Estonian govt decides to speed up use of EU funds

TALLINN – During a discussion on the preparation of the state budget strategy and the state budget for next year that continued on Friday, the Estonian government decided that ministries accelerate the taking into use of the balance of the EU structural funds for 2014-2020.

"We must overcome the economic decline caused by the pandemic and simultaneously move towards a balance of state finances," Prime Minister Kaja Kallas said in a press release. She added that faster tapping into the balance from the previous period and into the EU funds of the new period is essential for the development of the Estonian economy and increasing people's incomes. 

"The budget deficit will impose limits on the use of tax money in the coming years, but it is possible for us to invest a record amount of EU funds in the next few years, which all must go towards new growth and the implementation of big changes," Finance Minister Keit Pentus-Rosimannus said.

The finance minister observed that the government subjected the state of play concerning the budget of the EU funds for the ended period to a critical review.

"There, hundreds of millions still wait to be used by Estonia. By the end of the year the situation must be significantly better," she said.

The implementation of projects financed with external support for the 2014-2020 period continues until the end of 2023. According to data made available by the European Commission, Estonia, with 63.1 percent, placed fourth among member states at the end of March in terms of payouts made.

The government noted that it is nevertheless possible to put in effort so that the funding was taken into use faster and in bigger amounts.

Minister of Economic Affairs and Infrastructure Taavi Aas said that in his area of administration important projects, for the acceleration of which they are making everything possible, are waiting for payouts and contracts. He said that as one of the focal projects, payouts will continue in different regions of Estonia for the reconstruction of apartment buildings aimed at increasing their energy efficiency, in order to contribute to the achievement of climate goals and nearly halve  heating costs. 

When it comes to measures for which payout ratios are lower than 75 percent of the budget, other ministries must submit to the Ministry of Finance by May 6 a precise action plan for  speeding up the payouts and covering the grants with obligations.

In total over 3.5 billion euros was available to Estonia in structural funds in the 2014-2020 period, of which 279.3 million euros is still not covered with obligations. The goal for this year is to reach a situation by the year-end where 97 percent of the EU funding has been assigned and payouts have been executed to the extent of at least 75 percent.

In addition, the government discussed on Friday potential reforms and places of saving that would help to improve the government sector's budget position in the budget strategy for 2022-2025.

"The strained situation of the state budget is a good motivator to find opportunities for doing one's job more efficiently and saving on costs," Pentus-Rosimannus said.

The aim of the budget strategy is to plan activities and monies for a longer term, keeping in mind  the priorities of the government, forecasts, and global trends. The budget strategy ties together the major goals of the government, the plans and activities of ministries, and their financing, for the next four years. 

In making the decisions, the government bases itself on its priorities: rapid exit from the COVID-19 pandemic, supporting people's mental and physical health, financial sustainability, education and innovation, the green economy, foreign political activity, national defense, and reducing regional inequalities.

The government must endorse the budget strategy and give its nod to the 2022 state budget by April 30 at the latest. The government will continue to discuss the budget bill in the fall, before  submitting it to the Riigikogu.