Estonian PM: Much needs to be cut to move towards fiscal balance

TALLINN – Estonian Prime Minister Kristen Michal acknowledged during parliament's question time on Wednesday that significant cuts are needed to meet the Maastricht criteria and move toward balancing the budget.

"If we do nothing or fail to take the necessary steps, the expenses of the Estonian state will significantly exceed revenues -- by 5.3 percent of GDP," Michal said in response to a question from opposition Estonian Conservative People's Party (EKRE) MP Helle-Moonika Helme. "The agreed framework we should stay within, meaning the Maastricht criterion, is minus three. And we will be taking steps through cuts to fit within these limits."

"We in government and ministries understand that this task is pretty big. And we've set the goal for ten percent to be cut in the public sector over the next three years," said Michal, describing these cuts as essential to move toward budget balance. He added that the cuts affect every area and the only exceptions are pensions, defense capabilities, internal security and teachers.

The premier noted that cuts are also essential for the coming years. He pointed out that now is a more difficult time due to the war in Ukraine, with security needs having increased enormously and the picture when it comes to the economy being somewhat bleaker.

At the same time, he pointed out on a positive note that the economic forecast shows the economy on the growth path again in the coming years.

"This isn't coming just from the Finance Ministry; it's also coming from the banks," Michal said. "So there's already a bit of optimism and light at the end of the tunnel, which means that, just as in a person's life, the state must make certain decisions, set the foundation, and then move forward. We will make these decisions, we will put things in order, and from there growth will follow," the head of government added.