"Because the nearly €800 million cost of abolishing the 'tax hump' (Estonia's progressive basic exemption reduction scheme, which was replaced with a flat €700 exemption for everyone — ed.) and canceling the income tax increase was covered with borrowed money, the government's hands are tied. That was its own decision and unfortunately it means teachers, rescue workers, healthcare workers and specialized care services are paying for the tax cut. Social Democrats consider that deeply unfair," Sikkut told ETV Tuesday morning.

She said the government had tried to keep the deficit within 4 percent through accounting measures, bringing some spending forward into this year and postponing other costs, including construction of Rail Baltica.

"Government members probably felt they had achieved some kind of mathematically optimal result. But looking at it from the outside and from the opposition, no one can praise this budget."

Sikkut said she would not support bargaining over the budget. There is therefore no prospect of the Social Democrats helping the government push it through in exchange for measures they favored.

"Ultimately, this isn't about individual budget lines. If you've started making a Napoleon cake according to a recipe, you can't take cinnamon rolls out of the oven after the Riigikogu has considered it."

Sikkut said her greatest concern was healthcare, particularly specialized care. The Supreme Court has ruled that two-year waits for people with mental disabilities are unacceptable, she said, but the new state budget provides no funding to address the problem and comply with the ruling.

"Because the root of the whole problem — abolishing the 'tax hump' — lies in last year, the opposition cannot change anything now either. We have to say honestly that a solution will come after next March's elections. The hope that a government with a five-month horizon will make farsighted decisions with long-term effects will not be realized."

Sikkut said she was convinced the state budget would be revised after the Riigikogu elections.

She also pointed to the country's growing debt burden, saying the state had no control over rising interest rates.

"A few years ago, interest payments on loans were €20 million to €30 million, which is already a large sum. Now they are €200 million to €300 million and in four years they will exceed €600 million. With €600 million, we could solve the funding problems in healthcare and specialized care, as well as the pay problems facing teachers, police officers and rescue workers. Instead, we will be paying that interest in the future because we have been able to borrow until now."

She noted that the European Central Bank and the U.S. Federal Reserve were already signaling interest rate increases.

"We have no control over that and will simply pay a bigger bill in the future. So experts' advice to bring spending or debt growth under control quickly is not some abstract concern. Eventually, those interest costs will limit what we can do next year and the year after in areas where the problems are acute."

Sikkut said finding the right balance would therefore be a major challenge for the next government. She added that borrowing to cover recurring expenses, such as pensions or salaries, would be a mistake.

"Yes, you can borrow for investments. But we must cover recurring expenses with recurring revenue, whether that comes from state fees, taxes, environmental charges and so on. No other country has found another formula."

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