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Estonian Riigikogu adopts 2018 state budget

BC, Tallinn, 14.12.2017.Print version
The Estonian parliament on Wednesday adopted the 2018 State Budget Act, according to which Estonia gets the first ever state budget exceeding 10 million euros in size, informs LETA/BNS.

The budget was passed in the 101-seat chamber in the third and final reading by votes 55 to 41.


The size of expenditures and investments set out by the budget is 10.58 billion euros and of income 10.33 billion euros. This is the current government's first full-year budget, which expresses the aims of the coalition that took over in November 2016.


Expenditures and investments are bigger by 922 million euros or 9.5% and income bigger by 986 million euros or 10.6% than this year. The budget is based on an economic growth estimate of 3.3% and comes with a minus equaling 0.25% of GDP.


At the proposal of the finance committee, the budget bill was expanded by increasing regional investments, supporting various third sector and civil society projects as one-off expenses with 4 million euros. The source to cover that gap is reducing the government's special-purpose reserve by the same amount.


During the second reading 50 proposals to amend the bill submitted by MPs and parliamentary groups, which were not supported by the parliament's finance committee. The finance committee itself drew up 20 proposals, which for the most part consisted of a number of technical amendments between and within the areas of government of ministries as well as clarified and adding paragraphs of text. Altogether nine proposals were filed for the third reading, four of which came from the finance committee. The leading committee decided to not take into account proposals filed by the opposition.


Tax amendments taking effect from next year will raise the basic exemption for low and medium income earners to 500 euros a month, which means that people whose gross monthly pay is up to 1,200 euros will be left up to 64 euros more in their hands per month and the net wage of the lowest paid individuals will rise by up to 15%. The measure is estimated to cost the state 182 million euros in 2018.


The government is planning to invest 56.7 million euros in important infrastructure projects and in developing the living environment of Estonia. In 2018, the construction of a nationwide broadband network in collaboration between the state, municipalities and the private sector will continue and construction of the first stage of the Haapsalu railway will begin.


Investments in roads are budgeted to total 227 million euros, which includes money for the project to transform the Kose-Mao section of the Tallinn-Tartu highway into a four-lane road, construction of the Juri-Vao section of Tallinn Ring Road into a 2+2 lane road, construction of Reidi Road in Tallinn, renovation of the Haabersti road intersection in Tallinn and construction of an intersection at Vao on the Tallinna-Narva road on the border of the capital city.


Defense expenditures are estimated to equal 2.11% of GDP in 2018. Spending for independent defense capability will equal approximately 2% of GDP, to which investments necessary for hosting NATO allies and costs of the national defense investment program will be added.


Under the healthcare financing reform, 300 million euros of additional money will be channeled into the healthcare system over the next five years, including 34 million euros in 2018, to improve the availability of services.


The state will start making contributions in 2018 to the Health Insurance Fund on behalf old-age pensioners who are not in employment. This contribution is planned to gradually rise to 13% of the average old-age pension by 2022. The Health Insurance Fund meanwhile will take responsibility for some of the healthcare services previously financed from the state budget.


The payroll of employees of institutions financed from the state budget will grow by 2.5% and it is up to individual ministries to decide where exactly and how big pay rises will take place. The payroll will increase more - by 4.5% - in the field of interior security, including for the police, rescuers, prison and customs officials and social welfare workers.


Pay increases for teachers will continue, for which purpose the budget of the Ministry of Education and Research will get 36 million euros more than this year. The size of the budget of a pay increase for cultural workers and sports coaches working with young people is 10 million euros. A pay increase for prosecutors aimed at ensuring the competitiveness of their salaries will cost 0.6 million euros a year.


The government decided to reduce the government sector's structural budget deficit by half compared with what was planned in the national fiscal strategy, to a near-balance level of 0.25% of GDP.

The budget builds on the four major objectives of the government identified in the fiscal strategy that the government adopted in spring: to promote economic growth, to increase the population of Estonia, to strengthen the security of Estonia, and to increase the welfare and cohesion of the society.






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