Estonian FinMin: State budget in line with new EU budget rules

TALLINN – The finance ministers of the European Union reached a compromise to enforce the budget rules, which have been suspended since the coronavirus pandemic and have undergone an update, from 2024; the budget of the Estonian state for 2024 is generally in line with the new rules, but according to Finance Minister Mart Vorklaev, efforts must be made to reduce the budget deficit.

"Even though Estonia's debt burden is the smallest in Europe and well below 60 percent, we also have to work hard in the context of the new rules to keep the public finances in order. A country like ours is expected to be well below the 3 percent deficit level," the minister said in a press release.

"Estonia's budget deficit will be 2.9 percent next year and unfortunately the forecasts show a worsening of the economic situation. Our belt is quite tight and there is no more room for additional new expenses," he said. "In an ideal scenario, the long-term perspective would be to move towards a 1.5 percent deficit level, which the European Commission is guided by in so-called normal times."

The finance ministers agreed on the new conditions of the budget rules on Wednesday. On the basis of these, clear minimum targets for budget deficit and debt reduction are coming, for example, in the case of higher-risk countries. The new conditions also allow flexibility in making investments and carrying out reforms.

"It is important for us that the growth of the defense costs of the countries is also taken into account when evaluating the budget policy," Vorklaev said.

The agreement reached at the level of finance ministers is the basis for negotiations with the European Parliament, which is expected to confirm its position in mid-January.