Government to discuss €200-million state budget hole at out-of-town session

Cabinet meeting at the Stenbock House.
Cabinet meeting at the Stenbock House. Source: Government Office.

The government is to meet at an out-of-town session today, Thursday, in order to discuss next year's state budget and state budget strategy. The finance minister has called for finding €200 million in cuts or via revenue sources, for the forthcoming 2024 state budget.

Usually the cabinet meets Thursdays at the Stenbock House, a meeting followed by a regular press conference.

For the second consecutive fall, government members will convene at the Vihula Manor in Lääne-Viru County, the setting for talks on the 2024 state budget.

Once approved at governmental level, the budget bill is sent to the Riigikogu for processing, with the aim of it passing its third and final reading in December.

One difference from last year's discussions, ETV news show "Aktuaalne kaamera" (AK) reports, is that whereas in 2022 one of the central issues concerned the taking out of a loan, now the search for cutbacks is key, as is possible sources for additional revenue.

Central to the talks is Finance Minister Mart Võrklaev (Reform), who told AK that: "Our starting off point is the fact that we will be running a deficit of over €200 million next year (link in Estonian) while, following budget regulations, this deficit will have risen to €2 billion by 2027."

Eesti 200, which was not in the coalition this time last year, has as one of its central policy planks the diminution of state apparatus and bureaucracy; the party says this makes cuts on their own insufficient to achieve that task.

The party's foreign minister, Margus Tsahkna, said: "This 'solidarity cut,' as I refer to it, has to be made, in order to demonstrate to the people of Estonia, who pay taxes, and to demonstrate to Estonian entrepreneurs, who are in a tight situation, that the state is pulling down its bureaucracy."

"Small cuts are not enough here. Do we have to alter some major policy? Do we have to take some other tax policy steps? These make for some very difficult discussions," Tsahkna went on.

The third coalition partner, the Social Democrats (SDE), finds that making cuts is no longer viable, particularly when it comes to healthcare or domestic security. For this reason, the party says it wants to press on with taxing banks' profits.

Interior Minister Lauri Läänemets, who is also the party's leader, said: "At the end of the day, this money has been removed from the Estonian economy, from Estonian companies, from the Estonian people – major interest [rate] incomes.

Really we could put this back into the economy right now and this would be highly reasonable from the viewpoint of the economy itself."

Läänemets proposed a special tax on banks which he says would bring in €951 million over a three-year period and add €470 million to next year's state budget alone.

The SDE leader also disagrees with freezing the wages of salaries of rescuers and police officers, while teachers have also requested a wage hike – the finance minister had proposed to freezing the entire public sector salary fund for four years. 

While raising wages next year may prove tough, Läänemets conceded, in the ensuing years and bearing in mind inflation, not raising wages in those subsequent years will not be viable, he said.

Finance Minister Võrklaev said however that a wage freeze need not mean that public sector salary levels remain unchanged, but rather, ways to improve efficiency and hunt for areas where bureaucracy can be slashed

"This would bring out nicely to the politicians, to the leaders, those places where savings could be made. I'm quite sure that in we don't in the initial have to approach the salaries of the police, rescuers, nor the closure of any brigades," he went on.


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Editor: Andrew Whyte, Merili Nael

Source: 'Aktuaalne kaamera,' reporter Kadri Põlendik.

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