Stenbock House, 5 June 2024 – At an online session, the Estonian government approved this year’s negative supplementary budget, which includes nearly 115 million euros in austerity measures and 68 million euros in revenue measures, and will send it to the Riigikogu for discussion. This budget aims to ensure the financial stability and sustainability of the country, complying with the European Union’s rule of the budget deficit not exceeding 3%.
“The savings in the state’s current expenditure will primarily concern management and operating costs,” a government spokesperson stated, noting that public foundations will also have to contribute to the savings.
In a move to increase state revenue, more dividends will be taken from state-owned companies. “The supplementary budget foresees 68 million euros in additional revenue, such as higher-than-planned dividend withdrawals from state-owned companies Elering AS and the State Forest Management Centre,” the spokesperson added.
The negative supplementary budget notably spares the defence sector from cuts. “No cuts have been made on defence spending,” the Minister of Defence confirmed. However, the ministry is still required to review its personnel and management costs and redirect savings towards enhancing defence capabilities. Meanwhile, the Ministry of the Interior is expected to achieve savings through one-off cost reductions amounting to around 3 million euros.
Cultural institutions such as museums, theatres, and concert foundations will not be affected by the austerity measures. However, hospitals will have to contribute by achieving 1% savings on operating costs. Additionally, investments in research, development, and innovation (R&D&I) will be maintained at 1% of GDP, but the amount exceeding the spring forecast will be cut, resulting in a 19 million euro reduction.
The government does not plan to cancel any major investments, but some will be postponed. “The fiscal position will be affected by the postponement of some investments, such as those related to IT solutions and the construction of buildings and facilities,” the government spokesperson explained.
Further savings are expected from a reduction of 39 million euros in both the government’s unallocated and earmarked reserves. This includes the partial rescheduling of the development of the eastern border and reductions in R&D&I expenditure. “10 million euros will come from the partial rescheduling of the development of the eastern border by the Ministry of the Interior and 6.6 million euros from a reduction in R&D&I expenditure; the remainder is savings in government reserves,” the spokesperson detailed.
This comprehensive approach to fiscal management is intended to steer Estonia towards a more stable economic future. “The supplementary budget aims to ensure the financial stability and sustainability of the country,” the government concluded.
