TALLINN – According to Estonian Finance Minister Mart Vorklaev, the European Union is about to agree on updated budget rules, Estonia would like to reach this in December and quickly implement the rules.
Vorklaev stated that recent crises have severely rattled the economies of the European Union countries, which has led to an increase in budget deficits and a rapid increase in the debt burden. According to the minister, reversing this trend as soon as possible is in the interests of all of us and will support the growth of the economy.
"Reformed rules will contribute to the accumulation of buffers in good years in order to be ready for the next crises and downturns," the finance minister added.
In order for the rules to be of real use in reducing the debt burden and budget deficit, Estonia supports, in addition to determining the expenditure growth of budgets, the setting of additional specific minimum goals for both the deficit and the reduction of the debt level in economies with a higher risk. So far, it has been agreed, for example, to adhere to the requirement to improve the budget position by at least 0.5 percent per year until the excessive budget deficit is eliminated. Work on specifying other requirements is still ongoing.
Due to the worsened security situation in Europe, Estonia also supports the proposal to take into account the increase in defense spending when assessing the fulfillment of the budget deficit and debt level criteria.
After several years of fiscal rules being on hiatus, enforcement of the reformed rules is essential to ensure macroeconomic stability and sustainable economic growth. Consistent application of the rules will help mitigate the risks associated with high debt levels, which years of "fiscal sloppiness" have fostered.
Finance Minister Mart Vorklaev attended a meeting of European Union finance ministers in Brussels on Thursday.