Spending increases with 2011 budget

TALLINN - Estonian lawmakers passed the 2011 central government budget, keeping the planned deficit below the European Union’s 3 percent ceiling in the year the Baltic nation adopts the euro, reports Bloomberg. The 101-member parliament, or Riigikogu, voted 55-32 on Dec. 8 in favor of the plan, which increases spending by 5 percent, to 6 billion euros, or 1.6 percent of gross domestic product, up from 1.4 percent this year, according to the Tallinn-based parliament’s Web site.

The overall fiscal deficit, including local governments and social security funds, is also planned at 1.6 percent of GDP, the Finance Ministry said in a separate statement.
 Estonia is due to join the euro area in January after slashing the fiscal deficit to 1.7 percent of GDP last year and to an expected 1.3 percent this year, lower than any other eurozone member, according to European Commission forecasts. Its public debt-to-GDP ratio is due to decline to 7.1 percent this year from 7.2 percent last year, the lowest in the 27-member EU, Finance Minister Jurgen Ligi said on Oct. 28.

“Plenty of colleagues asked why the deficit should be 1.6 percent of GDP, and not 2.6 percent, for example,” Taavi Roivas, the head of parliament’s Finance Committee, said. “Everyone who takes even a peek at the international media or at what is happening in a lot of EU countries where the economic crisis has been replaced by a very serious public debt crisis understands that the deficit should be kept as small as possible and, at the same time, as big as needed to move toward a balanced budget,” he added.  The ruling Reform Party of Prime Minister Andrus Ansip and the junior coalition party Isamaa ja Res Publica Liit of former Premier Mart Laar aim for a budget surplus in 2013. The country had a budget deficit exceeding 3 percent of GDP in 1999, when it wasn’t part of the EU.