2019 state budget passes first reading in parliament

Finance Minister Toomas Tõniste (Pro Patria).
Finance Minister Toomas Tõniste (Pro Patria). Source: Siim Lõvi /ERR

The 2019 state budget bill passed its first reading in Wednesday's plenary session of the Riigikogu. The Centre Party-led coalition, since the departure of MP Tiina Kangro from Pro Patria's parliamentary group in the minority, can so far only count on one independent vote.

Former minister of entrepreneurship and IT, Urve Palo, who herself left the Social Democrats earlier this year and resigned her position in the government, told ERR on Thursday that Prime Minister Jüri Ratas' government can still count on her vote passing next year's budget.

The government has had a parliamentary minority since Pro Patria MP Tiina Kangro left both the party and its parliamentary group. This put the current number of independents in the Riigikogu at four (Palo and Kangro as well as former Pro Patria chairman, Margus Tsahkna, and former Centre Party member, Olga Ivanova), all of which are former members of parties currently part of the government. So far only Palo has confirmed that she will vote in favour of passing the budget bill.

Finance minister: Budget 'responsible,' to further foster economic growth

'This is a responsible budget that will support the growth of our economy, security and the welfare of families so that the budget will be in balance, the tax burden will be stable, the loan burden will decrease and the state's finance will be in good order also at the end of 2019,' Finance Minister Toomas Tõniste (Pro Patria) said introducing the budget to the Riigikogu.

Tõniste emphasised the strong state of Estonian finance, highlighted in the recent decision of rating agency Fitch to upgrade Estonia's long-term foreign and local-currency issuer default ratings to AA- with a stable outlook.

'The agency said that the increase in ratings was aided by Estonia's improved ability to withstand the possible negative impacts of the external environment, the good state of our state finance and a strong economic policy framework,' Tõniste added.

Historic budget of €11.31 billion

In the state budget bill initiated by the government on 26 September this year, the budgeted income is €11.06 billion spending €11.31 billion. The nominal budget surplus of the government sector in 2019 is forecast at 0.5% or approximately €133 million. The structural position, which in addition to income and expenses also takes into account the cyclical state of the economy, is balanced.

The tax burden in the next few years will remain on the current level. The debt burden will decrease from the current 8.2 to 7.4% in 2019, and according to estimates the debt burden will drop to 5.4% by 2022.

According to the bill, the Police and Border Guard Board is set to get around €13 million and the Rescue Board €8 million to stock up their salary funds. On the back of additional funding from the state budget, the average pay of teachers at general education schools will hit €1,500 a month for the first time next year. The salaries of nursery school teachers, social care workers, specialists in culture and other fields will also increase.

Health Insurance Fund, pensions to get additional funding

The budget of the Health Insurance Fund next year will receive approximately €180 million in additional money. The accessibility of social services should increase and the financing of special welfare services will increase to approximately €37 million, while the funding of social rehabilitation will grow to €12.7 million. Child allowances will increase to €299 million. Starting next year, the child allowance for the family's first and second child is €60. The average old-age pension next year will increase by 7.6% from €447 to €481 a month.

The budget bill sets out approximately 2.2% of Estonia's gross domestic product for national defence. The salaries of active-service military personnel will increase, and Estonia will boost its military capabilities with continued large-scale procurements. The total value of procurements makes up almost 40% of the annual defence budget.

The income of Estonia's municipalities is budgeted to increase by some 5% to almost €2.2 billion. The government will continue payments of direct support to farmers to help keep the Estonian agricultural sector competitive. Payouts of direct support in 2019 are budgeted to total €143.9 million.

Investments in important transport and infrastructure projects, rural development and projects in culture and sports are budgeted to total over €360 million next year.

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Editor: Dario Cavegn

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