Finance Minister: €50 million needs to be cut from budget ({{contentCtrl.commentsTotal}})

Kadri Klaos, Margus Täht, Madis Aben ja Martin Helme presending the Finance Ministry's summer economic forecast. Source: Siim Lõvi/ERR

Finance Minister Martin Helme (EKRE) said at Monday's summer economic forecast presentation that about €50 million will need to be cutback to help balance the budget.

ERR reported that this money needs to be cut back from the budget to help the government reduce its deficit and move towards a balanced budget.

According to a latest forecast, the structural deficit will be 0.6 percent in 2020 and 0.5 percent in 2021, the Ministry of Finance said.

This means that next year's budget will still need to find places for cutbacks in the amount decided by the state budget strategy in spring. In addition, this year's budgetary position must also be improved.

Helme said at a press conference on Monday morning that the need for cutbacks this year is about €50 million.

At the end of May, the new government set out a four-year state budget strategy. In light of the new economic forecast and other information that has become available in the meantime, this budget strategy needs to be slightly modified. In implementing the decisions of the state budget strategy, the 2020 budgetary position is in line with the renewed target, the 2019 deficit needs to be reduced.

According to the Ministry of Finance, the debt burden is to increase to 8.9 percent of the gross domestic product (GDP) this year. While the debt-to-GDP ratio of local government is to fall by 0.2 percentage points, the central government contribution to the debt burden is to increase by 0.5 percentage point.

While the surplus of the state budget creates the preconditions for the accumulation of reserves, the repayments of loans and funding of financing operations make the state's cash flow mostly negative. The negative cash flow will be covered by reserves and the treasury is not expected to generate new borrowing needs.

The tax burden is on a downward trend, as rapid wage growth is expected to slow down, as well as from the modest increase in the consumption of excise goods, BNS reported.


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Editor: Helen Wright

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