Government prepares for 9 percent decline

  • 2009-01-30
  • TBT Staff in cooperation with BNS

The government plans on cutting billions of kroons out of the state budget.

TALLINN 's Estonian Prime Minister Andrus Ansip has said thatthe government is pondering slashing the budget by 8 billion kroons (511million euros) 's and that the massive cuts would be made to accommodate for an 8.9percent drop in GDP this year.

Ansip told Estonian public radio on Jan. 30 that he hoped the Estonian gross economic product wouldnot fall so far, but that it was necessary to be prepared for it. On the sameday, Swedbank forecast Estonia's economic fall at 7percent.

At a Jan. 29 meeting, the Estonian Cabinet decided it would draw up anegative supplementary budget aimed at reducing the government sector shortfallby 8 billion kroons.

The prime minister said that there was no party in the government at presentthat would wish to make cuts at others' expense. All of them want a solutionthat would be acceptable for the Estonian state and the Estonian people.

"I am sure that the coalition is prepared to make important decisionsfor the state and we will surely reach an agreement," he said.

Ansip said that increasing the loan burden of the state was not a way outfor Estonia.The government must have a practical mind even in difficult times and makecuts. The difficult decisions about the cuts must be made also because Estonia would meet the Maastricht criteriaso it could adopt the euro. He said that devaluation was not an option.


The comments came a day after the prime minister and FinanceMinister Ivari Padar signed a decree placing temporary restrictions on budgetspending.

"The decision to curb disbursement stems from poorer than anticipatedinflow of budget revenues due to the fast cooling of both the global and the Estonian economy and experts',including entrepreneurs, bankers and analysts, increasingly pessimisticevaluations of the economic situation," Padar said.

"It's clear that in the changed economic situation it is necessaryuntil the adoption of a supplementary budget to monitor public spending moreclosely and plan resources so that all essential activities can beperformed," he said.

The order will come into effect on Feb. 1.