Estonian parliament to follow lead of Latvia

  • 2008-12-10
  • TBT staff in cooperation with BNS

Budget cuts all around

TALLINN - The Latvian government's actions in slashingthe revenue and expenditure projections of the 2009 budget could serve as anexample to Estonia as well, said head of the Estonian parliamentaryfinance committee.

"Political consensusin Latvia has moved in the right direction and hopefullythis will serve as a good example to Estonianpoliticians as well next year," Jurgen Ligi told BNS.

 "Latvia also has importance to us as awarning: violating budget balance over a long time costs very dear," headded.

Regarding measures taken bythe Latvian government, Ligi said forceful action was required to stabilize thetroubled financial system, but that there probably is not enough strength formore steps in the current difficult situation.

Estonia's advantage over Latvia beside the conservative budgetpolicy, is a financial system that does not need support and the large weightof Swedish banking, the lawmaker said.

"Estonia's situation will no doubtdeteriorate some more and an even bigger problem than our troubles is the factthat finance providers view us as a single Baltic region. Because of that alonewe have to keep our fingers crossed for Latvia," Ligi said.

The Latvian governmentdecided on Dec. 9 to cut the revenues of the next year's state budget by theequivalent of approximately 20 billion kroons (1.3 b euro) and expenditure by8.4 billion kroons.

Despite the cuts, thebudget is projected to run a deficit of about 15 billion kroons which amountsto approximately 5 percent of gross domestic product.

Estonia's ruling coalition parties agreedon 2 billion kroons' worth of cuts in the draft budget for 2009, but the budgetis nevertheless likely to have a deficit.