MP: Reform won't agree to adoption of state budget with deficit

MP Aivar Sõerd (Reform) with a copy of the state budget bill.
MP Aivar Sõerd (Reform) with a copy of the state budget bill. Source: Reform Party

Reform Party MP Aivar Sõerd, a member of the Finance Committee of the Riigikogu, said on Tuesday that his party will not agree to the adoption of a state budget with a structural deficit, noting that Estonia should take advantage of the good times in the economy to accumulate fiscal buffers.

According to Sõerd, the opposition party is set to file proposals on Wednesday to amend the budget bill that would enable the country to prepare for less favourable times.

"Reserves have to be accumulated during good times, as forecasts indicate a slowdown in economic growth and we also have to prepare ourselves for potentially less favourable times in the economy in the future," he explained.

The MP recalled that, according to a forecast published by the European Commission on 8 November, Estonia's state budget will run a structural deficit of 0.7% next year. According to a Ministry of Finance forecast, reserves will shrink in 2019, and unless the budgetary position is improved, the treasury will need to start borrowing in two to three years already.

"Our proposals to amend the budget call for improving the balance thereof," he said.

Reform proposes cuts, scalebacks

According to Sõerd, one of the Reform Party's proposals is to cut the size of the government's contingency reserve, as it is not acceptable to come up with a state budget in which discretionary decisions involving tens of millions of euros that do not take into account sectoral development plans, competitions, rankings, and national and municipal borders are labeled as regional policy. 

The Reform Party also views the scaling down of the state rental flat programme as a source of additional revenue. Furthermore, fiscal inflow could be improved by reducing cross-border alcohol trade by means of lowering alcohol excise duties.

"We have proposed forgoing the expense related to the prime minister's travel to Davos, as the cost of the prime minister's participation in the [World Economic Forum] without an invitation equals the Riigikogu's entire international relations budget," Sõerd highlighted.

The Reform Party is to submit nine proposals for amending the 2019 state budget.

More funds for (Estonian-language) education

Reform proposals calling for increased spending include one that would increase the size of the research and development budget of the Ministry of Education and Research and the innovation programme by €10 million, and another by which a measure converting preschool and basic education to fully Estonian-language instruction would receive €5 million.

According to yet another proposal, the budget for the once-yearly payout made to pensioners living alone would be increased by €10 million, while old-age pensions would no longer be counted as income in the calculation of tax-free income, reducing fiscal intake by €39 million.

The Ministry of the Interior would get an additional €10 million for the construction of Estonia's easten border, while the local government equalisation fund would be increased by €19 million.

The Reform Party wants to see the Estonian government's contingency reserve in next year's budget to be cut by €27.5 million, and the operating costs of the Government Office by another €150,000.

The party believes that its proposal to reduce alcohol excisue duties would bring in an additional €50 million next year.


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Editor: Aili Vahtla

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