Last Friday, the Reform, Eesti 200, SDE coalition met to discuss next year's state budget in light of the new economic forecast. They had a difficult task on their hands. If the government does not propose new tax rises, then between half a billion and a billion euros will need to be found.

Eesti 200 chairman and Minister of Foreign Affairs Margus Tsahkna said cuts could be made across all ministries.

"It has to be a political decision. A clear percentage will be handed over, so to speak. And it's up to the minister and the ministry to decide where to take it from," Tsahkna said, adding that last year it was decided to cut 5 percent of jobs at the Ministry of Foreign Affairs. He said this was not the case in every ministry.

It was hoped that more savings would be found this year, he said: "We saw last year that this did not happen. So if there is going to be a cut, let's really agree [on a percentage] and that cut will come."

No cuts from pensions

Prime Minister Kaja Kallas (Reform) told ERR that to save €900 million a cut of approximately 7 percent would need to be made across the board in every ministry.

SDE chairman and Minister of the Interior Lauri Läänemets said it would be hard for the government to agree on a figure.

"Because I cannot imagine the Social Democrats would agree to cut pensions or health care when we are already €150 million short," he said.

Tsahkna also highlighted pensions as a protected area.

But if the longer the list of areas excluded from cuts, the bigger each cut will have to be.

"We will not be able to make these savings without some public services suffering," Läänemets said. He said if a "substantial" cut is made to internal security there will be no point waiting for police officers anymore "because they will simply not exist".

No agreement on tax rises

The interior minister said the government should not dismiss raising taxes. "Yes, it is uncomfortable and it is difficult for many," Läänemets added.

Under the current process, tax rises should be agreed by the Riigikogu before the summer break in June. But Kallas said this will not happen.

"Most importantly, there is no political agreement on who will be most affected by the tax rises," she explained. "These lines generally go like this: our [Reform] choice would be to tax consumption, SDE's choice would instead be to tax income."

Läänemets also does not think a new tax bill will be proposed anytime soon. "Our hope is that we will be able to agree on a logic that will ensure the functioning of the state."

So, for example, SDE still hopes the money can be found to raise salaries for teachers, lifeguards and police officers next year. Kallas said salaries will rise as the tax hump will b removed, but public sector workers should next expect raises.

"The Reform Party's vision is that there is no money and nothing more will be done in Estonia in the next few years," Läänemets said. "The Social Democrats vision is that we have to."

Government wary of culture cuts backlash

However, recent discussions focus on cuts, not new taxes. One area where the government believes savings could be made is state foundations.

There are over 60 in Estonia, including the AHHAA Science Center, Tartu University Clinic, Enterprise and Innovation Foundation (EISA) and the International Center for Defense and Security (ICDS).

The Ministry of Culture has the largest number of foundations within its area of responsibility. Kallas said the government has also discussed ​​excluding culture foundations from cuts.

"Because in culture these costs are not so high, but in the aggregate, the resentment might be greater," she said.

Läänemets also said making savings in this area is unreasonable.

"There should be some analysis here before," said Läänemets, adding everyone must be able to participate in culture. "If, as a result, going to the theater becomes unaffordable for people on lower incomes, culture will become unaffordable for some people in Estonia," he explained.

National defense costs may automatically decrease

Defense spending is also a trick subject. Under the budget strategy, it should be 3.1 percent of GDP next year, more than €1.3 billion.

Under the latest forecast, as economic growth will be shifted forward, the percentage calculation will also change so €60 million less than planned will be spent on defense costs.

Now politicians must decide whether to stick to the agreement or not.

Now the politicians have to decide whether to stick to the percentage agreement or the expected amounts in the field of defense.

"I think we will look at the last forecast in August and take policy decisions. We really must not take money away from defense," Tsahkna said.

Kalev Stoicescu (Eest 200), head of the Riigikogu's National Defense Committee, said the political agreement only concerns a percentage, not a set amount.

"If GDP is declining, the country needs to review all other spendings, not just defense," Stoicescu said and noted that the national defense has not been affected by the current cutbacks. "Of course, we will try to protect the defense budget as much as we can, but again, we do not have an agreement in nominal terms, we have an agreement as a percentage of GDP."

Kallas said the defense budget has not been discussed yet. "In any case, we need to invest in defense now, because we are facing the most difficult security situation in 30 years. But the truth is that there is also a very big pressure on the budget," she said.

Läänemets stressed national defense and internal security spending needs to be protected. "This could prove fatal for all of us one day," the minister said.

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