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2019 state budget to exceed €11 billion

Minister of Culture Indrek Saar (SDE), Prime Minister Jüri Ratas (Centre) and Pro Patria Party chairman Helir-Valdor Seeder on Wednesday. 19 September 2018.
Minister of Culture Indrek Saar (SDE), Prime Minister Jüri Ratas (Centre) and Pro Patria Party chairman Helir-Valdor Seeder on Wednesday. 19 September 2018. Source: ERR

The government has reached an agreement regarding the 2019 state budget, which is to exceed €11 billion in size. The budget bill is to be approved at the government meeting next week.

According to Prime Minister Jüri Ratas (Centre), next year's state budget will prioritise people, public services and the development of rural areas.

"It is the common view of the government that by contributing to quality services — whether that is education, healthcare or security — we are investing in a a more coherent and more prosperous society," Ratas said on Wednesday. "As a result, we have decided that the wages of patrol officers, border guards and rescue workers need to increase significantly. Wage increases will likewise continue in the education, cultural and social welfare sectors."

According to the bill, nearly €13 million will be earmarked in next year's state budgets for the funding of raises for Police and Border Guard Board (PPA) employees, while another €8 million will be earmarked for wage increases at the Rescue Board. Teachers' salaries are likewise set to increase. With the help of additional funding from the state budget, the monthly wages of teachers at general education schools are to increase to €1,500 next year. Kindergarten teachers and social welfare, cultural and other sector specialists will also see their wages increase.

Speaking at a press conference on Wednesday, the prime minister said also discussed were the effects of and possible changes to various excise duties, but the government ultimately decided not to make any changes. "With regards to the alcohol excise duty, we made an additional decision: the planned 2019 hike will be cancelled, which now needs to be written into law, but the 2020 alcohol excise duty hike is also cancelled as well," Ratas said.

City and municipal incomes are to increase by approximately 5% next year, reaching nearly €2.2 billion. The state will continue to pay out transitional support to farmers. Nearly €5 million has been earmarked for the state's Ida-Viru County programme, while another €800,000 will go toward its Southeastern Estonia programme. According to a decision of the state budget strategy, these two regional programmes will continue to be funded through 2022.

"In reaching this agreement, we have taken account the recommendations of the Fiscal Council, which has said that as our economy is currently experiencing rather good times, we should consider that one day we should have reserves for when we don't have such good times anymore," said Minister of Culture Indrek Saar (SDE).

Defence spending to exceed 2.1%

Ratas stressed that the 2019 state budget is nominally in a surplus and structurally balanced.

"The state's finances are in very good shape," he highlighted. "We found the opportunity to give the Estonian Health Insurance Fund (Haigekassa) an addtional €180 million to put toward decreasing wait times. Defence spending will grow to nearly €590 million, which according to current estimates accounts for over 2.1% of our GDP. We will be putting approximately €370 million toward transport, infrastructure and other investment projects."

He added that the exact percentage of the GDP for which next year's defence budget accounts will be determined a year later, when the 2018 GDP is determined.

"Currently we can say that yes, it is projected as more than 2%," Ratas said, adding that this was a record amount of money being earmarked for defence spending.

The public sector's debt burden is to decrease from the current 8.2% to 7.4% in 2019, and is projected to drop to 6.2% by 2022.

Pro Patria Party chairman Helir-Valdor Seeder said that no new taxes will be introduced, and tax burdens will generally decrease. According to Seeder, money wasn't wasted in the new budget, and no great departures were made from the state budget strategy agreed upon in the spring.

One regret Seeder had regarding the new state budget was in connection to increasing research spending.

"One can be worried that research spending did not increase as we wanted; it will remain at the same level," said the party chairman. "There are things we could do differently, or more of, but this is a matter of choices; this is the compromise of balance."

In compiling the 2019 state budget, the government based its work on the most recent economic forecast of the Ministry of Finance. The government is due to submit its state budget bill to the Riigikogu at the end of September, where negotiations will last through December before the budget is voted into law.

Editor: Aili Vahtla

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