Estonian PM: We've got to do something radical with the budget

Prime Minister Kaja Kallas (Reform) and members of the government during state budget talks at Vihula Manor on Friday morning. September 15, 2023.
Prime Minister Kaja Kallas (Reform) and members of the government during state budget talks at Vihula Manor on Friday morning. September 15, 2023. Source: Jürgen Randma/Government Office

Picking up 2024 state budget talks where they left off at Vihula Manor on Friday morning, Prime Minister Kaja Kallas (Reform) said that members of the Estonian government are discussing both new taxes as well as reducing austerity targets. Difficult decisions, however, will be inevitable.

Asked whether any further taxes can be expected yet, Kallas replied that nothing can be said yet right now, but decisions must be made by Friday evening. "Can we do it? We're gonna try," she told ERR.

According to the prime minister, budget talks as well as the current state of the budget are both extremely complicated. "Therefore we've got to do something radical," she acknowledged.

Nonetheless, Kallas can't imagine comprehensive budget cuts either. "We did a round of crazy ideas like that last night," she said. "Officials are hopefully now calculating how we can solve this."

The head of government noted that taxes would most need to be directed into national defense. She also said that even the idea of taxing banks is currently on the table.

"We made the big decisions, and we can see that the tax burden has actually remained the same and we still have these problems," Kallas said.

"All summer we've been looking for where to make cuts; this isn't easy, and it's very difficult to scrape together such a large chunk [of money] from there, so yes, we're going to have to make difficult decisions," she continued.

"I don't think society would be very receptive regarding this, but we don't actually have any other options," she added.

Kallas said that all three coalition parties — the Refom Party, Eesti 200 and the Social Democratic Party (SDE) — and their ministers shared the same understanding of the situation, and that she didn't see anyone show fear of making tough decisions.

She noted, however, that reducing austerity targets isn't out of the question either. "Nothing is off the table," the prime minister said.

Tsahkna: Different decisions lie ahead than we thought

Minister of Foreign Affairs Margus Tsahkna (Eesti 200) likewise said that spending must be reduced and revenues increased.

"Otherwise we'll end up with such a big debt in the coming years that we'll be forced to take out essentially quick loans and then pay even more brutal interest rates," Tsahkna warned. "Even based on the current forecast, just the interest payments to banks on our debt alone are somewhere around one percent, and that is not okay."

According to the minister, the state will have to pay more to maintain Estonia's current standard of living.

"We don't want to cut teachers' salaries, for example, because we have to move forward in life," he explained. "So it's very likely that completely different decisions lie ahead of us than we thought coming here yesterday."

Regarding excise duties, Tsahkna said that those have been wrung so thoroughly dry already that there likely isn't anything left to be had there.

He did confirm that the government is not planning major public sector pay cuts.


Follow ERR News on Facebook and Twitter and never miss an update!

Editor: Aili Vahtla

Hea lugeja, näeme et kasutate vanemat brauseri versiooni või vähelevinud brauserit.

Parema ja terviklikuma kasutajakogemuse tagamiseks soovitame alla laadida uusim versioon mõnest meie toetatud brauserist: