At a time when politicians, analysts and financial experts are debating budget transparency and discussing whether an expenditure-based or activity-based budget is the better solution, three other important topics capture my attention: economic growth, the transition to Estonian-language education and the security of the elderly.

Light at the end of the tunnel

When drafting Estonia's 2025 state budget, several global negative economic factors were taken into account, including inflation, the impact of the war in Ukraine and reduced demand in foreign markets.

Despite these challenging conditions, forecasts remain optimistic. The economy is expected to begin recovering by the end of 2024, and economic growth in 2025 could reach nearly 3 percent. However, achieving this requires essential reforms that reduce bureaucracy and eliminate administrative barriers hindering businesses.

While preparing the 2025 budget, coalition partners considered not only tax increases and cost-saving measures but also how to ensure sustained economic growth. Entrepreneurs are already highlighting issues such as limited access to loans and decreased demand.

In my opinion, Estonia needs reforms that simplify administrative procedures and reduce regulations. This would be a crucial stimulus for increasing productivity and competitiveness. Simplifying business operations and reducing the time spent complying with bureaucratic requirements would allow entrepreneurs to focus on developing their businesses and fostering innovation, thereby enhancing their competitiveness in international markets.

The projected drop in interest rates to 2.5 percent could also invigorate the business sector. Meanwhile, the government plans to reduce state spending by €1.4 billion, thereby freeing up resources to stimulate entrepreneurship and support investments. The government also intends to reduce state borrowing, which in turn would help curb inflation.

Work continues on the Estonian education transition

The transition to Estonian-language education will remain one of the most important strategic goals in the coming year. Nearly €62 million has been allocated for this transition in next year's budget. But is that enough?

Over the past few months, I have had numerous conversations with the principals of Tallinn's so-called transition schools and with parents. Although the transition is still in its early stages, some of the most common issues that need to be addressed have already become apparent.

First, transition classes are in urgent need of assistant teachers, who ideally should be present in every classroom.

Second, teachers must be provided with regular training courses, specifically in teaching methodology. These courses should be continuous and supported by freely accessible materials.

Third, educators are concerned about the risk of segregation, which could mean that creating a unified school system might take longer than anticipated.

The Ministry of Education undoubtedly faces challenging tasks ahead, but I believe that by working together with schools and parents, the transition can be successful. We are striving to make the switch to Estonian-language education as smooth as possible. Only in this way can we ensure that all young people in Estonia have equal opportunities in both education and the labor market in the future.

Pensioners not affected by budget cuts

Despite significant cost-saving measures in nearly all sectors, pensions will remain unaffected by cuts, and their indexation will continue in the coming years. Pensions are expected to rise by 6 percent in 2025, which will help partially offset the losses from inflation and maintain the standard of living for retirees.

It is also important to highlight that the projected economic growth and improvement in the overall economic situation by 2025 will create conditions for further pension increases. With the period of higher inflation behind us and the stabilization of inflation, alongside the recovery of purchasing power, these factors should also have a positive impact on the financial well-being of the elderly.

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