NORDIC TEAM: Prime Minister Andrus Ansip says that the government has kept to the path of sustainable development.
TALLINN - In a speech given during the celebration of the 92nd anniversary of the Republic of Estonia on Feb. 24 in Tartu, Prime Minister Andrus Ansip said that thanks to the joint effort of the people, Estonia is becoming a symbol of common sense and wise management, a positive sign not only for the European Union, but the entire world. “As a state and as a nation we have made incredible achievements over the last year,” said Ansip, noting that Estonia’s conservative fiscal policy and ability to quickly react in changed circumstances are awe-inspiring. “Estonia has done quite the impossible. This will be crowned by the introduction of the euro in Estonia,” said the head of government in his most important speech of the year.
In his speech, Ansip reminded the audience that three years ago the economic growth rate was 7 percent, employment was rising and unemployment falling. “Based on common sense, the government decided to increase its financial reserves to an unprecedented extent. This was by far not a universally shared or the only imaginable policy at the time. To the contrary, a fleet of critics preached on how pointless it was to gather reserves, in some foreign bank, and that we should start new spending projects worth billions [of kroons] and take huge loans as a state to finance them. The government went the other way, the way of common sense, and gathered reserves in good times,” recalled Ansip, adding that the government reformed the labor market and sickness benefits, and pushed public spending behind strict boundaries. “I want to thank the people of Estonia who understood us,” said Ansip.
In his speech, he also reminded the audience that “A year ago loud voices called for cutting pensions. It was claimed that without cutting them it would be impossible to improve the fiscal position and that Estonia would fail. However, we succeeded,” assured the prime minister.
Since 2004, the government has managed to more than double pensions. Nevertheless, a Eurostat survey says that 39 percent of the population aged over 65 years live at risk of poverty in Estonia. “Is it reasonable to raise pensions by five percent in difficult times? In the European cultural space, it is not traditional to cut pensions before one has run out of every other possible choice,” said Ansip.
According to Ansip, this policy, in addition to ensuring stability, has another substantive reason: cutting pensions would alleviate the pressure on critically revising all public expenditure. He considers that a pension cut would have saved merely 2 billion kroons (128.2 million euros), but in reality the state managed to improve its fiscal position by 19 billion kroons without touching pensions. “I seriously doubt that the labor market and sickness benefit reform would have been carried out had we cut pensions,” he said.
Ansip also pointed out that in these difficult times, Estonia was able to save and robustly develop in various fields. He noted that, in spite of difficult times, Estonia has taken a long step towards becoming a Nordic society. Moreover, the number of lethal traffic accidents has decreased, the crime rate has not exploded in spite of the crisis, and the living standard has been stable. The prime minister finds that, in comparison with previous years, there is more “affection” and less “upstart egoism.” He asks “Why? The main reason is the common sense of our people.”