| Estonian govt endorses state budget strategy for four years |
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| Thursday,May 28,2009 Posted: 20:28 BJT(28 GMT) |
| From:Baltic News Service Article type:Original |
TALLINN, May 28, BNS - The Estonian government Thursday endorsed the bugdet strategy of the state for the years 2010-2013.
According to the strategy the main aims of the government are sustainability of the budget strategy, a simple and stable tax system, flexible structure of the state budget, growth in the volume of investments and reorganization of the public sector.
The government endorsed achieving government sector budget surplus by 2012 as its most important aim.
For 2010 the state is planning a budget deficit of 2.9 percent of the gross domestic product (GDP), which presumes application of additional measures to improve the budget position by about nine billion kroons (EUR 575 mln).
In 2011 the shortfall of the government sector budget would decline to 1.5 percent and starting from 2012 the budget would no longer have a deficit and reserves of the state would start to restore.
The Finance Ministry said that in case of the present tax policy decisions, the sum total of state budget revenue would remain at about 80 billion kroons during the next four years. But unless new budget policy decisions are made the expenditures of the state budget will remain at 90 billion kroons during the next four years.
According to Agriculture Minister Helir-Valdor Seeder, who stands in for the Finance Minister at present, it is clear that it is not possible to achieve the desired budget position at such annual revenues and expenditures.
"It is necessary to make complicated decisions concerning both 2009 and 2010 in the name of the long-term sustainability of Estonian economy and budget. Here we do not have to do with wishes and opportunities but an inevitable need," Seeder added.
In the next few years the share of non-tax revenue in the state budget will significantly increase, mainly due to foreign resources.
"No doubt use of foreign subsidies is a key issue of Estonia's further development. Bigger adaptation of foreign resources and measures to correspond to the situation in order to revive economy and the labor market has an important role," Seeder said.
According to the forecast, the state budget will have a deficit in 2010 and 2011. The state is planning to cover the expenditures above the level of revenues by means of loan capital to be obtained on the basis of contracts already signed.
This year the state signed loan contracts with the European Investment Bank (EIB) and Swedbank in order to cover budget deficit, favor investment and increase liquidity of the state treasury. In 2010 the state will continue taking out the EIB loan for the need of investments.
Local governments will presumably continue with budgets in deficit, financed by loans and previous periods' reserves throughout the period of the forecast.
The government sector loan burden will grow from 4.8 percent of GDP in 2008 to 8.2 percent in 2009 and to 9.7 percent in 2010.
(EUR 1 = EEK 15.65)
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