Centrists: tap into the reserves

  • 2008-06-18
  • Staff and wire reports
TALLINN - A senior Center Party official has suggested that the government should consider tapping into the country's strategic savings in order to kick start the economy, which has seen growth disappear and is in risk of contracting.
Kadri Simson, deputy chairwoman of the Center Party, which controls the Tallinn City Council but is in opposition on the national level, criticized the government's plan to continue lowering the personal income tax rate and sell state property while the market is at a low.

In Simson's opinion, it would be more practical to consider putting into use reserves that, as she claims, are "melting away" in bank accounts in the backdrop of 11.3 percent annual inflation.
"The government is clinging to fixed ideas that rule out tapping into reserves. It would be worth instead to assemble a work group of Estonia's best economists to help Estonia climb out of the economic chaos sparked by the government," she said.
The idea of tapping into the reserves is not new, and populist politicians from the Center Party and its close ally, the People's Union, often bring it up.
Right-wing parties say that the reserve is for future generations and should not be used as an impromptu tool of macroeconomic policy.
Simson complained that Estonia is receding from the developed Nordic countries with every day under Prime Minister Andrus Ansip's government.
"It seems to us as if the Baltic Sea is becoming wider and the mental, economic and political distance between Estonia and the developed Nordic countries is growing by the day," she said.
"The supplementary budget prepared by the government lacks a message how to turn the current economic stagnation into economic growth," she said.

Instead, the government is focusing on an employment contract law that does not serve the interests of most working people, excise tax hikes that hit the low-paid the hardest, and tax cuts that rob social spending of funds, Simson said.