TALLINN - The Estonian government approved on May 31 a four-year budget strategy for the 2008-11 period, which foresees an aggregate budget surplus of 4.8 billion kroons (306 million euros). The budget strategy projects revenues of 415.5 billion kroons and expenditures of 410.7 billion kroons for the four-year period. Overall budget volume will increase 19 percent in 2008 compared to the current year, which allows for a significant growth in most areas of governance, the government said.
The strategy paper also puts in place the framework for drafting the 2008 budget, spokespeople for the government said.
In an explanatory letter to the strategy, the government defined its strategic goals as ensuring Estonia's fast and sustainable growth, survival of the nation, a better and more prosperous life for the people, high-level education, innovative and competitive economy, protection of peace at home, and development of life in the countryside.
Commenting on the strategy, the governor of the central bank said it may not provide sufficient support for the country's economic policy goals.
However, Andres Lipstok said the budget surplus target set down in the strategy, at 0.5 percent of GDP, is substantially below the commitment made to the European Union and its member countries last fall.
"Let us hope that, depending on the development of the economy and risks, the government will raise the surplus of the state budget both in 2008 and in the following years," Lipstok said.
The bank's position is that the surplus of this year's budget must match the size of last year's. In 2006 the budget surplus made up 3.8 of GDP.
"If there are additional revenues, a supplementary budget increasing government sector expenditure must definitely be avoided, especially in view of the sharp budget increase in the current year," Lipstok added.
Sticking to a conservative budget policy both now and in the coming years is vital for reducing the risks the Estonian economy is facing, the central bank chief said.
"It is essential to maintain a solid budget surplus to secure investors' and financial markets' trust in Estonia and also ensure stable economic development in the future," he added.
