Finance minister: I wouldn't talk about cuts but postponing dreams

Increasing defense spending to 5 percent of GDP next year will mean the sums involved do not fit within the extended budget rules. As a result, there will be a need for big cutbacks in a number of areas, while investments made with European funds may also have to be postponed, Estonian Minister of Finance Jürgen Ligi (Reform) told ERR.
"Security must come first, of course, these steps have to be taken. From a financial point of view, it is a nightmare that the rules not only have to be changed but that we are not actually even able to [put in] these kinds of sums of money with the extended rules. It means that all other areas will have to cut back hard," Ligi explained.
According to Ligi, Estonia should not be talking about cuts, but instead about postponing investments: "We simply have to step back from our dreams in all areas."
Ligi added that he had spoken to the EU's cohesion commissioner and hopes that European funds could be redirected to defense.
"We have to scrape things together from all sides, but we also when it comes to the expectations for European money in other area – all kinds of wage increases and all kinds of construction [projects]," the finance minister explained.
"But obviously the whole list of investments will also have to go through a review, including those things that were already fought for in the State Budget Strategy," he added.
From the EU's Cohesion Fund, Estonia would still have around €1 billion left to draw from during this period. According to Ligi, postponing investments would also free up a lot of funds for Estonia in the form of co-financing. "A lot of money that we could also use for defense spending if we did not have to co-finance," he pointed out.
"We are not going to pull out all the stops now, but we will prioritize when applying for European funds. We have to reduce our dreams and Europe is promising us it will make military expenditures, which was not at all conceivable at the beginning of the period – to have military expenditures in the European budget," Ligi said.
Ligi confirmed that no decisions have been taken yet. However, officials are already working on it and after that, the political choices will need to be reviewed.
"We will make some kind of big decision, but we will still have to look point by point at which areas have to be tightened up and by how much. But we are not quite giving up on [all] other objectives, but yes, unfortunately, it is urgent at the moment," Ligi said.
"European money will still be used for major and important things. It's not as if it will go to waste. Most of the funds have already been promised, so we have to see what we can pull back," he added.
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Editor: Marko Tooming, Michael Cole