Estonia's finance minister: current budget woes are a legacy of past governments

Estonian Finance Minister Mart Võrklaev has published a response to former Prime Minister Jüri Ratas, rejecting criticism of the country's public finances and instead placing responsibility on governments Ratas himself led.

Võrklaev writes that when Taavi Rõivas handed over leadership in 2016, the state budget was in solid shape. However, under Ratas' first government and the subsequent EKRE–Isamaa–Center Party coalition, spending grew unchecked, creating a persistent deficit. In 2020, that coalition ran a 5.4-percent deficit, and Estonia's debt burden doubled within a single year.

Defense spending pressure

Võrklaev argues that the main pressure on the budget in recent years has come from security needs. After Russia's full-scale invasion in 2022, Estonia was forced to quickly raise defense spending from two to three percent of GDP. Comparing 2022 and 2026, defense spending has grown from 700 million euros to more than 2.2 billion euros.

He also recalls that during the 2023 budget negotiations, several parties, including Isamaa, pushed through unfunded promises that inflated public-sector wages and indexed benefits without a long-term financing plan.

Ongoing savings plan

Since 2023, the government has made savings decisions worth more than one billion euros, allowing it to cut the budget deficit by 1.1 and 2 percent of GDP in 2024 and 2025 respectively. However, since defense spending must rise above five percent of GDP from early 2026, the deficit has climbed again to more than four percent of GDP.

Võrklaev states the government's plan is to keep improving the budget position by 0.5 percent of GDP annually until debt stabilizes at 30 percent of GDP, while maintaining defense spending at a minimum of five percent of GDP.