According to Pauline Kommer, head of government finance services at Statistics Estonia, the central government had the largest deficit at the end of the second quarter of 2026, with spending exceeding revenue by €703.9 million.

Social security funds also ended the second quarter with a deficit of €64.2 million. Local governments were the only part of the public sector to record a surplus by the end of the first half of the year, at €72.4 million, Kommer added.

In the second quarter, general government revenue rose 2.7 percent and spending rose 4.4 percent compared with the same period in 2025. By the end of the first half of the year, general government spending exceeded revenue by €695.8 million.

Investment costs growing the fastest

Investment spending rose the most compared with the second quarter of 2025, increasing 23.6 percent to €851.1 million in the second quarter of 2026. Kommer said the increase reflected investments in both national defense and infrastructure.

Personnel costs also rose, increasing 8.4 percent from the same period last year. "The increase was mainly driven by salary costs in national defense and internal security, in line with what was agreed in the state budget," Kommer explained.

Value-added tax revenue helped slow the growth of the deficit. Compared with the second quarter of last year, receipts rose because of both the VAT rate increase in July 2025 and an overall expansion of the tax base as the economy recovered. VAT receipts in the second quarter were €73.9 million, or 6.9 percent, higher than a year earlier. Social tax revenue also slowed the growth of the deficit, rising by €71.7 million, or 5.4 percent, from the second quarter of last year as wages increased overall.

Consolidated general government debt, also known as Maastricht debt, stood at €11.3 billion at the end of the second quarter of 2026, up €1.2 billion, or 12.1 percent, from the end of 2025.

Central government debt rose 12.5 percent from the end of last year to €10.8 billion at the end of the second quarter.

The combined debt of local governments stood at €1.6 billion at the end of the second quarter of 2026, down 3 percent from the end of 2025.

The social security funds — the Estonian Health Insurance Fund and the Estonian Unemployment Insurance Fund — did not contribute to general government debt.

In Estonia, general government is divided into three parts: central government, local governments and social security funds. Central government comprises state budget institutions, foundations and public-law legal entities. Local governments include city and rural municipality institutions and their foundations, while the social security funds comprise the Estonian Health Insurance Fund and the Estonian Unemployment Insurance Fund.

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