The government on Tuesday passed the 2024 state budget and the next four years' fiscal strategy. Revenue will amount to €16.79 billion, expenses to €17.67 billion and investments to €0.82 billion.
The 2024 budget will have a structural deficit of 1.2 percent of GDP compared to 2023 and a nominal deficit of 2.9 percent of GDP.
The budget will concentrate on national defense, education, economic stimulation and reaching a sustainable fiscal situation. Support for Ukraine remains a priority.
Estonia's defense spending will for the first time exceed 3 percent of GDP next year at €1.33 billion in 2024 and around €5.6 billion for 2024-27. Over 50 percent of the defense budget will go toward procurements.
Funding for the Defense League will be €300 million in 2024-27.
Internal security will receive an extra €9 million annually from 2024, which will go toward the Police and Bordet Guard Board's crisis reserve, new equipment and hiring more assistant police officers.
€15.2 million will be allocated for border protection and eastern border development in 2024 and 2025.
Teachers are the only public sector workers to see a salary advance next year, with €561.9 million earmarked for teacher salaries, up €23.72 million since last year. The average salary of teachers is set to go up by 4.3 percent. Estonia will allocate €3.7 million to support new teachers and support specialists.
The budget for switching to teaching in Estonian will grow by €27 million. The transition has been allocated €71.9 million for 2024, including €3 million from foreign support.
Higher education will receive €274.7 million. The higher education activity support will grow by 15 percent to €232.3 million. An additional €5.2 million has been earmarked for doubling necessity-based study benefits.
The agreement to allocate at least 1 percent of GDP for research and development will hold in the 2024 budget.
Economic stimulation and the green reform
Investments and investment support for economic recovery amount to €1.9 billion in the 2024 budget of which €1.1 billion will come from foreign support and €800 million from the Estonian taxpayer.
Estonia will spend €20 million on the environment and ecosystems recovery. A total of €155 million will be invested in new renewable energy production in 2024-2027.
€96 million in foreign assets will be invested in environmentally friendly public transport and bicycle paths, with investments in public transport and bicycle paths to grow by €70 million over four years.
Financing for rail electrification will grow by €54 million. The budget also has €11 million for developing electric charging infrastructure at the Virtsu and Kuivastu ports to launch the first electric ferry between the mainland and Muhumaa in 2026.
Construction work of the main Rail Baltica line will start in 2024 in which €216 million will be invested.
€60 million will be allocated for improving public transport nationwide over the next two years.
The KredEx and EAS joint agency (EISA) loans fund will be increased by €100 million with the aim of supporting Estonian companies reaching foreign markets. The government will develop a Ukraine export loan instrument to provide companies with certainty for expanding to the Ukrainian market and help its economic recovery.
Next year's budget will have a structural deficit of 1.2 percent of GDP, while the government aims to keep it at or under 1 percent of GDP in 2025 and after.
A budgetary review has been ordered covering the administrative area of all ministries with which the public sector aims to save €150 million in the first wave.
Tobacco and alcohol excise duty hikes are forecast to yield €63 million in the next two years. The VAT rate will be hiked by 2 percentage points in 2024, which is forecast to yield €235 million.
Support for Ukraine
Estonia will put €29.2 million toward helping rebuild Ukraine.
With its European partners, Estonia will considerably boost its contribution to the European Peace Facility to which the Ministry of Foreign Affairs and the Ministry of Defense aim to add €6 million annually until 2027.
Estonia will spend €14 million on direct reconstruction activity in Ukraine.
Editor: Barbara Oja, Marcus Turovski