Estonian coalition agrees on cuts

TALLINN 's TheEstonian ruling coalition has agreed on a plan to slash the budget by 8.08billion kroons (516 million euros) is a last minute round of Feb. 4 talks thatstretched on until 2 a.m. thefollowing day.

Prime Minister AndrusAnsip and Finance Minister Ivari Padar said that they had agreed in principle that passing the negative budget could be connected to a possible vote of no-confidence.

Pro Patria and Res Publica Union (IRL) Secretary GeneralMargus Tsahkna told the Baltic News Service that a draft version of the budgetcuts would be on the table at a Cabinet meeting due to take place at 4 p.m. on Thursday.

Of the savings, a cut of 2 billion kroons will result from a 10 percentblanket reduction in the personnel and operating expenses of all stateinstitutions. Of these expenses, 3 percent have already been frozen as part ofausterity measures.

The cuts will affect also teachers and employees of state-owned companies.

Defense expenditures will be cut by about 650 million kroons, FinanceMinister Ivari Padar said. The decrease in funds for road maintenance will beof similar range.

The coalition decided not to change child and family benefits, nor is thesystem of the so-called parental allowance going to be changed.

Moreover, politicians from the Estonianruling coalition were reported by BNS as saying that the cut of 8.08 billion kroons agreed on by Thursday could eventually turnout to be about 200 million kroons bigger.

SALARIES AND PENSIONS

Two of the main components of the budget cuts will beslashes to wages for public sector employees and to wages.

A major part of the cuts will be to slash the pay for publicsector workers by 10 percent.

Finance Minister Ivari Padar told BNSThursday morning that the cut would pertain to all employees on the governmentpayroll from ministries to employees of companies in state ownership.

Institutions mat differentiate the cut depending on what kind of reforms andcuts they have made last year, Padar said.

The finance minister said that the agreement would see pensions increase by5 percent from April 1. The increase is markedly smaller than that envisaged byearlier plans, which would have seen a rise of about 14 percent.

Padar said that the coalition has no intention of changing the pensionsystem.

In the state budget for 2009 endorsed in December the sum total of revenueswas set at 97.8 billion and that of expenditures at 98.65 billion kroons.