Estonian PM: budget agreement to be reached by next cabinet meeting
Estonian Prime Minister Kristen Michal said an agreement on next year's state budget will be reached by next Thursday's government meeting. The main point of contention remains the pace of deficit reduction.
Estonia's government is continuing work on next year's state budget. It was previously reported that infrastructure investments would be cut in order to reduce the budget deficit.
At a government press conference on Thursday, Prime Minister and Reform Party leader Kristen Michal said an agreement on the budget would be reached by the next cabinet meeting, scheduled for next Thursday. He said negotiations are close to a conclusion, though details still need to be worked out carefully.
Deficit reduction
According to Michal, one of the most debated issues has been how the government will proceed along the path of reducing the budget deficit. The government has committed to cutting the deficit to 4% of GDP next year, as envisioned in the budget draft currently under preparation.
Tempered expectations
Education Minister and Eesti 200 party chair Kristina Kallas had earlier noted that some planned investments in infrastructure and real estate would have to be postponed or cancelled, not only to reduce next year's deficit but also to find funds for a small pay rise for teachers and rescue workers.
On Thursday, Kallas urged the public not to hold overly high expectations. She said the situation is genuinely tense, with strong expectations across all sectors for higher wages and benefits, while the budget council as well as economists from the Bank of Estonia and commercial banks have warned that a growing debt burden does not support sustainable development. The government therefore faces the task of preserving society's viability while avoiding a spiral of rising debt. Kallas added that negotiations on the budget are still ongoing.
