TALLINN - In order to keep within the deficit limit outlined by the EU, the Finance Ministry is further slashing the 2009 budget, drawing heavily on the pension budget and defense expenditures.
The increase in pension funds planned for April 2009 is now the largest of the cuts being made from the Estonian state budget.
The Finance Ministry had also predicted an increase in the 2009 economy when plans for the new budget were being drawn up, ministry spokesmen said. However, with the economy shrinking drastically in the second quarter of 2008, changes had to be made to keep the deficit under the 3 percent mark required to meet the Maastricht criteria and adopt the euro.
A total of 20.3 billion kroons (1.2 billion euros) have been reserved for the payment of pensions this year.
The budget of the medical insurance fund is 13.7 billion kroons, nearly 430 million kroons more than 2008.
One of the other likely cuts will be made from defense expenditure. Forecasts for the size of this year's GDP have become increasingly negative in recent months, placing defense spending in the line of fire as well.
A Finance Ministry spokesman said that it was still early to speak about concrete areas where the cuts would be made.
"It will only be possible to speak about cuts from any concrete sphere after the government has discussed the issue and coalition partners have made decisions together," the spokesman said.
The budget of the Defense Ministry is 5.2 billion kroons in 2009, 400 million of which are external resources.
The basis for the sum total of the defense expenditure, which is linked to the GDP, is the expenses of the whole sphere of administration minus external resources 's or 4.8 billion kroons, the Foreign Ministry informed the Baltic News Service.
A representative of the Finance Ministry said that it was not possible to speak about the size of the necessary cut before it was clear how big the January tax inflow would be.
Finance Minister Ivari Padar had previously stated that 5-6 billion kroons of expenses would have to be cut from the budget to remain within the Maastricht criteria.
Ruling coalition parties have said that the budget cuts must be made at the beginning of the year.
The sum total of this year's expected revenue in the state budget, endorsed in December, is 97.8 billion kroons and expenditures 98.5 billion kroons.
The Estonian economy, which saw 10.4 percent growth in 2006 and 6.3 percent in 2007, is now facing a recession as output fell approximately 2.8 percent in 2008.
