TALLINN – The Estonian government discussed the fiscal strategy for 2020-2023 at its Cabinet sitting on Thursday and is set to continue the deliberation next week.
The Ministry of Finance offered to the Cabinet an overview of the spring economic forecast made public on April 4, as well as the timetable and the basic principles of the preparation of the budgetary strategy, the government communication office said.
Prime Minister Juri Ratas described the budgetary strategy as a document of very big importance, with which the government sets out the directions of development of the state for the coming few years.
"Decisions concerning the budget must lead to an increase in the wellbeing of all residents of Estonia, nor must we forget about the coping of the people who are in a more difficult situation. The state also must ensure a balanced development in different regions, in order for our people to have good living conditions in the major cities, county centers, the more remote rural municipalities and small islands alike," the prime minister said.
"We will definitely see to it that the long-term view of financial planning supports the development of smart economy everywhere, which is a guarantee of our future and success. Estonia's economic growth has been fast and and we must find the possibilities for balancing off the budget, while not neglecting the objectives of the government," Ratas said.
When drawing up the budgetary strategy, the government will be guided by five principles: a family-friendly Estonia, a coherent society, a knowledge-based economy, effective governance, and a free and protected state.
The aim of the government's budgetary policy is to support balanced economic growth. For this, the government can prevent the economy from overheating by fiscal policy measures during years of faster economic growth and support the economy with government sector investments in years of slower growth.
In accordance with the State Budget Act, the government sector's budget must be in structural balance on the average.
The budgetary strategy is drawn up every spring. The government usually approves it at the end of April and the Riigikogu at the end of May the latest in the years of scheduled general elections.
The state budget for 2020 will be drawn up separately. Like the budgetary strategy, the bill of the state budget for next year has to get the government's nod by the end of May. If necessary, the government will continue talks on the state budget in the fall based on the summer economic forecast.