Government unites to avoid bankruptcy

  • 2009-02-04
  • By Matt Withers
TALLINN - The Estonian government has made progress in its bid to save the country from bankruptcy by means of a package of drastic cuts to the 2009 budget.
The leaders of Estonia's three-party coalition government have reportedly agreed on budget cuts to the tune of 5 to 6 billion kroons (320 to 380 million euros) during negotiations that took place on Jan. 31.
The ruling coalition went through a notoriously protracted deliberation when drafting the initial 2009 budget, but with the fate of both the government and the economy now in jeopardy the three parties have displayed unity in the face of adversity. 

"At this point it is no longer a matter of any separate party but of the whole state," said Margus Tsahkna, secretary general of Pro Patria and Res Publica Union (IRL).
Likewise, Eiki Nestor, head of the Social Democrat's negotiation team, said that the negotiations have proceeded in an atmosphere of mutual understanding.

"Some things seem to get solved quicker, others are more difficult 's but they're all complex and serious. It is in everybody's interest that the state wouldn't be in a situation in one year where the treasury's empty and there are only promises of fulfillment because there is not enough money," he said. Leaders of the Reform Party, IRL, and the Social Democrats announced a unanimous agreement to the cuts outlined at Saturday's negotiations. In continued talks on Feb. 1, however, the parties failed to finalize the package, which aims to free up approximately 8 billion kroons.

According to Finance Minister Ivari Padar the government discussed cutting costs in the public sector, on road maintenance and from social services, but no conclusive agreement was reached by the end of proceedings.
One particular point of deliberation is whether or not to cut the impending pension increase that current law dictates must take place in April 's a sensitive topic given the recent debacle concerning severely delayed pension payments .

The current budget allocates 20.3 billion kroons for pension payments, and the Finance Ministry estimates that the upcoming increase would give rise to the need to spend an additional 2.3 billion kroons.
Meanwhile, the Estonian Cabinet reviewed the tentative package at an extraordinary meeting on Feb. 2 before it was again passed on for review by opposition parties, unions and employers on Feb. 3. Liina Lepik, a government press officer, described the government meeting as constructive and said the Cabinet would resume discussions during its regular session on Feb. 5.

Yet some politicians have suggested that if the government fails to act quickly and finalize the package it might face collapse.
Mart Laar, IRL chairperson and former prime minister, said that if an agreement was not achieved immediately it might end badly for the coalition. Laar also said there is still the question of parliament passing the bill, which is by no means a certainty.

However, not everyone is trumpeting a pessimistic outlook. Keit Pentus, head of the Reform Party's negotiation group, said it would be good if the package of budget cuts was brought before parliament in the next few weeks 's saying that she expects the parliament to understand the importance of the cuts.
"The Riigikogu [Estonian parliament] in its turn will definitely not drag its feet on the budget amendments 's the sooner clarity arrives, the better," she said.