rather, the problem is that we need to fit inside the Maastricht criteria also with next year's budget. It is painful," she said.

The Eesti 200 politician said that where it comes to cutting long-term spending, ideological differences mean arguments are fiercest with the Social Democrats. However, there is no way around it.

"Previous governments have prescribed fixed costs that are set to accumulate over time, and this is something we need to revise. /.../ The deficit is not quite €1 billion, while even half of that is not something you can just temporarily cut your way out of. /.../ We need to look at the long perspective, to make sure things wouldn't be as bad as they are today in ten years' time," Kallas said.


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Editor: Marcus Turovski

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